Financial health tech startups are putting consumers in the driver’s seat
It’s all about accessibility: a growing number of startups are making financial management and wellness technologies available to individuals and small businesses that were previously only available to the rich or large institutions.
This is the big takeaway from a report on the global accelerator Upcoming Finances, which focuses on tech-driven financial health startups. Village capital launched Finance Forward two years ago with partners MetLife Foundation and PayPal.
âIt’s a pretty revolutionary change,â says Matt Zieger, program director for the Americas at Village Capital. âIt puts consumers in the driver’s seat. “
The report highlights examples of financial health innovation and trends among the 120 cohort members and 1,100 startups. Called The state of innovation in global financial health, the results focus on Latin America, the Middle East and North Africa, Europe, the United States and South Asia.
A subset of fintech innovation, the report defines financial health as âthe ability of a person to feel comfortable with their financial present and future; their confidence in how to manage their money, to obtain a loan at a fair rate to deal with an emergency or to develop a business; and their ability to build wealth over time.
The report divides startups into several categories: dealing with personal or small business loans with, for example, alternative loan products, access to capital or technology to manage debt; help people build their savings, manage their wealth and plan for the future (think insuretech or proptech); help workers seize opportunities to increase their income; and helping people pay for necessities and send money back and forth.
In the United States (24 companies), the report focuses on higher education financing, payroll technology, and wealth management.
For example, EdquityTechnology helps colleges improve student financial security by increasing access to resources and emergency funding. âThe same kind of systems that could have been made available to the college itself are made directly available to the student,â says Zieger.
Home loan partner, one of the two winners of the 2020 US cohort – he won a grant of $ 45,000 – uses AI and blockchain to enable homebuyers to research the loan market and access credit and other information that only lenders usually have access to. The result: borrowers can make more informed decisions about specific lenders and find out how to improve their chances of getting approved.
“We can answer questions such as: how likely are you to get approval from different lenders, how long would it take you to close, what is the best loan option for you, and who are the best lenders that you can buy?” will give you the best chance for success, âsays co-founder Bryan Young.
The other American winner, Manifesto, targets the less than 90% of people with 401 (k) who fail to transfer money from their previous employer to their current employer, leaving a lot of money on the table. The platform takes care of transferring their retirement money to a single account, a process which in other circumstances can involve a maze of paperwork and phone calls.
One attribute that many financial health companies have in common is that they typically work through a company, such as an employer, to deliver their service, although the end user is either the consumer or the employee.