The World Bank has stated two billion people are unable to access banking services on a global scale. At the forefront of this group are people with a poor or lack of credit history, bad credit, or limited access to financial services in general. In the Philippines, less than a third of adults have a bank account, and in Africa, only 23 percent of adults have a financial account. FinTech companies are looking for a way to extend banking into those margins, a move that will largely affect women and people of color.
The President and founder of CFSI, or The Center for Financial Services Innovation, Jennifer Tescher, has begun launching initiatives to assist in this process by using the Financial Solutions Lab to help incubate startups with a focus on financial health in the United States. These initiatives include Propel, a food stamp-streamlining process, and startups like Digit, EarnUp, and LendStreet which all target saving and assisting in debt repayment.
Other startups are attempting to redefine how we approach at banking as a whole, and looks at the holistic individual rather than reducing everyone to their FICO score alone. Risks are being addressed in different ways, and alternative data is being used to enlarge the number of potential customers. Another individual to come from FinLab at CFSI is Nicky Goulimis who co-founded Nova Credit, a company that is seeking to provide instant access to credit reports overseas. All three of the founders are immigrants with firsthand knowledge of the challenge of obtaining credit upon relocating to the United States. Credit is often necessary for mortgages, credit cards, and business and personal loans and without it consumers can be forced to pay higher premiums for both credit and insurance.
Another startup looking to affect positive change, Tala — headed by CEO Shivani Siroya — is a California-based business is looking to use mobile wallet, like Apple Pay, to help individuals manage their money on their phones. While approximately 77% of adults in the United States reportedly own a smartphone, the US lags behind other nations when it comes to movement towards mobile wallets on a global scale. Although 93% of Americans have access to financial services, only 17% use mobile wallet compared to Mexico which sees 38% usage. Mobile wallet provides an incredibly valuable service by allowing consumers to manage their finances without ever having to set foot in a bank.
As FinTech companies and investors continue to open the doors into financial services and work towards inclusion, especially for marginalized groups, the banking gap is well on its way to closing.