Financial Health and Inclusion Are More Than Fintech Buzzwords

Maybe it started with Apple’s famous 1984 Superbowl commercial
showing a totalitarian society in our future if we didn’t buy an Apple Macintosh.
Maybe it started with Apple’s famous 1984 Superbowl commercial
showing a totalitarian society in our future if we didn’t buy an Apple Macintosh. In the late 90’s, when I started in Fintech (and when rotary phones and bookstores still roamed the planet), tech’s vague virtue was omnipresent and whatever we did could be explained as part of a grand mission to throw off the shackles of old industry that polluted the environment and enslaved the masses. Of course, most of us were hoping to make a lot of money along the way but believed we’d discovered the way to pass a camel through the eye of a needle.

It turns out that online dog toys and banner advertising were not such righteous things after all. Tech fell from grace over time and has landed somewhere between big tobacco and the poultry industry on the scale of people’s trust and admiration. Today, tech is no different than the rest of the world – full of good things and a multitude of scams, shams and distortions of truth for the unwary.

I recently came upon new VC backed fintech company that bills itself as a “financial well being platform for employees”. From what I can see, it is basically a payday lender trying to embed itself into corporate HR systems to make payday loans to employees.  In addition, buried in their terms and conditions, is a provision allowing the lender to share borrowers’ identities and account access information with a different firm (with a history of serious regulatory problems over its data and security practices).  The terms and conditions also give this firm the right to resell borrowers’ account and transaction data to others with no restriction.  While this fintech may embody a VC’s dream of slick customer acquisition and high-margin multiple revenue streams, it isn’t a financial well being platform for consumers.

Financial health, well-being and inclusion seem to have become mandatory buzz words of every consumer fintech’s pitch without much thought or justification. I get that some people don’t care about doing the right thing and from what I’ve seen, these people end up in rehab centers, penitentiaries or Santa Clara mansions shaped like spaceships. If you don’t want to roll the dice and do the right thing, you need to examine your business model. If you have no real basis for claiming you are going to make consumers’ financial lives better, don’t.

Need some help? If you are doing any of the following, don’t say your fintech is about financial health or well-being:
• You are trying to make short-term, high-interest, uncollateralized loans to people.
• You are a lead-gen site for financial products pretending to give unbiased guidance.
• You have no honest explanation as to why you are better or more efficient than traditional providers.

If ethics and morality don’t drive you then maybe fear will.  Keep your eye on the trial of Elizabeth Holmes, the former Theranos CEO and human emetic. Some things get the public, regulators and prosecutors very upset - like fake blood tests. Another is taking financial advantage of people that don’t have much in the first place. Fintech has lost its charm with regulators and false claims and fakery are coming under more scrutiny with increasing chances of prosecution. Fintech needs to get its house in order, or all participants will suffer reputational damage and increased regulatory oversight because of a few fintech companies claiming to help people when they are not.