We know fintech is making it easier for consumers as a whole to get access to different types of financial services. Despite the innovation and disruption of the past decade, there still remains a significant cohort of the population that's dramatically underserved by financial services.
This issue was addressed Nov. 19 at the fifth annual Benzinga Global Fintech Awards, by a panel titled “Financial Wellness for the Underserved.” Sponsored by Envestnet | Yodlee, the panel featured Jean Donnelly, executive director, FinTech Sandbox Partners; Dara Tarkowski, managing partner, Actuate Law; and Eric Jamison, vice president of solutions consulting at Envestnet | Yodlee.
Each participant was asked by moderator Jason Henrichs, founder of FinTech Forge, what the biggest hurdles fintech companies face when it comes to reaching underserved consumers, and what needs to change structurally in the way the market works if we’re going to try and change financial wellness and inclusion.
Here’s what each panelist had to say.
Eric Jamison, Envestnet | Yodlee
Jamison said getting financial advisors to better serve underserved consumers will come down to providing data that makes it easier to engage with the unbanked and underbanked.
“In terms of how those worlds have intersected, it's really that marriage of all of the different transactional and personal information for a consumer, and sharing that information with an advisor. That’s where the rubber meets the road from an Envestnet perspective," Jamison said.
“When you start to think about the types of data that we have, we have 22,000 sources of data every day...being able to expose the companies that we work with to see their customers transacting with startups and different types of banks...you start to see how companies are starting to think differently of how they grow their pot."
Jamison said there are plenty of consumers out there unable to reach with some of their core products, "so they’re starting to think of other products they can offer and a lot of them are starting to leverage alternative sources of data to do that.”
Dara Tarkowski, Actuate Law
“From my perspective, because the regulatory framework in this country is so fragmented...that makes things very difficult and very expensive. For me, if we want to encourage that sort of innovation, a model much closer to the UK and what the [Financial Conduct Authority] is doing would be a much more hospitable environment because there is so much talent and so much opportunity here to do that.”
Tarkowski pointed to Apple Inc.'s (NASDAQ: AAPL) Apple Card and UnitedHealth’s (NYSE: UNH) Optum, both of which have recently come under fire from the New York Department of Financial Services for having allegedly racially discriminatory algorithms
“So the issues surrounding how the algorithms are built, what data is fed into them, how those factors are being weighted is now squarely in the crosshairs of the country’s most aggressive state financial regulator right now. So in my personal opinion... I would suspect there will be rules and regulations about the way those algorithms have to either be tested in advance. You cannot say ‘The machine did it and we don’t know how it happened’, because from a regulatory standpoint that is not going to cut it.”
Jean Donnelly, FinTech Sandbox Partners
Donnelly said she’s beginning to see more companies wanting to invest specifically in underserved markets, in part because it makes sense for their business.
“There tends to be a disconnect between people who focus on the capital markets world and people who focus on underserved markets—and I think that is starting to go away. I think that’s the type of disconnect that is the first part of realizing what the impact [underserved consumers] can have to the capital markets arena," she said.
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