It’s all about accessibility: A growing number of startups are making technology for financial management and well-being available to individuals and small businesses that was previously only provided to the wealthy or big institutions.
Matt Zieger
That’s the big takeaway of a report about global accelerator Finance Forward, which focuses on tech-driven financial health startups. Village Capital introduced Finance Forward two years ago with partners MetLife Foundation and PayPal.
“It’s a pretty revolutionary change,” says Matt Zieger, chief program officer-Americas at Village Capital. “It 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 Global Financial Health Innovation, the findings focus on Latin America, the Middle East and North Africa, Europe, the United States and South Asia.
Fintech Subset
A subset of fintech innovation, the report defines financial health as a person’s “ability to feel comfortable with their financial present and future; their confidence in how to manage their money, get a loan at a fair rate to deal with an emergency or grow a business; and their ability to build wealth over time.”
The report breaks startups down into several categories: addressing personal or small-business lending with, for example, alternative lending products, access to capital or technology for handling debt; helping people build their savings, manage their wealth and plan for the future (think insuretech or proptech); assisting workers to tap opportunities to increase their income; and helping individuals pay for necessities and send money back and forth.
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In the U.S. , (24 companies), the report focuses on higher education financing, payroll tech and wealth management.
For example, Edquity’s technology helps colleges improve students’ financial security by increasing access to emergency resources and funding. “The same kind of systems that might have been made available to the college itself are being made directly available to the student,” says Zieger.
Cohort Winners
Home Lending Pal, one of the two winners of the U.S. 2020 cohort—it won a $45,000 grant—uses AI and block chain to let homebuyers research the lending market and get access to credit and other information that only lenders typically are privy to. The result: Borrowers can make better-informed decisions about specific lenders and find out how to improve their odds of getting approved.
“We can answer questions like, What is your likelihood for 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 will give you the highest chance of success,” says co-founder Bryan Young.
The other U.S. winner, Manifest, targets the less than 90% of individuals with 401(k)s who fail to transfer money from their previous employer to their current one, leaving a lot of money on the table. The platform takes care of rolling over their retirement money into a single account, a process that under other circumstances can involve a maze of paperwork and phone calls.
One attribute many financial health companies have in common: They typically work through a business, like an employer, to distribute their service, though the end-user is the consumer or employee.
