The fintech industry has faced criticism in recent years for straying away from its original values of empowerment, access, transparency, and efficiency. This is concerning because fintech has the potential to address significant challenges such as capital aggregation, financial inclusion, social mobility, and stability in the financial system. However, there is hope for the industry to regain trust and deliver on its promises. Fintech innovators and investors can pivot towards applications that mitigate the impact of inflation and financial uncertainty, provide financial education, and offer services that alleviate financial stress for workers.
Cryptocurrencies and blockchain, which were designed to provide transparency and trust in financial transactions, suffered reputational damage from companies like FTX that subvert these ideals. Similarly, the term “social finance” is now more commonly associated with Reddit traders, Robinhood, and the GameStop short squeeze, rather than financial empowerment. Fintech founders also receive little recognition for their contributions in increasing the number of young people opening retirement accounts. These incidents have made it difficult for fintechs to obtain bank charters, showing the need for the industry to reestablish its reputation.
To regain trust and fulfill its potential, the fintech industry can focus on applications that combat inflation and financial uncertainty. For example, Buy Now, Pay Later (BNPL) services can be improved to enable consumers to save for purchases and earn higher interest rates on their saved money. Fintechs can also prioritize financial education and literacy, as empowerment without education can do more harm than good. By offering incentives and gamified-learning platforms, fintechs can make financial education more accessible and rewarding. Additionally, fintech-driven services can ease financial stress for workers by providing user-friendly HR systems and financial management tools, as well as offering affordable banking options and on-demand payment for hours worked.
In conclusion, the fintech industry has the opportunity to realign with its core values and regain trust by focusing on applications that address inflation, improve financial education, and alleviate financial stress for workers. By doing so, fintech can deliver on its promise to empower individuals, promote financial inclusion, and bring stability to the financial system. It is crucial for the industry to embrace this economic moment and prioritize the needs of individuals and society as a whole.
