Savings & Personal Financial Management: Building resilience for the financially underserved
Much like insurtechs, fintechs offering savings and personal financial management services are a small but important cohort within inclusive fintech. Just 73 of the 400 eligible applicants (18 percent) to Inclusive Fintech 50 were categorized as “Savings & Personal Financial Management” startups. Not only did fewer of these fintechs apply, but they captured just 9 percent of the combined customer base of the applicant pool. This could reflect the fact that many of the applicants in this category operate in upper middle-income countries, which tend to have smaller populations of financially underserved people than lower middle-income countries. Still, with growing interest in products and services that enable low-income and other underserved segments to improve financial health, these fintechs are well positioned to continue to deepen and expand their impact.
One aspect of financial management addressed by the winners in this category is managing personal debt. Technology, often in the form of algorithms and automation, is enabling companies to deliver personalized financial advice at lower costs while preserving the quality. For example, after assessing an individual’s financial situation, Resolve presents the most appropriate options for debt relief and then connects users to advisors who continue to support them on their path to financial health. But even after debts have been settled, many people must deal with the consequences of a sub-prime credit score. To tackle this all-too-common predicament, Self Lender offers a small-dollar, CD-secured installment loan that, through its repayments, improves the credit standing of its borrowers over time.
Another aspect addressed by the winners focuses on financial planning, wherein the innovation often lies in cashflow tracking. Frollo tracks personal expenditures and then uses behavioral nudges to incentivize incremental improvements across five performance areas: reduction of spending, management of debts, increase in savings, management of discretionary income and generation of wealth. Edquity’s cashflow management platform, meanwhile, is tailored to university students who are susceptible to dropping out due to gaps in financing. The platform not only flags potential issues before they arise, but links undergraduates to emergency resource referral programs and emergency aid in the case of a financial breakdown.
Other winners in the Savings & Personal Financial Management category are delivering a variety of solutions tailored for financially underserved segments. People’s Pension Trust, provides trustee services for the Ghanaian workforce, particularly those in the informal sector. Pensioners, many of whom are sourced in collaboration with the Union for Informal Workers, can register through a USSD menu and contribute towards their pensions through mobile money. Blockbonds, meanwhile, has enabled universal branchless mobile banking through blockchain and its SPENN architecture. A partner bank is first granted access to the SPENN infrastructure; the money that is in circulation between the different mobile deposit accounts in the SPENN system is then pooled and placed into a float account with the bank partner, who can generate a return on the capital. Similarly, Tez Financial Services too is investing in its own holistic ecosystem. As Pakistan’s first-to-market neobank, it has already inaugurated its mobile nano-credit product while its community-led savings product and a micro-investing product are in the pipeline. To better serve remote and unbanked communities, Tez Financial Services has struck deals with EasyPaisa, UBL Omni and SimSim to create a large branchless banking agent network and presence.
As a result of innovation, creative thinking, and strategic partnerships, the winners of Inclusive Fintech 50 are providing valuable services to help build resilience for the financially underserved around the world.
Inclusive Fintech 50 is funded by MetLife Foundation and Visa Inc. with support from Accion and IFC. Click here to see the full list of winners across categories.