What needs do customers and students face that fintech could potentially meet?
Consumer fintech, or financial products and services that leverage technology (particularly digital or mobile technology), are becoming increasingly popular for financial advisors and educators to incorporate into their practice as companies and products rapidly change, merge, and disappear. It can be difficult. But that’s not a good enough reason to ignore them completely.
According to a recent NerdWallet survey, the majority of Americans (83%) say they “spend” at least occasionally. This includes 84% of those surveyed who said they set a monthly budget but at some point spent more than planned. We know that budgeting is not the solution to financial woes, and no technology can solve all our clients’ problems. However, financial apps ease the burden of money management, allowing clients to work towards their life goals without worrying about money all the time.
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Consider the following questions in your practice to guide your clients on the smooth adoption of useful fintech tools.
1. What are their financial needs?
Always start with the client’s needs in mind.
A new tool you discover is so interesting that you might want to promote it (as I often do). Alternatively, you may be in a position to earn affiliate income or sponsorships by driving users to your app. Always consider your client’s needs and circumstances before recommending tools that may encourage behavior that could damage your relationship with money.
For example, a spending tracking app like Mint might help some clients feel in control of their finances, but having their financials constantly tracked and measured could help others. It can be more frustrating for clients. For the latter, a simple digital cash envelope bank account like Qube Money might be a better choice.
2. What is your comfort level with technology?
Some people are hesitant about fintech apps and online banking because they are new to digital and mobile technology in general. You can’t point apps to these clients and leave them alone.
In a project by the National Association for Latino Community Asset Builders and coaching resource platform Change Machine, practitioners point to age as an important factor in fintech adoption. But they also pointed out that coaching, influence from close relationships, and visual instruction were major factors. Therefore, you have the opportunity to guide reluctant clients to fintech adoption. All you need to do is provide the support and education you need to get comfortable on your new platform.
Think like a coach and help guide your clients to the right app for them. For example, financial management app Cleo may be clearly marketed to Gen Z customers, but its AI chat feature makes it easier for people who are already familiar with texting and chat technology to manage budgets and budgets. The app could actually be easier to use for older customers who have never used admin etc. No banking apps yet.
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3. Do they trust financial institutions?
The NALCAB/Change Machine project also found trust to be a key factor in fintech adoption. Many people, especially those traditionally underserved by the financial industry, are skeptical of financial institutions and reluctant to hand over control of their information and funds.
When in doubt, talk to your customers about their experiences with financial institutions. Have they felt served and supported in the past? Are financial services available in their preferred language? It’s an app.
4. Does the technology contain client identities?
Like many technologies, fintechs are often created and run by wealthy white men. The technology is powerful, but the exclusivity of decision makers can leave holes in its capabilities and understanding of users’ needs.
We explore options with our clients to understand which fintech features will benefit them and whether they feel the tools we share are representative of them.
Change Machine has developed a Seal of Inclusivity to help advisors determine whether a product or service is impartial. You can use that criteria to scrutinize fintech yourself.
- It is inclusive and accessible, including people with poor banking history, low access to technology, Android smartphones (or no smartphones), no bank accounts, no computers, etc. is it easy?
- Are your fees and minimum deposits, balances, or investments low (or zero)?
- Are companies transparent about how they make money and how they use customer data?
- Does the company provide easy access to customer support to ask questions, dispute fees, and manage transactions?
- Does your app prioritize user financial interests and security over engagement?
For example, regarding the last point, micro-investment apps that encourage regular trading with small investments can lead customers to greater risk than the situation requires. In contrast, the community finance app SoLo (which I personally use) serves users with small investments without encouraging risky stock trading (equity and inclusiveness). It also satisfies additional goals).
Don’t be afraid of fintech
Even if you are not an early or active adopter of technology yourself, remember that this technology has value for your clients and students. Listen to their questions and financial needs, and work with them to find and scrutinize fintech tools that make their lives easier.
The information provided here is not investment, tax or financial advice. For advice regarding your specific situation, you should consult a qualified professional.