Around the world, fintech startups are busily disrupting the financial industry. The companies, which apply technology to improve financial activities, are targeting everything from retail investing to mobile payments. But one growing sub-sector of the market is focused on more than profits. Under the general heading of "fintech for good", they're applying digital technology to address the needs of under-served, low-income or unbanked populations. Here's a look at three of them.
More efficient food stamps
Jimmy Chen grew up in a home where, he says, "We sometimes had trouble putting food on the table." So, when he left his job as a product manager at Facebook in 2014, he was determined to launch a tech startup that could help low-income Americans. After some research, he zeroed in on his market: the approximately 45 million Americans receiving Supplemental Nutrition Assistance Program (SNAP) benefits, otherwise known as food stamps. Specifically, his New York City-based startup, named Propel, would create an app with which families could tap their benefits more efficiently.
In the summer of 2014, Chen moved to New York City, where he had landed a fellowship at Blue Ridge Labs@Robin Hood, an incubator. When he started interviewing people about using the Electronic Benefits Transfer Card, or EBT, the card with which food stamp recipients can tap their benefits, he made a discovery: The process of tracking just how much they had left in their balance for the month was time-consuming and cumbersome.
With that in mind, Chen took the first step: building a simple app that showed recipients their balance for the month. Then, he added a way to find nearby grocery stores and famers markets that accepted EBT cards. He also built in a shopping list, with which users could buy food and stay within their budget. Plus he introduced low-cost, high-nutrition recipes. Most recently, through a partnership with a digital promotions company, he added access to discount coupons.
Total number of active users to date: 1 million.
A cross-border credit bureau
Most immigrants who come to the United States have a tough time getting access to credit. And that hurts their ability to do everything from rent an apartment to get a credit card. That's why, two years ago, three immigrants and fellow Stanford University graduate school comrades launched Nova Credit, which aims to create a cross-border credit bureau. "We've created a global standard for building a financial identity," says co-founder Loek Jannsen, who is originally from the Netherlands.
The co-founders started working on their startup while enrolled at Stanford's famed Lean Launchpad class. There, they realized there was no standardized, credible way for immigrants to demonstrate their credit worthiness. When they graduated in 2016, they spent the summer at Y Combinator, the accelerator, where they refined the complicated technology they needed to make their mission happen.
How does it work? The platform, which is integrated into credit reporting agency systems around the world, receives financial data and then sends it in a standardized format to U.S. lenders, property managers and others that need to assess an immigrant's credit standing. The information is displayed in a consistent form on a dashboard, regardless of the country of origin,. Also, the system provides a way for immigrants to input personal information and authorize appropriate agencies in their countries of origin to provide relevant data.
Now live in Mexico, India, the UK, and Canada, the company plans to launch the system in other countries soon.
Ensuring a steady cash flow
Lots of Americans live paycheck to paycheck. Even has an app that helps them, as well as others with a higher income level, solve cash flow problems easily and safely.
The app connects to subscribers' bank accounts, the better to track how much they spend and on which bills. Then it determines the amount of money they need to hold onto and what they can spend. (It doesn't actually pay the bills. Users have to do that themselves). That "okay to spend" amount includes their bank balance minus recurring bills, expenses and how much individuals need to save based on savings goals they've set. If, say, most of subscribers' bills are due at the end of the month, Even holds onto enough money from their wages earlier in the cycle to ensure they don't have to spend most of the next paycheck to cover all those previous charges.
There's also a feature called Instapay through which users who work for participating employers can get access to a portion of wages they've already earned before they receive the actual check. That amount is then deducted from their next paycheck.
For co-founder Jon Schlossberg, the gem of the idea came when he started researching the effect that poverty has on cortisol levels. He and fellow founder Qunten Farmer then came up with the basic concept for a business to help people worry less about how to make ends meet. More recently, they expanded the concept to help not just low-income populations, but higher-income earners, as well, address cash flow problems.
Recently, the San Francisco-based company announced a partnership with Walmart, through which the giant retailer will give its 1.4 million U.S. workers access to an Instapay service eight times a year.