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Saturday, March 24, 2018

Alex Letts
Opinion > U Account

Fintech as a force for good

Alex Letts, founder and chief unbanking officer of U | 4:57 Wednesday 21st February 2018

The big news around fintech focuses on the many ways it is already making financial services more profitable, more scalable, more secure and more user-friendly.

But, what’s happening now is not just about making the successful more successful, it’s also about bringing the promise of tech to a much wider demographic to deliver a greater good.

You see, fintech is not just about streamlining capitalism. It is also changing the possibilities for financial empowerment, financial improvement and financial de-stressing for millions and millions of people globally, not just in developing nations, but much closer to home, here in the UK.

Shout it out: people in fintech are actively playing a role in improving society.

There is a powerful subplot to fintech that is overlooked because, possibly, it’s not seen as quite so important. But it’s a story we know about, so I can tell this one with confidence; it’s just one of many.

According to the Office for National Statistics (ONS), around 14 million UK households are subsisting on a weekly income that’s lower than the national average. That taxed income needs to cover rent, utilities, food and everyday living costs. While it may seem an edge case to many in fintech, this constitutes half of UK households.

For this ‘forgotten UK’, the bus fare, the price of milk and all the day-to-day expenditures that the wealthier take for granted are very material indeed. It really matters if they become accidentally overdrawn and face unbudgeted bank charges; it often means a choice of either ‘eating or heating’ over the weekend. Saving for the kids’ school trips is a recurring challenge.

Thank goodness for technology; it naturally democratises. Technology reaches these people’s lives and they greatly benefit. So, while a low-income family might have previously budgeted for a door-step loan during the holidays and paid it back during term time – often using an envelope-filing system – they can now use their smartphones, not just to get a wider choice of pricing on loans, but also to manage how they make the repayments from modern, non-judgemental current accounts that don’t mind if you are rich or poor or what your credit history says. Electronic budgeting is, of course, not about sushi and lattes, but more about the difference between beans on toast or going out for a burger.

“But,” I hear you say, “do small improvements like this really help change society?” On their own? No, of course not. But when you add together the many small steps we’re taking in tech, the new apps and new providers all contributing incrementally, the effect is a barely noticed, but nonetheless quantum, shift. You see a gradual move away from randomly distributed DIY methodologies for managing finances, towards a ubiquitous accessibility to terrific digital solutions for those who were previously forgotten.

And that really is the miracle of fintech.

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