Take inspiration from these exciting new startups that are shaking up the fintech sector.
If there is one thing the digital economy hasn’t changed, it’s money. And more specifically, the fact that people always need help managing it, whether they’re wealthy and have lots of it to manage, or are just getting by. However, where we once headed to the local bank branch or hired a financial adviser to help us sort out our money woes, we now have a slew of apps and workarounds that can guide us.
In fact, fintech has in many cases proved better at helping consumers manage their finances than the conventional banking structures. This is particularly true when it comes to millennials, known for eschewing traditional structures and institutions in favour of digital-driven workarounds. And when it comes to personal finance, debt management, student loans, remittances and the like, there is no shortage of startups being founded to help millennials manage their pocket books and bank accounts.
As TechCrunch reports, “As a category, fintech has more than 60 million users. Many startups are focusing on millennials; with 60 percent thinking big banks are not designed to serve their generation, it is not surprising that 73 percent are more likely to be excited by a new financial service from a tech company than a nationwide bank. Simplicity, transparency and consumer-focused experiences are key.”
Offering financial services that are more accessible, customisable, and built less on traditional structures has never been more possible, and over the past few years, governments have been struggling to keep apace with fintech’s growth. While there those who say that pending regulation from governments will make it harder for startups to offer this as easily, the past few years have been seen a major growth spurt in the offering. Here is a look at some of the leading startups that are catering to serve millennial personal finance needs in a way that traditional financial institutions have failed to do.
Lending Club: When it comes to needing a loan, millennials are far more likely to go the peer-to-peer route offered by a service like Lending Club, which offers people loans based on their future earning potential and specific financial needs. Though it has recently suffered some setbacks, it has changed the lending process by taking away the unclear and intentionally complicated underwriting process and exorbitant fees by offering a more real-world option.
Transferwise: The London-based startup has revolutionised how we send money overseas or transfer money among international bank accounts, something internationally inclined millennials are more likely to do. Gone are exorbitant bank fees and waiting weeks for payments to clear, Transferwise uses a peer-to-peer model to keep funds inside borders and subvert banks entirely.
Venmo: The domestic money transfer app Venmo, based in the US, has removed the need for cheques and cash when you owe someone money. Lagging behind the rest of the world in direct bank to bank transfers, US banks still don’t offer a service to pay back a friend directly from a bank account at the click of a button. Venmo has fulfilled that need, and millennials have taken up the habit with enthusiasm.
Earnest: One of the biggest financial hurdles for millennials is student debt. Totaling $1.3 trillion, it is the second highest of any consumer debt category. According to TechCrunch, the “average student leaves college with $25,000 worth of student loans and ends up having to service these loans till they are well into their thirties”. Earnest is designed to help students structure their payback plan in a way that is aligned with their future earning potential. It also doesn’t take credit scores into account in the underwriting process, a move that’s designed for millennials.