Press likes writing about how banks will lose their power on account of the thread of Fintech startups. Long articles are dedicated to forecast the future of the financial services industry that in addition to a strong regulation, new comers can steal a big part of the pie. Bets can start… some will back small David (fintechs) and others would prefer Goliath (banks). Who can be the winner?
The winner is the consumer!
The mantra of any successful startup is “the consumer is the king”. Startups solve problems that the consumer suffers or create solutions that make him better off. Let’s be realistic, today none of us feels entirely satisfied with the products offered by our banks. By ignorance or risk averse, some clients remain stuck with banks that prioritize reaching financial goals at the end of the month instead of the goodwill of the client. For the year 2015, two of the biggest banks in Brazil presented records in profits. This is ironic in a country with a deteriorated economic situation where growth is negative and unemployment increases. In fact, banks earn more money when the client doesn’t know what is contracting or simply do not understand.
To counterattack this situation, Fintech startups can play a key role empowering the consumer.
I do believe in social entrepreneurship model and its impact in our society. If you think carefully, a Fintech startup can also be considered as a social enterprise. According to the Brazilian central bank, 40% of the financial active population is unbanked in Brazil. Fintech startups, with their technology and mobility, can definitively target this market and boost the financial inclusion within the country. In all Latin America the problem is very similar opening the path to startups to attend this forgotten market. Fintech startups build social commitment when increasing access to financial services. On the other hand, Fintechs also create social impact with the “banked” people playing the “transparency” card. Usually, they offer a service that is easily understood and controlled by the client. Products or services are very similar to the ones offered by a bank except that clients pay less fees in most cases. According to Let’s Talk Payment publication, it already exists startups enabled to substitute any service of the banking value chain. In other words, Fintech startups represent choice, new alternatives that release the consumer from the monopoly of banks. With the agility of Fintech startups clients become trained and empowered vis a vis of financial products. Indeed, the Fintech ecosystem has the power to evolve society. Thus, Fintech innovations should be advertised as something that anyone and everyone can benefit from.
In Latin America, I had the opportunity to attend a conference where Thiago Alvarez, one of the founders of GuiaBolso (Brazil), presented the history of how GuiaBolso was created. During his speech, he insisted in the purpose of the company to improve the financial health of the Brazilian population. GuiaBolso is a Personal Financial Management (PFM) platform that automates budgeting and guides financial decision-making through an application. Knowing that Brazilian population struggles understanding and managing its monthly budget, GuiaBolso launches a tool that provides advice to control and save some money. GuiaBolso has become one of the most famous applications downloaded in Android and Apple in Brazil. Making Brazilians savvier with their expenses is one of the main messages of GuiaBolso and one key of their success too because the goodwill of the clients is showed above all.
More Fintechs should follow the example of GuiaBolso and communicate more about the purpose/values of the company and the benefits that they are creating for the users. Banks should not be the worries of the Fintech, but the users.
As a Fintech founder, as an influencer or as an user, our mission is to raise awareness about Fintech startups to reach a bigger audience. Target market should not be limited to millennials or financial/tech specialists. Fintech startups represent a real option to improve money management and that is the problem of any human being.