By Aliza Gutman, Financial Health Network
There’s no arguing that fintech has tremendous potential as a delivery channel for high-quality products and services to help consumers improve their financial health. Yet many fintech tools are still not designed with the needs of underserved consumers in mind.
In our just-published brief, we share what we learned when we conducted nearly 50 interviews with researchers, product owners and managers, as well as service providers from a range of companies and nonprofit organizations across the financial services industry. We found the following strategies that firms are pursuing to expand the appeal of their products:
1) Give consumers reasons to trust you.
Trust, security, and privacy are significant concerns — particularly among underserved communities — that can affect people’s willingness to adopt fintech products. Negative experiences, including identity theft, can quickly travel through social networks as cautionary tales.
So what can fintech providers do to alleviate these fears? Protect personal information. This extends to respecting consumer privacy, prioritizing data security, and communicating the steps you take to do so in ways that are transparent and understandable. Delivering these messages via trusted partners can also help. Volunteer financial coaches at Prepare+Prosper, a nonprofit that helps customers build assets and financial capability, often begin describing new apps to customers by highlighting security features (example: the ability to recoup funds if a phone is lost or stolen) to assuage data privacy and security concerns.
2) Strike the right balance among sometimes conflicting — though entirely human — desires.
There is tension between the desire for easy, automated solutions and the desire for control. While automation can provide superior solutions, it can also cause anxiety for users accustomed to manually managing their financial lives. One nonprofit practitioner observed that clients who use 2015 FinLab company Digit, a smart automated savings tool, save more than clients who do manual savings account transfers. However, the tool’s automation can worry some clients. One way to try to reduce anxiety and lower barriers for adoption is to explain features designed to mitigate perceived risks of automation. In Digit’s case, that might mean leading with a description of Digit’s overdraft refund policy or explaining that automatic transfers can be instantly paused with a text message so that clients remain in control.
Practitioners also observed a tension between the desire to be informed and in control, and an aversion to being overwhelmed with info or “constantly reminded that I’m poor.” For consumers who live paycheck to paycheck, for example, an app that sends alerts when account balances dip below a specific threshold may be frustrating, demoralizing, and/or patronizing. Yet being aware of available account balances can also be important for daily financial decision-making. This is an instance where positive, non-judgmental, and playful messaging — coupled with custom options that enable users to decide what is right for them — can help products strike the right balance for users.
3) Design for mobile usage patterns prevalent in financially struggling communities, including data plan interruption and phone sharing.
Access to data (and calling) plans can be limited or inconsistent among lower-income segments of the population, due to cost and affordability. One way to design for users who frequently experience service interruptions is to build offline functionality into apps. Finlab company Propel, a startup focused on serving the 47 million Americans who participate in the SNAP program (previously known as food stamps) deliberately designed their app, Fresh EBT, to work offline. It stores data, like a user’s most recent balance, on the phone; so while the app cannot update offline, a user can still see the last balance and other previously-downloaded data when the phone is not connected to the internet.
Sharing phones with friends and family is another behavior that is more commonly observed among lower-income consumers, according to some providers. Propel heard from SNAP recipients that it would be helpful to link multiple EBT cards to one phone, because many users were taking care of elderly family members, while others shared a phone across households. Propel adjusted the app to meet this need.
4) Allow for alternative ID and transaction mechanisms for people outside traditional systems.
Many fintech tools require users to have social security numbers, bank accounts, and/or credit cards. However, for the millions of people who do not, those requirements become barriers to access. Approximately 17 million adults in 10 million U.S. households do not have a bank account. Nearly a quarter of consumers do not have a credit card, a fraction that rises to 63% among younger adults, ages 18 to 35. While accurately estimating the number of U.S. residents without a social security number is challenging, the IRS has issued more than 21 million individual tax identification numbers (ITINs), since the program began in 1996, to enable those without social security numbers to file taxes.
The absence of traditional IDs and financial instruments can become barriers to access and adoption of fintech products and services if there are no alternative, user-friendly, digital options. However, companies like IDology and Jumio are facilitating digital account opening for underserved consumers by providing identity verification technology that accepts alternative IDs and leverages a variety of non-traditional data sources for verification purposes. Accepting prepaid debit cards, in addition to credit cards and traditional debit cards, is another way apps can expand the universe of potential users.
5) Build for our diverse population.
English-only apps can be hard to adopt for those who are more comfortable in another language. One in five U.S. consumers speaks a language other than English at home, and more than 38 million speak Spanish. Yet a surprising number of leading financial apps do not offer a Spanish language version. This competitive landscape, coupled with consumer demand, points to a terrific opportunity for fintech developers to differentiate themselves.
Health problems, such as diabetic retinopathy and chronic arthritis, have higher incidence among lower-income consumers and may impact their ability to use technology. Additionally, according to one estimate, 4.5 million Americans cannot afford eyeglasses, suggesting that lower-income consumers with impaired vision may not have the corrective lenses they need. Observing the vision challenges common among their customers, 2016 FinLab company Bee, which provides mobile-first debit accounts with its issuing bank CFSB, responded by incorporating large buttons with large touch targets in their app. This design choice also addressed challenges associated with arthritis, as larger buttons are easier to maneuver.
While these insights come from our research about how fintech does and does not work for the underserved, they also have the potential for more widespread appeal. One executive at KeyBank recalled several instances where research on underserved consumers uncovered feature ideas that, when tested with other customer segments, generated broad demand. This helped them craft the internal case to build those features, not only expanding the appeal of their products for underserved consumers, but making their products better and more functional for everyone. And isn’t that something we should all be working toward?
This research was funded by the W. K. Kellogg Foundation. Access the full brief here.