This post originally appeared on the Forbes Finance Council
Even though they pretend to be, most fintech products aren’t built for the vast majority of Americans. Take, for example, the (fictional, but relatable) Miller family. In terms of everyday finance, the Millers are doing the best they can. With their annual pay hovering (and fluctuating) around the U.S. median at $61,000 a year, they manage to follow the 50/30/20 rule for budgeting for necessities/wants/goals religiously. They live frugally, clip coupons, and save for the future as much as they can.
Still, like many families, they don’t own stocks or other major investments. They rent their apartment but are saving for a down payment. Each adult in the home has a college degree that came with debt they’ll be paying off for years. They aren’t what anyone would call “comfortable.” An emergency trip to the doctor or even a car tow could set their dreams back months.
There are few financial struggles the Millers haven’t encountered and don’t understand. They know all the tricks to make their life work, and follow every rule the world tells them will deliver the American Dream. If you ask, they will tell you in great detail exactly what financial tools they would need to help them get ahead. The biggest would probably be time.
If they could drop everything and build a fintech product, their lived experience would be invaluable — not only in establishing the mission of their company, but in the development of a product that truly addresses the struggles of millions. We need more people like the Millers in fintech.
What I’m about to say applies across much of the startup world: Most people able to start or join tech companies enjoy far more economic privileges than the average American.
If you want to live in a major tech hub and pay the tech hub cost of living, it helps if you have the privilege of a financial cushion. If you want to take extra stock for a smaller salary for a couple years, that same privilege allows you to do so. Tech companies also tend to favor candidates who’ve graduated from “top tier” universities, access to which is unevenly distributed. There are certainly people who break this trend — those who work remotely from a less expensive part of the country, or teach themselves the coding skills to work at a Silicon Valley giant. But these folks are the exception, not the rule.
This means that, broadly speaking, the lives of people behind “life-changing” tech don’t look much like the Miller family. They’re far more privileged. And for fintech products ostensibly built to help people like the Millers, that privilege can cause significant blind spots. For example, many of the products that result are too heavily focused on stock investments, which cater to people with fewer immediate financial needs.
Most make the common mistake of requiring a lot of manual work to have any meaningful impact on a person’s life. They don’t have meaningful impact because people who need them the most are already overloaded (from both a time and cognitive energy perspective) trying to make ends meet. These are the folks working several jobs, dealing with crappy commutes because they can’t afford to live in metro areas, dabbling in gig-economy work, figuring out which bills are (and aren’t) going to get paid this month and budgeting down to the nickel. Adding more work on top of that mountain just isn’t an option.
The worst services in fintech, the all-too-common predators, are fully aware of their users’ fears and desperate needs. Unfortunately, they use that knowledge to take advantage and lock them into a cycle of reliance.
In all honesty, no one has a perfect solution for addressing inequality of opportunity or economic privilege. However, those of us working in, or even building, fintech businesses can take a few critical steps:
If your product is meant to help people who are struggling financially, everyone must first acknowledge that we all have blind spots. The top question on your minds must be, “Who can help me find my blind spots?”
Hiring processes that over-index on education, previous employment, or even “culture fit” as identifiers of quality candidates are likely to create larger blind spots for everyone internally. Diversity of backgrounds, diversity of ideas, and an environment that not just welcomes but actively engages diversity are critical to fintech success.
The world of tech tends to be one of “launch fast, iterate fast, fail fast.” In the real world, particularly in finance, you need to allow your products time to have a real impact and allow your team to collect real feedback from many different viewpoints. No one’s financial life (outside Silicon Valley) gets dramatically better overnight because of an app. These things take time, and the privileged bubble of tech tends not to have the patience.
In my own experience, this has been one of the most important challenges facing Even. Our success or failure as a team and product will be directly tied to our ability to identify and address these blind spots caused by privilege. If you work in fintech, the same is likely true for you.
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