Building a Fintech Platform to Support Universal Financial Guidance

Background and Purpose:

Disadvantaged populations are more likely to be excluded from mainstream financial products and services (FDIC, 2016; The World Bank, 2016), and from auxiliary financial guidance (i.e., financial education, training, counseling, and coaching provided by professionals) (European Savings Institute, 2016; Financial Advice Working Group, 2017; Sherraden et al., 2015). Lack of financial guidance negatively affects financial access, financial decision-making, and financial well-being, and disadvantaged populations facing difficult financial decisions have high demand for professional financial guidance (Sledge, 2011).

The innovation of financial technology, or FinTech (e.g., mobile banking, cashless payments, big data, blockchain, and artificial intelligence), shows its great potential to offer financial services to all people. However, to date, the market-driven adoption of FinTech pays little attention to financial guidance services for disadvantaged populations. This study examines how FinTech may shape a new digital platform for financial guidance to reach everyone. It discusses the key role of social workers in design and implementation of FinTech that safeguards and contributes to financial well-being in disadvantaged households.  

Methods:

This conceptual study first presents a theoretical framework of “digital financial platform” (Rodima-Taylor & Grimes, 2018) to summarize the development of FinTech, and defines its main functions. Second, using a case study approach, the study examines three FinTech examples: in the financial sector (the Revised Payment Service Directive and Open Banking; Kreger, 2017), the nonprofit sector (the Financial Clinic’s Change Machine; the Financial Clinic, 2017), and the public sector (the Moments of Life initiative of Smart Nation Singapore; Smart Nation Singapore, 2018). These three cases illustrate the potential for and features of each platform for financial guidance, and summarizes criteria for building a unified FinTech platform to support financial guidance for all.

Results:

These three cases of FinTech platforms are in different implementation phases (e.g., regulation stage, pilot demonstration, and early implementation), and all show a trend toward broad adoption. In addition, all three cases share common features, including: (1) creating a supporting ecosystem for targeted services (e.g., financial guidance); (2) streamlining multiple data sources in one place; (3) providing a variety of financial tools; (4) linking financial guidance to financial products (and potentially to social services); and (5) emphasizing safety, security, and transparency within the ecosystem. 

Conclusion:

The study suggests that a unified digital financial platform built on FinTech innovations has the potential to provide basic financial guidance to all. Furthermore, the study offers insights into establishing evaluation criteria for successful FinTech platforms.

FinTech platforms that support financial guidance for disadvantaged populations is highly relevant to social work practice; they not only affect clients’ financial wellbeing but also non-financial outcomes of importance to social workers, such as child development, family relations, and physical, mental, and behavioral health. The social work profession must engage in the development of a unified FinTech platform to support financial guidance for all. Social workers must be involved in design and implementation to ensure that vulnerable individuals have access to appropriate guidance on FinTech platforms, or alternatives when FinTech is not a viable strategy for financial guidance.