By Mike Peplow, CEO at Paynetics

The UK has found itself on the brink of another recession, it’s been 15 years since the last one and the news is hitting consumers hard. Banks are finding themselves on the back foot as, now more than ever, consumers are ready to move their finances elsewhere in order to find financial institutions with products that will meet their changing needs.

With this in mind, we must ask ourselves how fintechs led the banks to re-engage with consumers after the 2008 financial recession, and can they do this once again?

In 2021, Accenture found that two-thirds (63%) of consumers are looking to introduce more sustainable products and services across all aspects of their life, including their financial institutions. With social impact and responsibility being increasingly important to consumers, should all fintechs consider being a ‘force for good’?

How do we define ‘doing good’ in the fintech world?

Typically we can assume a fintech has a few specific characteristics, including agility, ability

to adapt, a focus on collaboration, and an interest in challenging the status quo. Fintechs are

often set up to focus on the individual instead of being ‘one for all’. Having all of these

attributes usually means they’re ‘good’ at being a fintech, and potentially a fintech that can

do ‘good’ too.

It has been found that over half of consumers are more likely to buy financial products from

providers who demonstrate sustainable values. Therefore, fintechs that are ready and

willing to demonstrate sustainable, ethical and purposeful products with an end goal

greater than just profit will align with consumers wants, and be more attractive to the

current market.

Being purposeful and profitable

Putting purpose over profits requires fintechs to have some social purpose other than

making money and just being a ‘good’ fintech and we know that consumers are now

actively looking for this purpose when choosing their financial institution.

At the same time, modern consumers value experience over things and wish for fintechs to

be more people-centric. Fintechs often create competitive advantage by being able to tailor

offerings for niche markets. Consumers appreciate the personal approach, feel like they’re

supporting positive change, and are increasingly looking for companies that align better

with their values. If another financial institution does this in a better way, they won’t hesitate

to switch providers.

In short, Fintech’s prosper by offering services and a way of delivering those services that

is attractive to its target customer therefore out performing its competitors that offer a more

generalised proposition.

Fintech front runners

Fintechs tailor an offering to meet a customer’s financial needs, and some have already

started to make a wider difference.

A current example of a fintech setup with more than just money in mind is Sibstar. Their app

and card are designed to help you manage your money day to day. The extra support

provided enables those living with dementia to maintain their financial independence, whilst

giving those around them peace of mind. Not only is this a financial service but also

supports an underserved community who needs help with their money.

Paynetics are also part of this group. Recently, with Phyre, we have developed a mobile

payment application for IOS and Android that allows charitable organisations to easily

deliver funds to those displaced as a result of the Russian invasion of Ukraine.

Fintechs are also already known for promoting financial inclusion via services like buy now

pay later (BNPL). The short-term financing opens up lines of credit for those who wouldn’t

ordinarily be able to access it. Having access to credit, allows consumers to build up their

credit score and become eligible for more traditional types of finance. BNPL needs to be

brought under regulatory supervision to better protect users however, what cannot be

denied is that BNPL has made access to short term, affordable credit a lot more accessible.

When is a fintech truly a force for good?

We know what makes a ‘good’ fintech, but a fintech that is a force for good needs to be

reaching wider than the immediate financial communities needs. Fintechs can be innovative

in their approaches and therefore have the ability and potential to help people in need.

We’re already seeing examples of this where fintechs have encouraged financial inclusion,

launched sustainability initiatives and helped customers in times of crisis.

There is a “double whammy” here! I would argue that fintechs just being fintechs has

had a hugely beneficial impact. By coming into the market with new products and services

fintechs have caused the large banks to react with new ways of working, improved customer care and a much faster approach to new product introduction. Even the largest

bank wants to be seen as fintech!

The future fintech landscape

We’ve seen many fintechs already start to showcase their ability to make financial products that don’t just revolve around money, but are designed to serve a greater purpose for the wider community. This will soon be the norm, as fintechs search for innovative approaches in order to stay competitive.

Purpose and profit in unison will be front of mind for banks and fintechs. Focusing on customers and their needs and wants has never been more important. Any organisation losing this focus will risk seeing a growing number of consumers move to providers who can better align to their values.