For Financial Peace of Mind, Look No Further Than Your iPhone
WHY YOU SHOULD CARE
Because technology can make all aspects of your life easier, including your finances.
By Christine Stoddard
OZY and JPMorgan Chase have partnered to take a deeper look at how businesses can impact society for the better. Enjoy the rest of our special series here.
Fintech is not some new kind of fitness wearable. And despite popular belief, fintech — short for financial technology — is not the same as blockchain. Though some fintech products do support various cryptocurrencies, there’s much more to it. And most notably, it’s helping level the playing field for anyone who wants to improve their financial health.
Andrew Wu, assistant professor of technology and operations and finance at the University of Michigan’s Ross School of Business, is quick to point out just how much the term “fintech” can encompass.
“With all the buzz around blockchain, it’s easy to forget that the finance industry has been in a continuous state of technology transformation ever since its inception,” says Wu. “[Financial] technologies, such as mobile payments, online lending, automated wealth advisory and machine learning/big data, are significantly transforming our way of exchanging capital.”
So with all the change and transformation brought on by fintech, how are financial institutions keeping up? Adam Carson, Managing Director and Head of Digital Partnerships at JPMorgan Chase, can help explain. A symbiotic relationship appears to be forming between fintech startups and banks. Specifically, Carson sees two “flavors” of fintech: one that disrupts and another that enables. The latter, he says, works by selling “products and services to big banks so they can compete.” And the reason for doing so is because big banks bring two key things to the table: scale and expertise.
Gregory La Blanc, lecturer in finance, strategy, and law at University of California, Berkeley’s Haas School of Business, helps explain why these two groups need each other: “While fintech startups are more agile and less encumbered by legacy technology, [big banks] have enormous amounts of data and can use that data to make better decisions — not just financial decisions but also marketing and personnel decisions.”
To put this data into perspective:
In 2017, JPMorgan Chase had almost 50 million digital users — an impressive number considering the entire state of California has 39 million people.
In addition to harnessing data, another new trend taking shape between fintech and financial institutions is the automation of services. “[Fintech] can automate investing so you don’t have to think about it, worry about it or trust one single person. You can trust an algorithm to do this efficiently and at a low cost,” says Carson.
And investing isn’t the only area where fintech is making an impact. Consumers can reap the same efficiency and cost benefits for things like managing spending, contributing toward savings and eliminating debt.
A good example of this is a new app called Goalsetter. Goalsetter, created by Tanya Van Court (a New York City mother and former marketing executive at Discovery), is a goal-based savings and gifting platform that lets kids and families redirect money typically spent on excess consumer goods towards three big categories: saving for the future, sharing with others and spending on things or experiences that matter most to them. The app allows family and friends to give kids GoalCards — digital gift cards that give real money towards kids’ dreams — and also has features that enable parents to auto-save for their kids’ goals and “cash out” once a goal is met. Van Court’s app was among the winners of the Financial Solutions Lab (Lab) Challenge, a five-year initiative sponsored by JPMorgan Chase to help encourage financially healthy individuals, and increase stability and resiliency across diverse communities.
The Lab is managed by the Center for Financial Services Innovation (CFSI) and seeks to identify, test and bring to scale promising fintech innovations that can help improve financial health across the U.S. Each winning organization receives $250,000 and guidance from members of the Lab advisory council, which include individuals from IDEO.org, Google and JPMorgan Chase.
Goalsetter, and other Lab winners, are the types of creative automations that Carson believes can improve a variety of customers’ financial health. “This whole account aggregation is enabling innovation on top of the traditional banking system,” says Carson. In his view, these innovative technologies are making it easier for those already in the banking system, while enticing those in under-banked populations to enter the system and access the tools they need.
“JPMorgan Chase is extremely proud of our partnership with CFSI and the Financial Solutions Lab,” Carson says. “It gives us a really great opportunity to help fund companies that are serving the under- and un-banked and also companies that are really focused on improving the financial wellness of Americans.”
From mobile apps to cashless payments to real-time risk assessments, banks have been well suited to keep pace with — and even anticipate — technology’s impact across all markets and industries. And lucky for consumers, this collaboration between finance and technology is making the ability to store, lend and facilitate money a lot easier and a lot safer. Fintech is empowering us not only to bank, but to completely rethink our financial well-being.
- Christine Stoddard, OZY Author Contact Christine Stoddard