Across demographics and income levels, we’re seeing increased usage in fintech for peer-to-peer payments, borrowing, budgeting, credit monitoring, and more. It became clear to our team that fintech was here to stay and that these products and tools could play a pivotal role in helping people – particularly Black and Brown women – build financial security.
But with racism and sexism so hardwired in our society, we’ve also seen fintech amplify these inequities, thus exacerbating financial insecurity. Here are just a few examples:
- Buy Now, Pay Later Loans: According to a the CFPB, these loans appear to be a zero-risk credit option, but their report identified several risks of harm including inconsistent consumer protections and debt overextension.
- Earned/Early Wage Access: While getting access to wages early may seem like a win for people living paycheck to paycheck, EWA products often exacerbate the financial security problems they purport to solve through fee-stacking and other inequitable practices. Some of these tools even require users to share personal data like access to their location to “prove” wages have been earned.
- Investment Apps without Guardrails: Apps that don’t provide definitional explanations or supportive information could lead to a customer inadvertently invest their savings or income in a way that yields little to no return on investment, and even increases their financial vulnerability.
These examples illustrate that when we don’t design and develop fintech products with an equity framework, we’ll only magnify the social inequities present today. But in order to build products and tools that help build financial security, we need a framework to assess and recommend equitable fintech.
Our Seal of Inclusivity
To ensure that equity and financial security is being prioritized in the development, pricing, and marketing of new products, we need inclusivity and marketplace standards. When we couldn’t find an existing framework or rubric to meet our needs, we created our own – the Seal of Inclusivity (SOI).
To develop the SOI, we compared 15 product selection frameworks used in the financial security field — including those from the Cities for Financial Empowerment Fund, Financial Health Network, and Flourish. By identifying strengths and gaps in other models, and leaning on Change Machine’s history and expertise as practitioners, we extrapolated the following defining principles for our SOI.
Recommended products:
- Are inclusive and accessible: Products intentionally seek out underserved communities and are designed to serve low-income customers, for example, by removing barriers and increasing access to relevant financial security tools and resources.
- Are fairly priced, with low fees and flexible payment models, and provide an equal value exchange. Their models are unlikely to have a disparate downstream impact that results in negative effects on financial outcomes.
- Offer customers safety, transparency, and control over their data, with clear consent agreements and terms of use. People understand how and for what purpose their data is used, and are aware of whether the company derives profit through the use of that data.
- Build financial security: Services and products are geared towards individuals’ real-world needs and daily financial lives; products can demonstrate that they materially impact and improve financial security of the populations they serve.
Applying the SOI to Create a Recommendation Engine
With our SOI established, we are able to use it to vet fintech products and determine if they meet these standards for equitable fintech. Those that do are added to our Recommendation Engine which allows practitioners to introduce their clients to fintech products that can help build financial security.
The tools included in our Recommendation Engine always go through this vetting process. There is no pay-to-play or opportunity to “skip the line” for immediate inclusion. Most of the products you find in our recommendation engine were introduced to us by satisfied customers or nonprofit practitioners who saw the benefits of using a specific tool.
In many cases, the recommendation engine includes multiple tools that address similar challenges or help people work towards similar goals. We believe Change Machine’s role is to surface products that reduce consumer harm and maximize financial security, not to rank equitable products against one another. But we do encourage clients and consumers to weigh in on the value of the products they’ve used through online reviews.
In addition to only recommending tools that meet our rigorous standards, we also communicate these expectations to the practitioners who use our platform:
- Customers are under no obligation to use or not use any product recommended to them by their coaches;
- No product or service is going to be the right fit for every customer – customer needs and opportunities are unique;
- Use of products should support customers in taking steps to achieve their financial goals; and
- Fintech products and services are not a substitute for financial coaching, but can improve coaching outcomes.
We believe that financial goals and the strategies to achieve them can be supported by financial products and tools that increase efficiency and remove barriers to access, including fintech products and services. Change Machine’s Recommendation Engine supports customers and coaches by providing them access to information and resources and makes it easier for them to select a product to meet their needs.
Today, our recommendation engine includes products that help people reduce their debt, build their credit, open low/no-fee checking accounts, access bilingual digital banking services, file taxes for free, start investing, and more. And while founder demographics are not a part of the SOI vetting process, we’ve found that diverse innovators often create equitable solutions. To date, 64% of the products we recommend have been created by BIPOC-led companies – a number worthy of note as funding of diverse founders continues to fall short. If we want more equitable fintech in the marketplace, we need to be funding the products that were built from real-world experience.
Recommending Equitable Products is just the Beginning
The Seal of Inclusivity and our Recommendation Engine are just a few examples of how we push forward the #TechForEquity movement. Beyond this work, we are finding other opportunities to partner with fintech providers to drive equitable product development and educate policymakers on the need for new programs and regulations around financial security. We view our role as a broker to connect policymakers, practitioners, and product builders with the information they need to improve the financial outcomes of marginalized communities.
