App economy payments are driving financial inclusion
The line between fintechs and digital platforms has never been less clear—and that means the opportunities to achieve global financial empowerment have never been greater.
For the first time in history, the delivery mechanism for financial services is decoupled from traditional banks. That creates a revolutionary moment for fintechs and online platforms.
The need for affordable financial services among underbanked populations is a longstanding one, which is why non-bank alternatives have flourished across developing and developed countries alike, leaving many without access to affordable to financial services.
Fortunately, mobile technology has changed the landscape and enabled the rise of digital banks and low-cost, user-friendly mobile wallets and remittance platforms. This rise has led to new opportunities for connecting users with financial services.
At first glance, those opportunities appear in seemingly unlikely places. To take one example, Uber recently partnered with Mastercard and BBVA bank to offer debit accounts to drivers in Mexico. Not only do they get paid through that account, it can also serve as a gateway toward other services, such as loans and reimbursement options. But Uber has been exploring financial partnerships for years, including working with Betterment to offer drivers in the U.S. a year of free retirement investing help.
Lyft is also bringing financial services to drivers, enabling them to sign up for no-fee debit accounts through which they can receive payments after every ride. They can also earn cashback rewards and set up automatic savings through the account.
The connection between ride-hailing apps and financial services may seem tenuous initially. But such online platforms are perfectly suited to connecting workers with products that can accelerate their financial well-being. They know their workers' needs better than anyone. By partnering with third-party companies, as Uber has done with BBVA and Mastercard, they're able to deliver relevant and potentially life-changing services.
The opportunity to get in the financial services game extends far beyond the gig economy. Online marketplaces are especially well positioned to provide financial products to customers. Consider Amazon's secured credit card for customers with poor or limited credit histories. The secured card, which is issued by an Amazon partner bank, gives customers a chance to improve their credit and eventually qualify for an unsecured card, all while earning cashback perks. This grants Amazon access to a formerly untapped market segment, and it deepens customers' relationships with the company.
Online platforms, like Amazon, have unprecedented visibility into their users' financial behaviors and gaps. They've also built trust with their user bases and know what types of messaging resonate. By combining this knowledge with strategic tech and finance partnerships, companies can increase brand loyalty, grow profitability and drive financial empowerment.
Often the temptation in the industry is to look at what alternative banks and lenders are doing and analyze what they might launch next. But the real opportunity to achieve financial empowerment lies with the companies that are most intimately connected to people's lives. That's why natural partnerships are emerging among consumer-facing marketplaces, banks, and back-end fintechs to drive greater value for them and their customers.