Wealth disparities in the US are growing and current investing and wealth building platforms are not meeting the needs of low- to moderate-income people (LMI). According to new research from Commonwealth, 65% of LMI working women are interested in investing, yet less than 40% are currently investing. Women and Black, Indiginous, People of Color (BIPOC) represent a significant untapped market in personal investing and the FinTech ecosystem is uniquely positioned to help close the wealth gap through innovative and inclusive solutions to support the needs of these populations. 

What opportunities are there for fintechs to help close the investing gap? How can they better prioritize the needs of their customers, including women and BIPOC investors?

To explore these questions and more, Commonwealth and MassChallenge FinTech hosted a webinar moderated by MassChallenge FinTech’s Senior Managing Director, Devon Sherman, with Julianna Samper, Senior Innovation Manager at Commonwealth; Axel Thibon, Founder and CEO of Wizest; and Calvin Williams Jr., CEO of Freeman Capital. The conversation centered largely around exploring ways in which innovation can confront racial and gender wealth inequality by creating opportunities for wealth building and investing that support the needs of systemically underserved individuals and communities. Our panel specifically highlighted the role and opportunity fintechs have to provide support and resources for LMI women and BIPOC on their financial journey.

Here are three key takeaways from the webinar: 

1. Start with the business model. Business Roundtable’s Statement on the Purpose of a Corporation noted that “Americans deserve an economy that allows each person to succeed through hard work and creativity and to lead a life of meaning and dignity.” Fintechs that are committed to creating economic opportunity and helping close the investing gap should have a business model that supports those goals. Fintechs have to think about incentives for product managers and prove that integrating social good into their business can still result in great profit. Calvin Williams Jr. of Freeman Capital stressed the importance of this, saying “pushing the financial system forward and prioritizing the needs of customers should inherently result in more impact and more profit because people will feel like it’s built for them.”
2. Build inclusive products. A survey conducted by Commonwealth during the pandemic found that 20-35% of people used apps to manage their finances and that investing apps were the most popular. While investing platforms remain popular, they are not designed for asset limited, income constrained, & employed women and instead benefit people who already have an understanding of investing and actively participate in the market. The question that fintechs need to be asking themselves, as Commonwealth’s Julianna Samper noted, is “what are we doing to understand [LMI women and BIPOC’s] financial journey to build something for them so they can achieve financial security and actually start thinking about building wealth?”
   
   There has been an increase of digital financial services which fintechs should leverage to create financial experiences that adapt better to financial journeys, especially those of LMI households. Fintechs need to start thinking about creating high quality savings products so their customers can build financial resilience, which is an important foundation to investing, and onboarding platforms to help women and BIPOC progress in their financial journeys. 
3. Provide Access. LMI women and BIPOC face several barriers when looking to invest. When it comes to financial wellness and closing the wealth gap, there are artificial walls that have caused psychological hurdles for these communities which need to be deconstructed. As Commonwealth’s Julianna Samper acknowledged, “the majority of women of color did not grow up learning or hearing about investing at home”. LMI women and BIPOC are interested in investing and want to participate in the market, but, as Axel Thibon of Wizest shared, “they don’t start because they don’t know where to go”.

To help close the investing gap, fintechs have both a responsibility and an opportunity to guide LMI women and BIPOC through the investing process and prove that wealth building is possible for them. Fintechs can create a path for these traditionally underrepresented communities and provide the necessary guidance, resources, and support for investing.

Thank you to our friends at MassChallenge Fintech for partnering with us on this event and to BlackRock’s Emergency Savings Initiative for making our partnership possible.