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Fintech (abbreviation of Financial Technology) icon or logo concept. Design with crypto currency coin and blockchain technology graphic. Vector illustration (Fintech (abbreviation of Financial Technology) icon or logo concept. Design with crypto curre

Can Fintech Solve the Wealth Gap Issue? 

The merging of technology and finance tools makes it easier for everyday citizens to compete with wealthy investors. It helps level the playing field and build wealth for businesses and entrepreneurs. Utilize Fintech to simplify your daily life, increase income, and generate wealth. Here’s how.

Fintech is a force for change. The goal is to disrupt the current financial structure to serve other community and business sectors. The technologies can help businesses and individuals rethink and retool legacy approaches or implement policy changes. Financial technologies also help bridge the wealth gap.

Today, 65% of low and moderate-income working women are involved in the financial arena. Yet only four in ten have active investments, according to the research conducted by Commonwealth. While wealth disparities are often incomprehensible, Fintech provides access to marginalized communities through investing and building wealth.

This article will discuss a few factors to consider about fintech disruptors. We’ll also talk about how you can move the needle towards achieving a balance and solving your company’s looming wealth gap issues. Here is what you need to know.

 

Table of Contents

What is Fintech, and Why Does It Matter?

How Can Fintech Bridge the Wealth Gap Issue?

Fintech Offers Incentives to Low-Income Communities

The Three Steps to Fixing the Wealth Gap Using Fintech

Step One: Make Diversity a Priority

Step Two: Shift the Culture

Step Three: Use Your Data

Conclusion

 

What is Fintech, and Why Does It Matter?

Fintech is a combination of two words or concepts – finance and technology. It refers to businesses or individuals who use technology to enhance their financial services. This technology often involves automated features to streamline operations further and ensure bookkeeping accuracy.

The term refers to an evolving industry serving consumer and business interests. Financial technology offers an endless array of convenient applications for various operations. It leverages technology to make financial processing more manageable, more efficient, and ultimately more profitable for its users.

These days, there is a sizable income disparity impacting diverse groups. Fintech proves to be a resourceful tool for individuals and businesses in every community. However, one of the challenges that continue is the wealth gap. According to Inequality.org, the world’s richest one percent own more wealth than nearly half of the entire world population. That’s an enormous gap.

The top 10 percent owns about 70 percent of the wealth in the United States. That means wealthy individuals have six times the fortune as the average adult. Meanwhile, the wealth gap issue has several factors running against lasting success. Individuals and businesses without access to financial resources can face countless avoidable hardships. This makes it even more challenging to climb out of the vicious cycle of poverty.

While some might see the issue as nearly impossible, others see opportunities. Regardless, Fintech reveals the disparity while enhancing prosperity prospects. It also brings all the pieces together, giving people the tools to thrive instead of merely surviving.

How Can Fintech Bridge the Wealth Gap Issue?

Innovation plays a pivotal role in obtaining the success of building wealth despite the disparities. Instead of shying away from impending changes, active Fintech companies can highlight various opportunities. Specific businesses might also lead the charge to become a beacon of accomplishment. Fintech solves the wealth cap issue for companies and individuals by embracing diversity while erasing outdated policies and procedures.

Fintech Offers Incentives to Low-Income Communities

According to the Harvard Business Journal, diversity is a key to unlocking innovation and driving market growth. It’s imperative to consider individuals with diverse traits and experiences to create an environment where all ideas are heard. The research also shows that embracing diversity will out-innovate and out-perform the standard sample set, providing measurable results and profit from new markets.

As new firms are built and grow, so do new cultures. From the outset, there is an opportunity to create an inclusive culture that is open and respectful and that values diversity. This needs to come from the leadership, with a clear tone from the top and expectations set around accepted behaviors. Fintech makes it all possible.

For the more established fintech companies, this means taking the time to understand the culture and subcultures in the organization. You can talk to colleagues, new hires, and missed hires for candid insights. However, these insights are to help identify problems and their root cause. The issue still requires a viable solution.

According to Investment News, many barriers are systemic. This is especially the case regarding access to financial resources. Solutions will take a focused approach and dedicated group effort. Yet, we see Fintech addressing market access with enhanced investor identity and actionable data. The current market has struggled to identify critical areas of growth opportunities. However, the proof is in the data, which continuously proves undeniable.

The Three Steps to Fixing the Wealth Gap Using Fintech

Many individuals have either seen the statistics or have read about the wealth gap, especially in the United States. There is a nationwide reckoning shining a light on the inequities that have led to the numbers. The systems’ pitfalls and failures help reveal when society must shake the status quo and produce results.

Today, entrepreneurs in the fintech space choose different paths to solve these issues. They often use digital tools and data to improve financial inclusivity. Consider democratizing the traditional economic space to solve the wealth gap disparity. Give a voice to underrepresented candidates with these three simple steps:

Step One: Make Diversity a Priority

Increasing DEI is a crucial first step. Many traditional financial institutions don’t have the cultural knowledge or awareness to speak to audiences that may be out of their standard or specific target market. As a result, this first step can lead to a healthier environment that can breed financial security.

Diversity, in any space, has proven to have a positive impact. For example, variety can introduce changes in thought and provide a shift in structure. This is what can help companies create a safe and inclusive workforce. Fintech can help develop a space where every individual feels heard.

Equitable hiring practices can also lead to a more innovative team and a better understanding of various markets. Making diverse teams a priority will assist with creating a plan to identify areas of improvement. When it comes to the fintech world, the process is no different.

According to People Matters, the financial services industry has primarily been male-dominated. Current metrics still reflect a significant gap in present times. Studies suggest that women founders account for only 1.5% of the fintech space globally. Although this gap is slowly closing, certain groups remain underrepresented and closed off from wealth-building resources.

Step Two: Shift the Culture

The other business imperative for embracing diversity is the need to understand and better reflect a diverse customer base. For example, companies can align their insurance, savings, mortgage, and wealth management products with the needs of specific groups. Fintech helps companies serve their LGBTQ+ staff while supporting ethnic minorities and female partners. This will provide a clear competitive advantage.

According to recent findings, fintech platforms can confront racial and gender wealth inequality by creating wealth-building and investing opportunities. These prospects can support the needs of systemically underserved individuals and communities.

Black, Latinx, and female-led households are currently considered a significant market for investment opportunities and market innovation. However, those groups have yet to be served by traditional financial tools. Fintech helps reveal untapped markets, disproportionate experiences, and longstanding systematic discrimination. It shifts the culture automatically.

New tools can use behavioral economics to help consumers make financially sound decisions on saving and investing. By setting up mobile structures that allow people to automate their activities, the market can branch out from traditional methods of financial literacy education and reach broader audiences.

Consumers need to access liquidity at a price they can afford. New approaches to collecting and using consumer data can help achieve this parity. However, recent data and algorithms give companies better indicators to determine creditworthiness. Meanwhile, millions of borrowers are eligible for assistance but are unaware of programs to help them.

By aggregating this information and looking beyond the consumer’s history, Fintech can change the narrative. Companies could then redesign and reimagine what inclusivity looks like. Their efforts thereby help bridge the wealth gap. The shift comes as good news because fintech firms can also do good without necessarily sacrificing profitability by chasing these opportunities.

Step Three: Use Your Data

Data has proven to be a powerful tool that is often under-utilized. It can generate reliable metrics to understand your target audience more deeply than those using intuition only. Data collection gathers and measures information on variables of interest in an established systematic order. It also enables one to answer stated research questions, test hypotheses, and evaluate outcomes.

Collecting data through technology facilitates acceptance by encouraging cooperative learning. Data collection gathers and measures information on variables of interest in an established systematic order. It enables one to answer stated research questions, test hypotheses, and evaluate outcomes. Usually, the result is equal communication and access to wealth-building opportunities.

Consider gathering the facts to support the longevity of your findings further. Using data helps individuals, groups, and businesses provide feedback to make a lasting impact on various industries. Although there may be different styles, data and technology can effectively use the findings for a proper analysis. Simply put, a decision backed by data is a decision that provides more analytical facts to support your theory.

Technology is part of the solution. It can chip away at the legacy of discrimination we see with the current economic structure. The existing system provides conditions that impede families’ financial security by branching out from traditional data-collection strategies. Unfortunately, those strategies don’t always include specific communities.

Current financial tools make the existing system faster and more convenient for currently well-served people. However, this does not address all the pain points. Technology is now refocusing on underrepresented markets, which is the most exciting because it provides a vital advantage for various innovations.

Conclusion

Fintech provides the opportunity to expand financial services and education to underserved populations. It offers a non-biased analysis to identify the root of opportunity and ensure an equitable outcome. Use it wisely to help close the wealth gap.

From down payment assistance to increasing education through technology, individuals should have access to resources to build financial wealth. However, a policy change is necessary and will only occur when individuals take the first step. The most challenging part of generating a plan of action is implementing it.

Genuinely ask yourself how the data can be of use. How can you implement changes to the current structure using this new information? Remember, incorporating Fintech is a process that will not happen overnight. Instead, you get there by giving people access to better tools and financial products while helping individuals increase financial literacy. Fintech empowers the people and supports businesses.

Fintech is about ownership and how it impacts all other moving parts involved. Thus, it’s wise to note that not every individual will be on board with the changes suggested. However, long-term growth does not stem from comfort. True success happens when Fintech gives people the right tools to grow their wealth and enjoy financial equity.

Adopting these strategies will benefit present and future endeavors. It also helps form the foundation of collaborative space and promotes industry-wide change.

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