TOA Technologies

Sep 27, 2023

Yuval Brisker is CEO and co-founder of Alviere , an embedded finance company. He previously co-founded TOA Technologies, a SaaS firm acquired by Oracle in 2014. The technologies underlying fintech point to a world of empowerment and access, transparency and efficiency. And yet the past few years tell a story in which fintech’s most prominent players have been out of line with those values. That’s a problem, because the world needs fintech to help address some of the biggest challenges it confronts — aggregating and mobilizing capital, enabling the unbanked and underbanked, powering social mobility, and bringing stability to the financial system. The question is, can fintech innovators and investors lean into the current economic moment? Can they true back to their technologies’ root-level values, reclaim their industry’s promise, and regain the world’s trust? I think the answer is yes. Good tech, bad actors Looking back, one of the frustrating things about fintech’s recent blowups (crypto, meme trades and FTX among them) is that so many have involved applications and business models that have shown (and still show) so much potential to make a positive difference. One of the big lessons of the social finance backlash is that empowerment without education can do more harm than good. Cryptocurrencies and the blockchain, designed to provide transparency, trust, and resiliency in financial transactions, sustained a massive reputational blow at the hands of a company — FTX — whose business model subverted all of those ideals. The field of “social finance” — which should be synonymous with innovation in the service of financial empowerment — is today more widely associated with Reddit traders, Robinhood and the GameStop short squeeze. Meanwhile, fintech founders get little credit for increasing the number of young people who open retirement accounts . The ultimate irony may have come when Silicon Valley Bank, once admired for having successfully backed more than 70% of all fintech IPOs between 2020 and 2022, fell prey to America’s first-ever fintech-enabled bank run. Efficient markets indeed. With all of this, is it surprising that federal bank regulators have made it nearly impossible for a fintech to get a bank charter? Fintech forward To reassert their industry’s reputational birthright, fintechs would do well to lean into the current economic moment and focus on applications that blunt the impact of inflation and financial uncertainty on workers and consumers. Here are three key areas in which financial technology can lead the way. We can turn the economic cycle to the advantage of more individuals You’ve likely heard of BNPL — buy now, pay later — a way to give consumers more purchasing power at the online point of sale. My company is developing a take on the old “layaway plan” concept, by which consumers would set aside money for an item they wish to buy until they have accumulated the full purchase price. The same financial technology also enables employers to give their workers the benefit of today’s higher rates, letting them opt to roll a portion of their salary — which they may not immediately need — directly into an account that pays 4% or more. For a worker who may not have a high-yield account of their own, this service can make a difference. Especially if they find they cannot pay for the item after all, they will have saved money and not triggered any of the predatory terms inherent in many BNPL services. We can double down on technology-enabled financial education One of the big lessons of the social finance backlash is that empowerment without education can do more harm than good. Not surprisingly, many innovative fintechs — maybe better seen as hybrid fintech/edtechs — are building better financial literacy and education models and technologies. This is something schools often don’t teach. Innovative incentive models are often at the heart of this new crop of players. Austin-based Zogo, for example, is a technology company that works with financial institutions to promote financial education and well-being through short-form content. Its modularized platform includes tangible incentives to make financial literacy and education accessible and rewarding. Founded in Ghana and registered in the U.K., the School of New Africa (SONA) is developing a gamified-learning platform whose mission is to educate young people about African history, culture and language, while also teaching financial literacy. The platform — backed by producer-rapper Fuse ODG — has many inbuilt financial services, including one that lets children progressively earn a parent-provided “allowance” by successfully working through learning curricula. We can make life easier for workers experiencing financial stress Workers may no longer be quitting in droves but they remain under heavy financial stress — which is not good for them and is corrosive of their employers’ success. At a time when across-the-board salary increases are not a widely available option, employers have other levers to pull. These include fintech-driven services that enrich workers’ standard of living in concrete ways, with services that empower them and take some of the stress out of the day-to-day grind. Such services might include user-friendly HR systems that offer better access to everything from “time cards” to intra-company promotions. And they could include financial management tools and resources, like more flexible payment terms. In the latter category, employers of a certain scale are ideally positioned to push back against one of society’s most persistent sources of economic inequity — unbanked and underbanked workers exploited by high-fee financial service providers. Inflation has walloped workers in the past two years, reducing their purchasing power and squeezing monthly budgets. Simultaneously, home prices and rents have risen. Employers can lessen the burden by providing fully functioning and well-priced bank accounts, debit cards and earned-wage access and early pay. Earned-wage access is, essentially, on-demand payment for hours worked. Normally, biweekly or monthly pay periods are rigidly set to make company cash flow and accounting easier. But to some workers, especially those in hospitality, retail, manufacturing, and skilled and unskilled trades, on-demand pay is a boon. All of these products and services are a far cry from meme stocks and digital bank runs. Some will succeed and some won’t. But at this moment in our economic and social history, we can’t afford to have fintech held back by those who would subvert the very values its technologies are meant to elevate.