Fintech is on fire and Hispanics, are adding fuel to the flame, according to the latest research report by Plaid (Fintech Effect 2021). The report showcases how the pandemic has accelerated fintech adoption, growing from 58% usage in 2020 to 88% usage in 2021. That’s a 52% increase in one year!
Hispanics over-indexed versus the general population, with 95% of them using fintech, according to the report. Across all ethnic groups, fintech’s value comes with saving time (93%), saving money (78%), and reducing financial stress/fear (71%).
It’s also created a democratization of financial services. People with few resources -- regardless of location -- now have access to banking, insurance, credit and even cryptocurrency. Between 80% and 90% of users have said they will continue using fintech at about the same level. The report also reveals that the frequency of daily users rose 29% -- from 37% pre-pandemic to 48% today.
This is a watershed moment for Hispanics at all income levels to take better control of finances. Fintech is a preferred alternative for a community that has been labeled as “unbanked” or “underbanked” for decades. Hispanics use fintech for budgeting, banking, monitoring/improving credit scores, bill paying, investing and saving.
The headlines have shown us just how many people want easy access to saving and investing to live the American Dream, even if they’re starting small. Fintech allows people of color to get a leg up, with access to tools for better management of their money, especially in areas with sparse brick-and-mortar banks.
It’s no wonder that Chime, a fintech, has become the largest “neobank” in the U.S., with over 12 million customers according to Cornerstone Advisors. Chime is attractive to millions of consumers, including Hispanics, who have been marginalized by traditional banks especially as cash-dominant users.
By being a low-cost source for savings and bill pay as well as secured credit cards, Chime is opening banking to people who otherwise were in banking deserts or couldn’t meet account minimums. That customer base puts Chime in sixth place of all banks in the U.S. With its recent partnership with Walgreens, Chime has hit the mainstream, as its customers can make deposits in cash at any of the 8,965 Walgreens across the country. Banks should be equally concerned that Chime offers a “no fee overdraft” product for up to $200 -- an attractive offering to a lot of U.S. consumers.
So many things have changed the past two years for all of us. It’s great to see that saving and having greater control of their money is helping so many rise to their financial potential.