Demystifying Consumer-Facing Fintech

Chapter 2 looks at transparency and fintech tools. The premise behind many so-called fintech innovations in consumer markets is to make more personalised financial products available to an often underserved and largely inexperienced cohort. Many consumers are not good at managing their day-to-day finances, selecting optimal credit products or investing for the future. Fintech products, and the applications associated with them, are commonly promoted on the basis they will use consumer data, AI capacities, and a lower cost basis to promote competition and better serve consumers, including financially excluded or vulnerable consumers. Paterson, Miller, and Lyons challenge these premises by demystifying the kinds of capacities that are possible through the fintech technologies being offered to consumers. The most common form of fintech solutions offered to consumers are credit, budgeting, and investment tools. These typically do not disrupt existing service models through the use of deep learning AI. Rather they are commonly enabled by encoding the rules of thumb used by mortgage brokers and financial advisers. They make a return through methods criticised on when deployed by social media platforms, namely on-selling data, targeted advertising, and commission-based sales. There is moreover little incentive for fintech providers to make products that benefit marginalised cohorts for whom there is minimal relevant data and little likelihood of lucrative return. The authors argue that greater transparency is required about what is being offered to consumers though fintech tools and who benefits from them, along with greater accountability for ill-founded and even sensationalised claims.