There’s no doubting how much fintech has affected the overall finance world. According to Standard & Poor’s Global (and maybe your 401k), various segments of the fintech market saw major profitability in the last few years – $181 billion for assets under management via digital investment platforms in 2017 and $41.1 billion in loans originated through web-based lending during the same year, to name just a couple. Statista noted that digital payments, the biggest of the markets under fintech’s umbrella, projects to experience a 12.8% compound annual growth rate between 2019 and 2023.
With that growth, however, have come a considerable number of conversations about the position of ethical concerns within this cutting-edge financial field, as well as the form ethical standards or legal regulations might take. If you’re interested in delving into the fintech universe – as a user or an investor – it’s worthwhile to look into these matters and see where they fall within your own values and worldviews.
Fintech Weekly noted that while traditional banking and finance have been regulated for decades (and are under even closer scrutiny in the wake of the 2008 crisis and subsequent Great Recession), regulations for digital lending, mobile payments and the other big fintech segments are minor or nonexistent. As such, there exist certain fears regarding how fintech operators might treat their customers’ personal data – whether they’ll emphasize data privacy and keep it secure, or share it with third-party partners without requesting individuals’ consent. Others wonder if fintechs will be able to protect customers from breaches and fraud. On the other end of the spectrum, fintechs that operate entirely above-board may well worry that illegitimate users, like the criminals who use cryptocurrencies and other digital money-management tools for nefarious purposes, could drive regulators to impose requirements too difficult to meet.
If seeking facts to counter anxieties regarding unethical fintech use, consider the role millennials play in the space. According to CB Insights, people from this generation have (or will soon have) $30 trillion in investing power, and their priorities regarding sustainability and social philanthropy are pushing numerous fintech startups in the direction of impact-based environmental, social and governance investing. Bigger organizations in the fintech universe see the writing on the wall in this respect and are changing their strategies to better adjust with the times. and serve the desires of potential customers.
The peer-to-peer lending market is one of fintech’s most robust subcategories, but SoLo Funds facilitates a more ethical approach to P2P by empowering individuals’ ability to lend and borrow money in small amounts ($50-$1,000), without worrying about the usurious interest rates of payday loans. Joining as a lender affords you the opportunity to help people in need on a small-scale (but no less meaningful) level. SoLo prioritizes protecting user data through the highest level of security possible, the same that is used by banks insured by the FDIC. SoLo’s end goal is to build communities and empower others through wealth distribution, and this pillar drives all of the decisions that we make!