Why the Middle Class Needs FinTech

By Samuel Phineas Upham

The path of upward mobility begins with financial management. If the average person could better manage his or her money, savings would thrive and we would all collectively handle risk better because we’d have a stronger financial cushion. Banks aren’t doing a very good job of providing those services right now, not for lack of trying, but they are bogged down by regulation preventing them from innovating and growing. The solution involves smaller companies that are better equipped to handle consumer demands.

Woman checking email in office.

Shrinking Classes

The shrinking of the classes has as much to do with savings accounts as it does with jobs. The average person can’t see his finances every minute of every day, so poor people living paycheck to paycheck have an especially hard time balancing their budgets. We collectively need technology that better services the populace, delivers financial statistics relevant to our lives and encourages us all to save more.

The Question of Risk

Banks can’t afford risk right now because regulation has forced them to keep cash in reserve, rather than for lending purposes. What was intended to safeguard against the collapse of the financial system is instead fueling a frugal approach to lending and risk. Fortunately, smaller startups represent less risk and are considered safer investments. Big banks are finally beginning to experiment with smaller personal loans, access to credit and other concepts that were too expensive or risky before. They are just doing that experimentation through a sandbox of sorts, where small startups are raised to try new strategies in consumer finance and fail.

All of these change are driven by access: in the edge of the smartphone, the cost of money ought to be sensible.

About the Author: Samuel Phineas Upham is an investor at a family office/ hedgefund, where he focuses on special situation illiquid investing. Before this position, Phin Upham was working at Morgan Stanley in the Media and Telecom group. You may contact Phin on his Samuel Phineas Upham website or Facebook.