Real-time payments and portable identity: The most underserved areas in financial technology

When it comes to underserved areas of the fintech ecosystem, there most definitely is not an app for that. With a growing ecosystem of startups and upsurge in venture capital-backed investments globally in financial technology (a recent KPMG study revealed that global venture-backed investment reached $13.6 billion last year), software company Plaid issued a "call for startups" this week to nurture innovation in areas it says aren't getting enough attention. The company has built a technology platform that lets third-party applications connect with users' bank accounts. The company's CEO Zach Perret told TechCrunch it hopes to be part of the process to build businesses working in these areas. While it isn't clear what form Plaid's startup mentorship will take -- the company said it could take the form of resources, connections, and capital -- among a series of consumer-facing financial technology tools, banking and back-end infrastructure. In the personal finance space, the company would like to see more work on bills (letting consumers better monitor and understand their bills), loan servicing, exploring new areas of insurance and tax preparation. Industry analysts who spoke to Tearsheet said they liked what they saw on the list and had some ideas for expanding it. "The initiative is important because financial services and the payments systems have evolved into regressive services where the poor are spending a much higher share of their income than the rich are [to access financial services], said Aaron Klein, a Brookings Institution fellow and director of the Brookings Center on Regulation and Markets. Klein said one area that could benefit underserved markets are innovations that allow for real-time payments and adaptive technologies based on real-time payments that would help people manage their money in alignment with their goals. Others add that some context around the thinking could help frame the product offerings in terms of issues to be resolved. "It is not clear to me what the framework for this is," said Peter Wannemacher, senior analyst at Forrester Research. "Two things I would like to see: One is life events -- Forrester research shows that the No. 1 driver of financial product purchasing are these big shifts and shared finances, or any situation in which one person acts as an observer of a partner in or as a proxy for another person's finances." Additional areas that could be included are the notion of ubiquitous or portable identity (digital identity that can move between countries); poverty and multigenerational wealth management; platform partnerships between fintech companies and banks; insurance data management; and access to credit, said Bradley Leimer, managing director and head of fintech strategy at Explorer Advisory & Capital. For those in the personal finance startup space, it's about grouping the issues around a context to solve customer pain points. "It's about putting it into a broader context and creating business models to help consumers improve their financial lives," said Colin Kennedy, chief revenue officer at Clarity Money. For Plaid, the initiative is about putting a focus on financial inclusion. "At Plaid, we believe that everyone, regardless of where they bank, should have access to the best financial tools and services,” said Perret. “We launched the request for startups to help highlight a few areas of fintech that have a lot of room for growth. New businesses in these areas will not only digitize existing processes, but in some cases will drastically change the way all live our financial lives.”