For many around the world, the creator economy has changed what it means to earn a living. Currently valued at over $100 billion, this industry consists of more than 50 million independent content creators, social media influencers, bloggers, and videographers worldwide. These creators garnered an estimated $15 billion in revenue last year, many without the financial tools and services available to traditional businesses.
In fact, it appears the creator economy has grown so fast that hardly anyone in financial services has been able to keep up. This rapid growth has increased the need for financial entities to deal with a growing set of problems that are unique to creators, such as outstanding royalty fees, long pay cycles, and inconsistent earnings.
So far, traditional banks and financial institutions don’t seem to cater to these growing needs of the creator economy. Even among fintech firms – which are generally quicker to jump on new opportunities – only a handful in the industry have started to offer financial services that are geared towards creators and influencers.
Why has the creator economy (so far) been overlooked by traditional financial firms?
Legacy financial institutions have not been tailored to fulfill the needs of creators and influencers. They were not built for that purpose from a technological or cultural standpoint, according to Hussein Ahmed, founder and CEO of Oxygen, a creator-focused fintech.
“Generally speaking, we don’t see traditional financial institutions as the zeitgeist of the times, and for good reason. They’re just not built to serve creators well,” said Ahmed. “It’s the same problem freelancers and small businesses face: too much friction, and legacy processes that are not digitized and don’t speak to a group that is overwhelmingly digitally native. The economy of the 21st century cannot be powered by the financial platforms of the 20th.”
Matt Stormoen, co-founder and CEO of influencer marketing platform Mobibi, says traditional financial firms could perhaps be in the process of developing the appropriate tools and services for creators, but they may be having a hard time keeping up with the quick progression and evolution of the industry.
“As a conduit in the creator economy myself, I do understand firsthand how quickly the landscape is changing. Think TikTok and Clubhouse, or even Cameo and OnlyFans – different platforms, different calibers of influencers, and different monetization approaches. Given that traditional banks put a premium on certainty and permanence, perhaps they see the creator landscape as still too much in flux to be worth the investment.”
The creator economy has unique data requirements, integrations, and workflows that traditional financial players will be slow to catch up with, according to Charley Ma, GM of fintech at Alloy, an identity verification platform for financial firms.
“The idea that the audience and brand you've curated as an influencer is actually a monetizable asset is still quite novel,” said Ma. “If you approach a bank and say you have 1 million followers on Instagram, they would have no clue what to do with that information. But if you go to one of the emerging creator-focused fintechs instead, they'll be able to much better process that info and translate it into financial terms.”
Fintechs are rising to the challenge
Some fintechs are beginning to fill the void left by incumbent financial institutions by coming up with unique tools and services that target the specific needs of creators and influencers.
ChannelMeter, a management and payments platform for content creators, launched a banking service last year following a $4 million seed funding round. Named Creator Cash, it offers banking and financial tools including a savings account, credit card, as well as analytics and real-time insights for earnings on platforms such as YouTube and Patreon. It also provides expedited YouTube AdSense payments, which allow creators to skip the waiting time and get early access to their monthly YouTube earnings.
Eugene Lee, co-founder and CEO of ChannelMeter, predicts that by the end of this decade, almost a trillion dollars – if not more – will be paid to creators across the globe, every year.
“Over the past four years, we’ve onboarded a million creators to our platform, and we’ve processed over $637 million in payments to creators on YouTube, Instagram, Facebook, Twitch, Snapchat, and TikTok,” said Lee. “A fundamental advantage we provide for our clients is using software to systemize payment records and speed up access to payments. In the past, creators had to wait weeks, if not months, to actually get paid for their work. We’ve brought this down to literally hours and days.”
Karat Financial, which provides banking services specifically designed for digital creators, recently announced a $26 million Series A round. The company was founded in 2019 by Eric Wei, former product manager at Instagram, along with co-founder Will Kim, former analyst at Goldman Sachs. The firm’s portfolio of investors includes actor Jared Leto, YouTube co-founder Steven Chen, Twitter co-founder Biz Stone, and former TikTok CEO Kevin Mayer.
Karat Financial’s main offering is the Karat Black Card, a credit card issued in partnership with Stripe that doesn’t charge interest or annual fees, and instead gets a profit from bank interchange fees. Rather than analyzing a user’s credit history, Karat looks at non-traditional metrics like creators’ social media engagement stats and follower counts to underwrite them. Eventually, the firm hopes to expand its set of offerings to include things like getting a mortgage, taking out loans, and filing taxes.
Alex Frolov, founder and CEO of influencer marketing platform HypeAuditor, says Karat Financial clearly recognizes that being a full-time influencer is now a legitimate profession. “With credit cards now being made for doctors, teachers, and police officers, Karat Financial took the opportunity to offer this niche credit card for influencers, and I anticipate we will start to see more financial institutions offering influencer-specific credit cards.”
Oxygen claims it is the first and only challenger bank in the U.S. that offers both personal and business banking from the same account, with a particular focus on creators, freelancers, and small businesses. “We’re building what we describe as ‘The banking platform for the 21st century economy,’ explained Hussain Ahmed, Oxygen’s founder and CEO.
Ahmed says Oxygen allows creators and other variable-income entrepreneurs to manage both their personal and business expenses in one application, while offering perks not often associated with debit programs such as cashback, savings with robust APYs, and retail and travel perks for top-tier influencers.
Lumanu is a management platform that offers financial services as part of its complete “business-in-a-box” solution, purpose-built for creators. One of the flagship features, EarlyPay, helps creators get paid instantly without having to wait for the 30/60/90-day payment period that is still common in the industry.
“We’ve noticed an alarming lack of financial knowledge needed to run a business among the creator community. We plan to offer various important services to tackle this issue, from income and expense tracking to automatic tax filing and benefits,” said Lumanu’s co-founder and CEO, Tony Tran. “We’re especially excited in doing our part to increase the financial health and literacy of all creators, regardless of background, race, or gender identity.”
While it’s still a niche market, a few other examples of creator-focused fintechs that have sprung up recently include Lili, Creative Juice, Spotter, XPO, and Stir. Tran believes this number will grow rapidly in the near future, as the creator and influencer economy represents a major opportunity for financial firms to tap into.
“I think it’s short-sighted for people not to invest in the enormous amount of talent, drive, and passion that powers the creator economy. What makes it special is not just the actual shift in the economic landscape, but also that the shift is being driven by a group of people who do what they love. To me, betting on passion is a no-brainer.”