Banks have generally steered clear of influencer marketing even as some fintechs like Current and Chime have used it to connect more widely to their audiences. And this reluctance to use creators in their marketing is also emblematic of how little traditional FIs understand about this sector. This lack of understanding also seeps into capturing the creator economy as customers and results in financial products that focus on making creators’ lives easier, being few and far in between. It’s a missed opportunity to connect to a customer base that is grossly underserved, growing rapidly – especially due to the low barrier to entry–, and strongly financially motivated. 78% of people report that being a creator helps them establish financial stability, according to research. And there are loads of issues that a so-inclined FI could potentially solve. Like any other SMB, creators need tools that help run their businesses, as well as ease the process of getting paid. While most big banks now have a healthy suite of products directed at SMBs, the nuances of the creator economy like unpredictability of payment and diversified income streams, warrant a dedicated strategy.
Why FIs have been reticent
It won’t be wrong to say that what makes creators different from normal SMBs is also what makes them harder to build products for.
Influencers don’t fit existing molds: “Traditional banks are not engaged in building products for creators due to the instability of creators’ income streams. Banking business models are generally built around servicing “stable” customers, such as salaried employees or established businesses. They may view creators as higher-risk clients because it is difficult to apply traditional financial models like credit scoring, lending, and financial planning to them,” said Tachat Igityan, CFO and Founder of destream, a financial platform for content creators.
They have varying needs: Veteran Youtuber Hank Green, author and founder of Subbable, a crowd sourcing platform that was sold to Patreon, has expressed how hard it is to build products for this segment, having considered to build one himself during the years when VC funding was at its highest:
“Creators are so diverse in their needs that, to create a product that is scalable — and that doesn’t cost a ton of money trying to individualize itself for each individual creator — you end up creating a bad product,” said Green. Powerful platforms: Apart from the diversity inherent to this segment, building products for influencers is made more complicated by the power social media platforms hold in the lives of content creators. Even for Youtubers as skilled, famous, and experienced as Green, the exact amount of money they make on a particular platform can sometimes be unclear. “It’d be nice if I knew how much money I made. I have no idea, it hasn’t updated since January. It’s broken. It thinks I’m British. It’s paying me in pounds,” he said earlier this year.
Why creators need FIs to act
Given that financial motivations are a top driver for most people to enter the creator economy, the lack of financial products keeps them from enjoying the fruits of their labor. Payments are at the heart of it all.
“Creators face financial challenges due to the irregularity of their income streams. Unlike traditional employees with salaries, creators have unstable earnings based on project timelines, client payments, or content success. Their income is formed from multiple sources, which makes managing payments more difficult. Also, international audiences and clients mean creators frequently deal with cross-border payments, which complicates their financial management even more,” said Igityan.
Although platforms optimize their experiences to ensure that creators have all they need to craft and post quality content, the same cannot be said for payment processes. “They typically connect to PayPal and leave it there,” he said.
“From our experience with PayPal, we’ve encountered issues like high transaction fees and their policy allowing refunds up to a certain number of days after a transaction, often without any explanation. This can be especially problematic for creators who may not have experience managing chargebacks or dealing with potential fraud.”
How to build financial products for creators
i) Business management tools: Creators too need tools that help with making running their business on a day-to-day basis easier. These tools include things like invoicing, payroll, and cash flow management.
ii) Make getting paid easier: Approaching the creator economy with a payments-first mindset might be the key to solving a big chunk of creators’ issues. A few years ago, ad revenue was the primary source of income for Youtubers but now the platform has diversified and creators can also earn from patronage and loyalty of their viewers through things like superchats and super stickers. “These new methods have increased the number of income streams and made them more consistent, but they have also introduced new challenges in managing multiple platforms and payment systems. Creators still face challenges related to high transaction fees, fluctuating income, and difficulties in accessing banking services, especially for international transactions or taxes,” said Igityan.
Building products that can help make the management of these different types of payments easier and help improve access to liquidity may significantly contribute to how a creator approaches her business and strategizes about its scale.
iii) Know your creators: A large portion of creators are Gen Z, which means that FIs looking to enter the sector need to build a voice that connects with their values and addresses their concerns. “To connect with them [Gen Z] effectively, fintech companies can also focus on providing educational content, such as budgeting tips, investment strategies, and credit score insights. This will help them position themselves not only as service platforms but also as trusted advisors,” he said. iv) Collaborate: Creators have found it hard to band together and advocate for their interests. For example, Green’s Creators Guild shut down after three years due to lack of funding. While creators may find it hard to collaborate and build movements that make social media platforms ensure their interests are guarded, FIs have enough power to do something about this. Their efforts don’t have to look like Green’s but they can bring platforms and creators to the same table and ensure that the technology doesn’t just make it easy for consumers to pay for content but also makes it easy for creators to gain access to this money.
‘To better serve content creators, banks could join these fintechs to integrate these offerings into their services. Moreover, creator platforms like YouTube, TikTok, and Instagram can collaborate with financial companies to offer integrated financial services, such as direct payouts, expense management, or tax optimization tools,” said Igityan.
Sidebar: Like creators, gig workers and Gen Z also suffer from inattention
Sidebar is a member-exclusive section, where we discuss stories that are tangential to the main story above. In this sidebar we discuss how far FIs have come when it comes to building products for other non-traditional types of customers like gig workers and Gen Z, and inform this discussion with Tearsheet’s proprietary research. If you want to keep reading, please consider becoming a TS Pro subscriber by clicking below. 
