Due to the rapid rise of fintech (financial technology) over the last two decades, nearly everyone has used some version of it to automate money movement online. These financial activities run the gamut, from collecting rent via PayPal to financing purchases via Affirm; from trading stocks via Robinhood to refinancing homes with Better Mortgage; from monitoring credit scores via Credit Karma to transferring money via Zelle; and many more.
With fintech now poised to replace traditional financial services, cohesive partnerships are emerging that may ultimately work to make banking, investing and lending money easier and more accessible for all moving forward.
Here’s how four fintech companies in New Jersey are working toward a more inclusive future:
While banking technology has existed for decades, the marginalization of minorities by financial institutions has existed for centuries.
“What’s new is the ability for businesses like MoCaFi to reimagine technology, banking products, and services for communities that historically have not been served well by traditional banks to create real value, in ways that create scale and impact fairly quickly,” says Wole Coaxum, founder and CEO of Mobility Capital Finance (MoCaFi).
According to Coaxum, there is real imperative, due to the COVID-19 pandemic and increased social justice, to more efficiently get dollars to large numbers of underbanked people.
“It is our hope that the moment has officially met our movement,” Coaxum adds.
Sponsored by Sunrise Banks in St. Paul, Minnesota, MoCaFi’s customer-facing, mobile-first financial inclusion platform currently partners with companies such as MasterCard and Galileo, a payment processor owned by SoFi, to onboard and solve the needs of underbanked individuals, who currently are in excess of 50% in black, brown and rural white communities.
Additionally, according to Bankrate, Black communities spend 50% more per month on banking services, while Latinx communities spend 100% more.
“The average Black person will spend $40,000 in excess fees over their working lifetime for banking services such as overdraft, out-of-network ATM, and check cashing fees,” Coaxum says. “Imagine if those fees could instead be invested.”
MoCaFi provides accessible and affordable bank accounts along with credit building assistance, especially for those working in the cash economy.
“People who are not typically part of the financial mainstream can use our platform to pay bills and rent, which we then use to help raise their credit with the traditional bureaus,” Coaxum says.
Coaxum says MoCaFi has also been laser-focused on building financial literacy tools and partnerships with various capital providers for customers to better position themselves to become home and business owners.
“We are not simply a direct-to-consumer model – we partner with cities with place-based strategies to get dollars to individuals, too,” Coaxum explains. “This reduces costs for the cities while empowering individuals to become instruments of financial change in their communities.”
Founded in Harlem in 2016, MoCaFi relocated to Newark at the request of Newark Venture Partners in 2018. Recently, its staff of nearly 25 raised $12 million to attract 100,000 members within 12 months.
According to SmartAsset, nearly 63% of investors are now comfortable working remotely with financial advisors.
That’s fantastic news for WBI investments, the 37-year old, family-owned investment advisory firm that created CyborgTech in 2019 to deliver “Cy,” a financial advisor-assisted robo advisory platform.
“While a financial advisor is going to know you and your family’s needs and situations as they change, what beats a human money manager is the combination of man and machine,” says Matthew Schreiber, co-CEO and chief investment strategist for WBI Investments and CEO of CyborgTech.
By seamlessly pairing human advice with machine-optimized portfolios, “Cy” recently won “Best Robo Advisory Platform” in the 5th annual FinTech Breakthrough Awards program.
“Although big banks might have such technology underneath their umbrella, we at CyborgTech can help smaller banks that need it, as what we’ve built is incredibly pliable,” Ann Schreiber, chief marketing officer for WBI Investments and president of CyborgTech, says. “It can plug into existing systems very easily.”
Additionally, since the average age of financial advisors in the US is nearing 60, “Cy” had to be simple and easy to use, Matthew Schreiber says, while also addressing the flip side.
“These guys grew up in wire house settings, were trained incredibly well, and traded stocks for a long time,” Schreiber continues. “They have more market knowledge and field experience, and because we’ve been putting a lot of technology around the market these days, younger advisers typically don’t have all that.”
Founded in 2008 as a small community bank in Teaneck, Cross River Bank was recently recognized as the third-largest lender of Paycheck Protection Program loans during the pandemic, following JPMorgan Chase and Bank of America.
“Our average loan size in the first round was $33,000 compared to the national average of $101,000,” Eden Hoffman, head of communications at Cross River, says. “This showed that the money was truly going to small businesses in need.”
Now, as the second round comes to an end, Cross River has made more than 450,000 loans to small businesses nationwide, saving more than 2 million jobs in the process, explains Phillip Goldfeder, senior vice president of public affairs at Cross River.
How did they manage this?
“We merged the trust and reliability of community banking with the innovative offerings of a technology company,” Goldfeder says. “Today, we’re powering the most successful fintech companies in the world.”
Shortly after its founding, Cross River entered into a technology partnership with GreenSky (point-of-sale consumer loans), with over 30 like-minded partnerships following soon thereafter.
“We are now the bank behind many fintech companies on the marketplace lending side, such as Affirm, Upstart and Rocket Loans; the consumer payment space, such as Stripe, Plaid and Remitly; and even in cryptocurrency exchange, such as Coinbase,” Hoffman says.
Cross River also builds its own proprietary technology to ensure it keeps pace on the banking side as technology partners continue to evolve.
“We’re not consumer facing, but we’re the ones making sure the mechanisms work, that consumers are being protected, compliance is being followed, and that money is being moved safely,” Goldfeder says.
Valley Bank in Wayne is embracing a culture of innovation that combines people, process and technology to drive their business forward. This innovative mindset is helping Valley design a more customer-centric culture. For instance, in 2020, the bank identified a need to make banking services for homeowners associations (HOAs) less time-consuming and more personalized.
Valley rolled out HOAValley.com, a fully integrated and intuitive online banking platform dedicated to serving the needs of HOAs and property managers. “From specialized deposit products to online treasury solutions, Valley’s dedicated online platform leverages some of the most innovative digital resources powered by a dedicated team of bankers to help HOAs improve efficiencies and optimize cash flow,” says Fareena Suri, innovation program manager at Valley.
This spirit of innovation is accelerating Valley’s commitment to fintech partnerships. As Valley moves forward, it is leveraging its extensive experience in the real estate industry to partner with PropTechs–startups offering technologically innovative products or new business models for the real estate market. “In fact, Valley is currently exploring investments in PropTech partnerships that will leverage the bank’s extensive experience in the commercial real estate industry to help it become a thought leader in this space,” Suri says.
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