Nowadays we all talk about how to spend our money and make profit. We invest, buy houses and so on and low or even negative interest rates worry us… We choke in the money and within the scope of Personal Finance we get all kinds of suggestions on how to spend our money in the best way and make profit. That’s nice of course and a lot of people respond on it.
But there is more, because at the moment a lot of people, especially the poor or those with debts, are continuously out of scope as we see and read in articles about Personal Finance. So at the moment Personal Finance is only for people that have or earn enough money to spend it for future goals like investments, pension or to buy expensive things.
This forgotten group is indeed not a good basis for a business case aiming on financial gain… Often they have to deal with measures and rules that make their financial position even more difficult because they live for instance in a certain region or have a low credit score. For getting a loan or insurance they have to cope with higher rates than those with a good salary and live in a more affluent neighbourhood…
Also our financial institutions like banks support this system of oppressing the poor and people in debt with high negative rates up to 12% per year and do nothing to get them out of this miserable situation instead.
Looking at Personal Finance as a whole of financial tools and opportunities for people we can conclude that there is a blind spot or missing link to the poor and people in debt.
How can we solve this? In the FinTech world we see that some start-ups and new financial companies try to point out and inform people about their financial status and give them hints to improve their financial behaviour.
But why are the existing banks, mortgage and insurance companies not active in this field? Well, simply because it does not fit into the old business case, a business case that overlooks the social part of our society. They often use the excuse of old software on mainframes, privacy rules and other legislation, but this does not release them from participating in the change to a better world… Otherwise they will lose the added value of their business, now or in the future.
Fortunately we see some movement in this respect towards a more social and sustainable society. Otherwise customers will turn easily to new FinTech offering new practical functions. In the meantime Fintech is taking over all existing functionalities that banks offer in Personal Finance.
So let this be a wake-up call for all incumbents. They should make a start with Social Banking or Social Personal Finance by adding this new “social functionality” to their products and services in order to prevent customers switch to new FinTech.
But there is more. Not only the business must pay attention to the poor and people in debt, but also our society must be aware of the need of education. Education and coaching will enable people to get out or even better to prevent them from financial misery. This requires not only more attention for financial education on schools, but should be implemented into all banks and financial institutions that sell or are related to financial products and services.
Although the added value of “social functionality” is just a minor factor in the scope of financial profit, it will contribute to making this world a better and sustainable world. So let’s get started!