SaverLife’s ‘fintech for good’ research was generously supported and funded by the Bill & Melinda Gates Foundation.
Unpacking the Consumer Fintech Experience (Fintech Banking, Earned Wage Advance, Cash Advance, and Buy Now Pay Later)
The use of financial technology (“fintech”) has grown rapidly over the past decade, and most recently options such as fintech banking, Buy Now Pay Later (BNPL), cash advance, and earned wage advance (EWA) applications have exploded onto the market. These solutions are widely used by SaverLife members (members) and offer new tools that may better meet their financial needs than mainstream financial products. However, some aspects of these fintech solutions also have the potential to increase debt or destabilize household finances. In this report, we explore whether new fintech options are helping or hurting the financial health of persons living with low-to-moderate incomes (LMI).
In this research, we examined the characteristics of SaverLife members who use fintech products to manage their financial lives, then we delve into their reported experiences with these products.
Topline findings
Finding 1: 45% of members use fintech banking. These members tend to have lower incomes, lower rates of employment, and a higher likelihood of living on a disability than members who turn to traditional (brick-and-mortar) banks.
Finding 2: Almost half (49%) of members paid overdraft fees in the prior 12 months; members who identify as Black or Hispanic and who have lower incomes are more likely to pay these fees, underscoring that lower-income people pay significantly more for banking services. Fees are the top reason for closing traditional bank accounts and using fintech bank accounts.
Finding 3: Over 40% of members used BNPL in the past year. Among users, 63% said they had one or more problems with these products, such as overspending or missing payments.
Finding 4: Compared to members who use BNPL, members who use cash advance or earned wage advance products are less likely to own credit cards. Users of all three products are more likely to use payday loans than non-users.
Finding 5: BNPL use is more associated with convenience and preference while online cash advance and employer-provided earned wage advance are more associated with paying bills on time and dealing with unexpected expenses and drops in income.
Finding 6: Use of all three short-term credit products is highest among SaverLife members with children, underscoring the need for additional financial support for parents (such as increasing and expanding the Child Tax Credit).
Research Events
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Webinar 2 — Coming in January 2025.
Financial health product design: How do we design better fintech products to meet the needs of consumers?
We will open up registration for this event closer to the date of the webinar. Please check back later.
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Webinar 1
SaverLife explores the latest in fintech innovation, revealing why consumers are increasingly relying on fintech back accounts, Buy Now Pay Later (BNPL), Earned Wage Access (EWA), and Cash Advances to manage short-term liquidity needs.
