For perhaps the first time in US history, the government is mailing practically everyone in the country checks to help them get through what is a challenging time. Getting virus-related money to people is a massive logistical nightmare, and the opportunities for abuse are substantial. With the economy in lockdown, though, there’s no choice. Millions of people need money to live.
The current government systems, however, clearly aren’t up to the task. Sending out checks in the mail is a hopeless solution in a situation where people need money right now.
Fintech companies rightly see an opportunity. The current crisis is a chance for them to showcase just how much better life is when people choose to use their services for their transactions compared to traditional channels.
Even before the crisis struck, there was evidence that fintech firms were having an impact. Companies were making it possible for domestic B2B clients, for instance, to open a euro bank account without any of the usual fees. These kinds of services will likely become more mainstream. Banks closed their branches nearly a month ago now.
Some fintech companies are helping people get access to their stimulus money faster. One fintech firm called Chime, for instance, is providing its customers with a one-thousand-dollar advance that they can use while they wait for their official money from the IRS. The free overdraft feature for its customers allows them to get access to credit today. Chime will simply wait for the government to pay its customers and then recoup the money.
We’re not talking about small sums of money either. According to a Business Insider report, Chime also already distributed more than $1 billion to its 600,000 customers. And that number is likely to rise if the administration decides that it wants to keep people under lock and key for longer.
Interestingly, fintech is also giving users more options. The vast majority of people need the money from the government, but they don’t necessarily want it all at once. Instead, they want to stagger it over the weeks so that they can remain frugal and on a solid financial footing as the crisis unfolds. A bunch of companies, therefore, are enabling their clients to receive assistance in tranches of their choosing.
Fintech is also providing people with answers for how much money they’re likely to get in the post when it does eventually arrive. TurboTax – one of the country’s most popular accounting software developers – says that it will include features that will give people a sense of how much they’re likely to get paid. The system is free to use, too, meaning that anyone can sign up for more information on how they should budget.
Fintech, therefore, has an opportunity to prove its worth in the current crisis. Finally, there’s a compelling reason to make financial transactions faster. People desperately need money right now. They can’t afford to wait another week or month for the check to arrive. It has to happen today. And that’s what fintech is all about.
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