Regulating FinTech: The Path to Actual Financial Inclusion in the United States

Abstract

Over the past decade, financial technology (FinTech) has redefined the financial sector. FinTech refers to algorithms, software, applications, and other technologies that work to improve and automate financial services. This paper investigates FinTech’s role in financial inclusion in the United States with data and qualitative analysis from government research and peer-reviewed reports. It concludes that despite FinTech’s growth and success over the past decade, the industry has made little impact on financial inclusion for Black, Hispanic, and lower-class Americans. Some FinTech products trap these groups into cycles of debt, which further extends generational cycles of wealth inequality. The first section of this paper establishes the landscape of wealth inequality in the United States and analyzes the FinTech revolution. The following section examines how lending and algorithmic bias are reflected in FinTech services. Most notably, this paper concludes with solutions of how FinTech companies and the government can work to correct this inherent discrimination. FinTech companies can partner with nonprofits and introduce socially conscious practices to expand financial resources. The government must introduce FinTech-specific legislation and enforce current laws to protect underserved Americans and fix the inequalities that they helped create.