Credit Card Aggregators: Over- and Under-Served Markets
Gen X and baby boomers constitute the underserved segment of the credit card aggregator market.
- Financial technology (Fintech) describes new technologies/innovations that seek to automate the delivery and use of financial services.
- Third-parties having access to bank data and being able to build apps that connect financial institutions and third-party providers (aggregators) are among the most active areas of fintech innovation.
OVERSERVED AND UNDERSERVED SEGMENTS
- The credit card aggregator market caters to the 91 million consumers with low-to-moderate incomes, 51 million people battling volatile revenues, those with credit challenges (121 million people), and the underbanked/overbanked (67 million people).
- These consumers constitute the financially underserved people in the US and represent most of the credit card aggregator market. However, while their services are helpful to these consumers, they might experience challenges when navigating the numerous technological innovations of such companies.
- The underserved segments of credit card aggregators thus follow after the age group that is less connected with technological innovations, i.e., Gen X and baby boomers. Consumer-oriented fintech targets the younger generations of Gen Z and millennials, who are "digitally-savvy, urban, and better-educated."
- However, fintech experts believe the focus of the industry on millennials is more because of the size of the segment, rather than the ability of older generations to use fintech.
- Fintech usage is, however, "highest among millennials, with a global average adoption rate of 48% among tech-savvy 25-34-year-olds." Consumers in the older category use fintech services on average (30% for 45-54-year-olds and 22% for 55-64-year-olds). However, despite these statistics, they are still underserved.
- The fintech industry, and in essence, aggregators, tend to offer little to older consumers because their priorities and solutions do not align with the needs of that category.
- Credit Karma's target segment, for example, is for consumers between 18 and 34 years, which comprises Gen Z and millennials.