This report examines the significant volume of recent investment activity in the FinTech market for financially underserved consumers. This consumer finance segment is a dynamic and growing space. Over the span of 12 months, investments and exits involving 74 companies and 85 transactions furnished opportunities and returns for more than 125 investors. A closer look at the size and key characteristics of the active market for consumer financial products addressing the needs of the underserved provides a chance to define and examine a unique consumer finance segment normally embedded in an array of mass-market segments including consumer finance, specialty finance, and financial technology.

FinTech, in this report, designates financial service companies that use technology to reduce costs and increase access to financial services as a key part of their strategy. More narrowly, this report focuses on the growing subset of FinTech companies developing products and business models that serve, or have the potential to serve, financially underserved consumers whose needs are not fully met by traditional financial services.

Underserved consumers struggle with their financial health in a number of ways. They may use alternative, and often costly, non-bank financial services – such as check cashing or payday loans – to meet some or all of their financial needs. They may be challenged in their access to credit by subprime credit scores and thin or no credit files. They may find their access to – and the benefits derived from – a full range of conventional financial products otherwise limited by low – to moderate household incomes or other factors that inhibit the achievement of financial health.