Why The Future Of TikTok Impacts The Fintech Industry
On Monday, I published a piece for Forbes diving into how the future of TikTok, whether banned from the U.S. or sold, may impact a generation’s financial literacy. (Read that story here).
The TL;DR is that TikTok played an essential role in increasing financial education for many marginalized communities, including women, people of color, Gen Z, and anyone who never received resources to become financially literate (57% of U.S. adults are economically literate).
Those pathways into financial education, via the popularity of personal finance creators like Vivian Tu (Your Rich BFF) and Tori Dunlap (Her First $100K), play an instrumental role in expanding fintech companies’ products and services to a broader audience.
This is inspiring news as it means that anyone can now become more empowered when making decisions around their money. No matter their financial background, people can now access the tools and resources they need to make intelligent financial decisions.
Not only that, but more people are becoming aware of fintech as a career opportunity, allowing them to take control of their financial future.
As the world reaches this tipping point with heightened financial literacy and increased use and awareness in fintech, I couldn’t help but wonder if TikTok were banned, would we roll backward?
Financial Education Gap
Since financial literacy isn’t taught in schools and typically only afforded to the well-resourced and informed, social media has been a go-to resource for learning and knowledge sharing. As noted in my Forbes article:
“78% of millennials and Gen Z believe they have more access to financial advice now, thanks to social media like TikTok than they would have as part of previous generations because of their identities, such as race, gender, or income.”
A survey by the National Financial Educators Council revealed that the average consumer lost $1,819 in 2022 due to inadequate financial knowledge, a significant amount in an era of high living costs.
Fintech companies and leaders are doing financial education well, like Step (a banking app for 14-24-year-olds) and Angel Rich, who is disrupting the fintech industry as an international champion of financial literacy and equity.
However, if TikTok gets shut down, it will create a swell of consumers that will be looking for financial education and digital tools elsewhere. And there is a rapidly increasing demand for financial education, with nearly 80% of fintech users asking for this service.
This begs the question: how will the fintech industry respond?
In journalism school, I had a professor who instilled in us aspiring reporters to “follow the money,” aka data. When we do, we can see fintech companies have a lot of incentives to cater to TikTok’s audience:
- 42% of all TikTok users in the U.S. are between the ages of 30 and 49, and 11% are above 50.
- 37% of TikTok users have a household income of $100k+
- 61% of all TikTok users are female (!) Essential for female-focused platforms.
- Twenty-four hours: The time spent watching content on TikTok each month. This is more than the average time spent watching YouTube.
New Metircs For Success
Most notably, TikTok’s other significant impact on the fintech industry is its ability to alter the data, strategy, and metrics we use to determine success.
For example, instead of focusing on clickbait-type content that would typically go viral on platforms like Twitter, TikTok users sought content with more value-driven stories from creators. This included personal stories, vulnerabilities, and traumas.
As a result, fintech companies have had to pivot their marketing budgets to influencer marketing – because TikTok proved that people follow people and not institutions. Consumers wanted genuine stories they could relate to, and TikTok provided this unique form of engagement. It’s why fintech companies have had to get personal with their stories to reach their target audience.
In addition, this newfound appreciation for authenticity has opened up many new avenues for fintech companies to explore when it comes to marketing their products. No longer is it simply a consumer tool to build wealth or software that enables enterprises to offer financial services.
Fintech tools have become a way to cultivate a sense of belonging with their customers and partners. Fintech companies can now use storytelling to create a community where users can feel part of the company while also being willing to pay or partner with them.
This culture shift has allowed fintech companies to reach out to new audiences and build relationships with their customers.
Power of Brand
With the economic downturn, cutting marketing budgets can be tempting. First, however, we must remember the power of brand and infrastructure. We’ve seen how a lack of brand marketing can affect our perception and how things may evolve.
That’s why it’s imperative to look at the human-centered side of things, such as with TikTok. It’s not just businesses that have been impacted, but small business owners who have relied on these platforms to make a living as Tori Dunlap shared, “this ban would hugely impact the ability to run my business.”
We must take the lessons learned and use them to inform our strategy – this isn’t the time to back off brand and marketing. Plus, follow the data.
User preferences when looking at branded content:
- 68% remember a brand better if they feature a song they like in its videos.
- 56% of users and 67% of creators feel closer to brands that publish unfiltered content.
- 45% of users feel more connected to brands that offer value on the platform (For example, videos about #inflation saw a nearly 1900% increase as people came to the platform to learn about what’s causing inflation and its impact on them).
- 50% of users said the platform helped them decide what to buy after seeing the product advertised or promoted on TikTok. (Source).
Fintech has made its mark in mainstream dialogue. However, many people still need to learn about its transformative potential.
As a creator on TikTok and other social media platforms, I have yet to see any meaningful dialogue around what fintech is – the potential power it holds to reshape financial narratives.
We must take the onus upon ourselves to reshape our perceptions of fintech and consider its capabilities in different contexts.
This is a massive opportunity for us to explore, and by recognizing the full range of fintech applications, we can open up new possibilities and help more users understand how they can incorporate fintech into their lives.
So, who has experimented with sharing financial education and knowledge on TikTok? What’s working for you? What’s not?
Ultimately, the financial services industry needs to be more aware of trends like TikTok, as my friend and fintecher Vered Frank shared. These are more than just “fads” – platforms reflect the yearning of new-gen investors to be more engaged and connected with their money. This a trend we should be encouraging – not suppressing.
The government’s decision to ban new platforms, motivated by the intention to protect (or possibly silence in this case), will ultimately have adverse effects. This is particularly concerning as it follows a period of financial inclusion, where large areas of the population were finally given access to the services and opportunities they had been denied for so long.
Such a move would perpetrate the industry’s old habit of excluding large portions of the population.
The future of TikTok in the U.S. remains uncertain, but it has already had a massive impact on fintech by providing users with access to educational content and helping those in need gain greater insight into financial well-being.
It’s up to us as an industry to continue promoting financial education and access so that we can all benefit from its many advantages.