200 million Americans have loans outstanding, and many of those borrowers are middle-income consumers who are poorly serviced by the financial services industry. Traditionally, these borrowers do not have access to effective financial tools that help them make informed business decisions. Middle and lower income Americans are at a disadvantage, and some fintech companies are taking on this huge consumer problem. Nadim Homsany, the co-founder of EarnUp, spoke today at the Brookings Initiative on Business and Public Policy (IBPP). Nadim served on a panel with other experts to discuss the effects of the fintech boom, with a particular focus on how regulation and public policy can enhance or hinder the industry’s ability to solve some of the more intractable problems facing middle-class Americans. 

The problem for many consumers

The Brookings Institution panel discussion was titles “How to Make Fintech work for all Americans”. The Earnup founders saw the consumer finance problem through family experience. “We’ve seen our parents endure a lifetime of loan frustration – complex products, poor service, indecipherable statements, and unpredictable expenses,” said Nadim Homsany, EarnUp co-founder. “Our parents are still paying back these loans even as they enter retirement, and they’re not alone — everyone has these problems.”

Matthew Cooper, another EarnUp co-founder explained his reasons for starting the business in a recent S.I.C interview: “As I started to learn more about my parent’s experiences related to taking out loans and repaying them, it became clear to me that they had a horrible experience. It may have been bad advice from financial professionals, or confusing information from lenders, or both.”

Cooper continues: “The entire process of accumulating debt and the process of repaying debt just felt like it fundamentally wasn’t working. And I felt that the parties involved around my parents had been intentionally misleading or ignorant of the products they were offering. As a son looking out for them, the whole process made me very upset.”

Other large companies have taken notice. Aaron Klein of Brookings recently wrote that Google AdWords and Facebook no longer allow certain types of deceptive financial products to be advertised on their platforms. Bookings also reported that poor financial service products affect rural consumers more than those in urban areas.

The fintech solutions

“There is incredible innovation happening in the fintech space right now” said panel attendee Kevin Joseph, President of The Joseph Group and former Senior Counsel to the U.S. Senate Committee on Commerce, Science and Transportation. “Companies like EarnUp have created solutions that solve financial challenges for Americans who are poorly served by the current banking system.”

Nadim explained that EarnUp’s solution is to intelligently automate loan payment for consumers. They do this by setting aside small sums of money as income comes into the consumer’s account. EarnUp’s system makes the loan payments, which eliminates the need for a consumer to create a budget. Borrowers can also benefit by accelerating their debt payments, which reduces the total interest expense and improves the consumer’s credit rating.

A win for consumers

“We believe that financial collaboration can be a winning strategy for middle-income consumers”, Homsany explained. “EarnUp will also embed financial education resources into the site, so that borrowers can learn more about their finances and become more empowered”. EarnUp’s founders are focused on building a fintech company can will benefit all consumers.

Listen to the full panel at the Brookings website.