Investing Has Been Crazy. New Fintech Seeks to Make Sense of It All. A look at two new platforms helping investors take control of their money in an out-of-control landscape.
By Natacha Rousseau Edited by Bill Schulz
Opinions expressed by Entrepreneur contributors are their own.
As data driven tech continues to pervade our digital lives, what impact can it make on our money?
Front (an automated strategy platform for everyday investors) and Katapult (a lease-to-own platform for consumers with low credit scores) operate at different ends of the market, but both are driven by a passion to give everyone more control over their money.
Katapult-ing interest fees
Katapult has identified a clear need in an underserved market and aims to help the 55 million under-banked Americans which, according to the Federal Reserve, accounted for 22 percent of U.S. households in 2018. In addition, only 40 percent of Americans say they could pay an unexpected $1,000 expense — such as an emergency room bill, car repair or appliance replacement.
Katapult enables people with low incomes to afford things like new furniture or electronics, using a clear and easily understood lease-to-own purchase agreement, which removes the fear of being penalized for late payments or mounting interest fees.
"Many Americans do not have access to traditional financing options due to a lack of credit or bad credit," claims Katapult CEO, Orlando Zayas. "Our belief is that you are more than your credit score and everyone should have access to financing with transparent payment terms."
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Front-ing assessments
Last year's chaotic markets inspired the launch of Front, an algorithm driven investment strategy platform to give investors outside of Wall Street the same level of information to help decision making. Founder Bam Azizi drew on his experience in the stock market crash of 2008 to create technology for small investors that gives a personalized risk score for stocks, combining financial assessment metrics with individual preferences and current portfolios.
The startup has developed a model called FISCO ("Front Investment Score"), which makes investment risk easy to understand by calculating a single score for every stock. This automates the usual manual process of analyzing a company's performance, assessing news for any impact on stock price, looking at financial performance over time and predicting future shifts in value. They then automatically assess the stock for compatibility with the investor's current portfolio to give a final percentage score. Their model delivers a result in seconds rather than days. The lengthy manual process may tempt investors to take a hasty decision and Front maintains it is empowering people to invest with data, not their gut. The app then links the investor to their usual brokerage platforms, like Robinhood and Ameritrade, to purchase stocks.
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"The pandemic brought unforeseen circumstances that we had never seen before," adds Zayas. "Some decisions such as remote set-up and employee support had to be made quickly upon shutdown, but as we have navigated through this pandemic on an ongoing basis, we really listened to understand the situation and pain points so we knew how to address them."
The Front team has always been remote, dispersed and getting things done virtually. Even in a post-pandemic world, Azizi plans on continuing to conduct most meetings via video call. It saves money and the team can focus more on the stuff that matters, rather than transportation and logistics.
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