J.P. Morgan Chase & Co. is launching a $3 million competition on Wednesday, Feb. 28, that will help black businesses become bigger players in the flourishing fintech industry
The Financial Solutions Lab Challenge will allow businesses owned by people of color, women, and people with disabilities to develop fintech (financial technology) products that benefit overlooked populations in their communities.
Backed by funding from J.P. Morgan, roughly eight to nine businesses owned or run by minorities can win $250,000 each in capital. They also will get professional services help from the likes of industry leaders like Google, strategic guidance from the FinLab’s advisory council, and resources such as mentorships and access to partners from the Center for Financial Services Innovation (CFSI) and JPMorgan Chase.
This year will mark the first time the competition focuses on minority entrepreneurs. The group is underrepresented in serving the fintech business, an industry that essentially develops technology-based products to offer financial services. Fintech firms had revenues of $16 billion in 2016 versus $12 billion in 2013, the International Trade Administration reports.
The competition was started in 2014 by the Financial Solutions Lab (FinLab). That lab is part of a five-year, $30 million between J.P. Morgan and CFSI. It aims to identify, test, and expand the availability of promising innovations that help Americans increase savings, improve credit, and build assets.
Organizers say because diverse businesses are more likely to develop more inclusive products and services, the Lab is spotlighting diversity this year. They add diverse fintech innovators and products can also help improve the financial health of underserved U.S. populations by giving them access to such Fintech tools such as apps and other software to help them build wealth.
Businesses planning to enter the challenge are encouraged to show how their products can help consumers improve their financial health, help their company or nonprofit succeed in serving a diverse market, and show how their operations reflect this diversity.
Despite improvements in recent years, women-owned businesses received just $1.9 billion of the $85 billion total invested by venture capitalists last year and only an estimated 3% of the venture capitalist workforce is black while only 4% is Hispanic or Latino.
The FinLab believes that diversity among leaders and teams also leads to more inclusive products and services with the potential to scale to millions of customers. All told, FinLab companies have raised over $250 million in capital since joining the program.
“We continue to be blown away by the impact that FinLab companies are having on consumers,” stated John Thompson, chief program officer at CFSI. “The 26 organizations supported by the Lab so far have cumulatively grown to help more than 2.5 million Americans improve their financial health—more than 15 times the consumer base they served before joining the Lab.”
Colleen Briggs, head of community innovation, JPMorgan Chase, stated, “Technology offers a tremendous opportunity to help us reach overlooked populations with financial products and services that can improve their long-term financial health. We want to see more innovation designed to meet the needs of underserved populations and teams of entrepreneurs that reflect this diversity. We believe that the FinLab’s continued focus on inclusive fintech will help us unlock this potential.”
Businesses interested in applying for the FinLab competition can submit an application at http://finlab.cfsinnovation.com by the deadline of April 11, 2018. Winners will be announced in June.