The reason fintech has failed to help consumers in debt: Consumers in financial distress have very little disposable income, leading them to prioritize spending on rent and essentials, so CLTV is low.

CAC is high due to a competitive acquisition environment, and servicing costs are high due to old infrastructure and compliance overhead, as well as low brand loyalty, especially for lending products.

Businesses attempting to offer services therefore either fail, create extractive business models, or monetize consumer behavior in a way that isn’t necessarily helping consumers.

Failed businesses include most budget planning and debt repayment programs. Premium debt repayment products have failed to scale, with YNAB a single counter example.

The vast majority of debt repayment tools are free, and their success rate at getting consumers to actually save has never been established by research. They therefore repeatedly fail to build a venture-scale business at a reasonable amount of time.

Extractive businesses may start as consumer-facing, but their business models are eventually misaligned with consumer benefit.

High CAC, low customer loyalty, loan stacking and high cost of servicing all dictate either high APR, often masked as subscription, or require a commitment from consumers that many can’t afford.

Consolidators, specifically, require a certain amount of outstanding debt to qualify for their program, often encouraging consumers to default on loans that are current to reach that limit.

This causes severe pressure on consumers’ credit scores, while many never complete the program. Even and EarnIn, two companies in the payday advance space employing different funding models (employer-funded for Even vs. tips-funded for EarnIn) present an interesting alternative.

Content monetization businesses provide free help and credit monitoring for consumers. It is a helpful package and one that is both hard to replicate SEO-wise and highly defensible.

However, once they create a pool of demand from consumers, these services (Credit Karma, NerdWallet) monetize through the personalization of credit offers to consumers.

While not by themselves extractive, they are not aligned with consumers’ need to reduce their debt load and improve their financial stability.

This type of solution has the most potential to be aligned with consumers thanks to its ability to scale consumer engagement at low CAC, but it is crowded and heavily reliant on Facebook and Google as distribution mechanisms, making it unattractive to new entrants.

As usual, if you want to work on problems like these, we’re hiring in many positions https://jobs.lever.co/trueaccord