How social media shapes the future of fintech

Social media in fintech is a huge issue and cuts right to the core of how the latter has revolutionised financial service. Both are all about democratisation and giving individuals greater power – social media does so by giving people a voice, with billions using X, Instagram, Tik Tok and others to express themselves and reach others. Fintech works in a similar way, with a multitude of tech solutions designed to give people greater transparency and direct control over their finances (across saving, banking, insurance, crypto and investment). The two are increasingly combining, with social media shaping fintech and opening it up to new audiences.

The GameStop Phenomenon

To get an idea of how much social media is influencing financial decisions, we only have to look back to January of 2021. At this time word spread throughout the DIY investor community in the US about struggling video game store chain GameStop with consensus it was undervalued. This largely took place on Reddit where momentum developed, spreading around social media and soon the trading strategy to short GameStop shares went viral.

The result was astounding. Through this mobilisation of investors on social media, investors seized upon GameStop shares and forced its share price to soar to $500 – nearly 30 times its valuation of $17.25 per share at the start of the month. Furthermore, institutional investors in the stock lost billions. And that was just the beginning, regulators soon stepped in, and congressional hearings were arranged to scrutinise market practices.

The lesson was clear – social media could not be ignored any longer in the world of finance. This also opened the industry’s eyes to just how active the online community of trusted fintech influencers is. Tik Tok financial creators, and those creating content on YouTube, Instagram, X and numerous other platforms, could no longer be ignored and were clearly more than capable of moving the dial when it came to market behaviour.

The growing world of finfluencers

At its most basic level, social media is a way to share and communicate information so it’s no surprise that this has become a conduit for ideas and tips around finance. Fintech user engagement has thrived on these social media platforms, and it was only a matter of time before influencers in financial education arose.

Engaging with financial markets can be a daunting prospect which is why so many people have gravitated towards influencers who can easily break down concepts, explain how things work and even give helpful advice and tips.

This means financial influencers are now a heavily relied upon by investors and this is particularly prevalent among younger generations. In a recent survey, the FCA found that 85% of young investors regard social media platforms like YouTube, TikTok and YouTube as highly influential on their investment decisions. Within this, 43% admit these platforms are their primary research tool.

And this is growing. According to customer engagement platform Emplifi these influencers have been growing their audiences. Between April 2023 and April 2024 follower numbers of financial influencers on Instagram and YouTube recorded double median growth. In particular, the largest financial influencer Instagram accounts (more than 100,000) recorded nearly 15% median growth over this period. Meanwhile, on YouTube, financial influencer accounts recorded 8% median subscriber growth compared to 4% for other channels.

How social media is shaping fintech

Unsurprisingly, fintechs are capitalising upon this and a surge in social media fintech advertising has occurred in recent years. These platforms are a great way to communicate with customers and spread brand awareness, but many are now going further and partnering with financial influencers.

Creator-driven fintech campaigns are taking various forms and providing education can be a very popular way of connecting to more people. A common strategy for Tik Tok fintech campaigns is to quickly grab a person’s attention with a common problem such as “want to buy that first house but not even enough savings to cover next month’s rent” or any other evocative statement. Tik Tok creators are fantastic at quickly and concisely generating engagement with their followers, and they can do this to identify a person’s financial problem, highlight how financial services can help and then put that person in touch with the fintech’s solutions.

This is now expanding and every month more fintechs are publishing Tik Tok finance tips, promoting savings via social media and carrying out all other kinds of content campaigns through these financial influencers. Engaging Gen Z in fintech is also growing as a trend as many young people face challenges previous generations didn’t, such as soaring inflation and a sustained cost of living crisis.

However, while social media may be a natural way for fintech solutions to market and expand their reach, they must do so with caution. Financial services remains a highly regulated industry, and financial promotions must be clearly labelled as such, with all the required disclaimers and T&Cs included. This is obviously a challenge given social media’s short-form structure for content and in 2024 the FCA issued 38 alerts again social media accounts operated by finfluencers due to concerns about these promotions. This served as an important reminder that, regardless of the communication method used, fintech firms and finfluencers alike must be careful about the impacts they can have.

To get more insights from the Cardaq team as they’re published, sign up to a newsletter below: