The Rise of the “Finfluencer”

TikTok is a popular entertainment app that’s used by nearly a billion users daily—the majority of whom are under 25. TikTok’s highly diverse audience base means there is an incredibly diverse range of content people create and consume. While TikTok began as a space for dance challenges and comedic videos, it has evolved into an all-round entertainment platform that shares bite-sized educational videos. 

As a result of this diverse content, we have begun to see new types of influencers gain traction on the platform and across other social media sites. A new type of influencer that is taking social media by storm is the finfluencer. 

What is a finfluencer?

A “finfluencer”—or finance influencer—is an influencer that shares financial information and expertise. 

They offer Gen Z and Millennials financial advice in snackable, light-hearted formats and are becoming an increasingly popular source of financial information on social media. 

Why are they relevant?

There are four main reasons finfluencer have been able to dominate TikTok:

1. The rise of fintech has resulted in a money-savvy community of Gen Z and Millennials that live and breathe financial literacy.
2. Amid the COVID-19 economic uncertainty, younger generations don’t know what to do with their money. 
3. Amidst high unemployment, Gen Z & Millennial audiences are educating themselves to be financially resilient.
4. There is interest in cryptocurrency and investing, but a limited understanding of the processes and consequences.

The impact of fintech

Fintech (financial technology) has disrupted traditional banking. As of January 2021, over 14 million Brits had a digital-only bank account (Monzo, Starling Bank. Plum etc.). 

Fintech banking offers customers 24/7 support through non-traditional channels such as social media. New fintech and traditional banks are beginning to take a mobile-first approach to reach out to customers by designing products and services with the aim of enhancing customer experience via mobile. 

With more accessible banking, more consumers are taking an interest into personal finances in order to become more financially literate. 

The impact of COVID-19 and unemployment

The pandemic has resulted in economic uncertainty. Unemployment rates among 18 to 29 year olds is expected to reach 17% in 2021 and many are in low-paid and insecure jobs. As a result, young people don’t know what to do with their money. 

76% of 25 and 29 year olds have concerns over how COVID has impacted their work and personal lives. Amidst this recession, Gen Z & Millennial audiences are using social media to educate themselves to be more financially resilient; they are learning how to plan for and in later life. 

The impact of Crypto

Cryptocurrency has become a buzzword online. As a result of its popularity on social media, many finfluencers have begun discussing investing in crypto. Thanks to the general population having a minimal understanding of crypto, finfluencers have been able to gain a following through creating crypto content. 

Crypto-memes and influence from public figures such as Elon Musk, crypto attracts people due to its perceived value; Dogecoin saw its value rise 40% after it went viral on TikTok. Many consumers don’t understand the concept and consequences of crypto. Finfluencers have the opportunity to explain these through simple, bite-sized content. 

Who and where are finfluencers?

Among top finfluencers, 34% are female aged 25-34 years, compared to 16% male in the same age bracket. This shifts when looking at finfluencers aged 35-44, of which 25% are male and only 9% are female.

Finfluencers are primarily found on TikTok (or FinTok) and YouTube. They are discoverable through the key hashtags:  #moneytok, #stocktok, #fintok, #finance and #investing.

TikTok has become a go-to platform for Gen Z and Millennials to learn and teach all-things finance and investing. The hashtag #FinTok has over 490.5 million views, and #MoneyTok has over 8.5  billion.  

Regulations for finfluencers

Surprisingly, there are no specific regulations relating to the promotion of financial services on social media. However, the Financial Conduct Authority (FCA) has repeatedly stated its concerns for fraudulent content on social media; cryptocurrencies aren’t currently regulated by the FCA, meaning many social media posts around digital tokens are scams. 

As a result, TikTok recently banned the advertisement of financial services and products on its platform. Google is also cracking down on financial services advertisers by making them prove they are authorised by the FCA

To summarise, there are no regulations for banks or fintechs surrounding the use of influencers. The chosen influencers must be clear about exactly what they are promoting and inform their audiences of rewards and risks involved. This isn’t a strict law, but is ethical and will avoid an investigation from the FCA.

Finfluencers must clearly label any sponsored advertisements from financial institutions, as they would with any other partnership.