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Podcast 288: Leigh Phillips of SaverLife

The CEO of SaverLife talks savings, gamification, financial inequality and why she is optimistic about the future for low-income Americans

March 5, 2021 By Peter Renton Leave a Comment

Views: 125

Just a heads up that we have rebranded the podcast. From now on we are calling the show Fintech One•On•One, it better reflects what we are trying to do here. That is, one-on-one conversations with fintech leaders. While lending is still important to us, we cover most verticals within fintech and so we now have a name that reflects this broader scope.

We have heard many times on this show and in the media that last year was a good one when it comes to savings rates and loan delinquencies. People were not spending as much and they received government stimulus to help with their savings and pay down their debt. So, when I received a survey last month that showed the exact opposite of this consensus, I wanted to learn more. So, while those generalizations are true, there is a segment of the population that has been hit brutally hard by the pandemic and in this episode we find out more about them.

Our next guest on the Fintech One•On•One podcast is Leigh Phillips, the CEO of SaverLife. SaverLife is a non-profit dedicated to helping build financial security for those people who need help saving money. They do this in a number of ways, including a gamification approach that makes saving fun.

On this podcast you will learn:

  • What attracted Leigh to the SaverLife mission.
  • How fintech is falling short on serving low-income families.
  • What they provide their members and how they encourage them to save.
  • How their prizes and gamification work to help people save.
  • Why $100 in savings is an important benchmark.
  • How Leigh thinks we can really solve financial inequality.
  • A profile of the typical SaverLife member.
  • The results of their survey that showed the impact of the pandemic.
  • How they are working with fintechs today.
  • What is the difference between those who are successful on their platform and those who are not.
  • How they are using personas in their messaging.
  • Who is funding SaverLife.
  • Why Leigh is optimistic about the future for low-income Americans.

This episode of the Lend Academy Podcast is sponsored by LendIt Fintech USA, the world’s largest fintech event dedicated to lending and digital banking.

Download a PDF of the transcription of Podcast 288 – Leigh Phillips.

Click to Read Podcast Transcription (Full Text Version) Below

PODCAST TRANSCRIPTION SESSION #288-LEIGH PHILLIPS

Welcome to the Fintech One-on-One podcast. This is your host, Peter Renton. Chairman and Co-Founder of LendIt Fintech.

(music)

Today’s episode is sponsored by LendIt Fintech USA, the world’s largest fintech event dedicated to lending and digital banking. LendIt’s flagship event is happening online this year on April 27th to 29th with the possibility of an exclusive VIP in-person component. The verdict is in on LendIt’s 2020 event that was held online with many people saying it was the best virtual event they’d ever attended. LendIt is setting the bar even higher in 2021, so join the fintech community at LendIt Fintech USA where you will meet the people who matter, learn from the experts and get business done. Sign up today at lendit.com/usa.

Peter Renton: Now, if you’re wondering what happened to the Lend Academy podcast, it is still here, this is it actually, we’ve had a re-brand. Fintech One-on-One is what the podcast will be called from now on. The reason we changed the name is that it better reflects what we are trying to do here, these are conversations, one on one conversations with fintech leaders.

We have moved beyond the lending space, but that is not to say lending is no longer important. On the contrary, we will continue to have leaders in fintech lending on the show regularly, but Fintech One-on-One better encapsulates what we are trying to do as we have many conversations with leaders that are outside of lending such as this one today.

Today on the show, I’m delighted to welcome Leigh Phillips, she is the President and CEO of SaverLife. Now, SaverLife are a national non-profit, they’re focused on helping people build financial security and they do that in really interesting ways. They focus a lot on gamification, ways to sort of gamify savings with their members that has proven to be quite effective, we get into that in some depth.

We also talk about what is the difference between people who are successful and not successful at really embracing their programs, we talk about the impact of the pandemic and how the members of SaverLife have been impacted much more than the typical person. We talk about how they interface with the for-profit community and they have some pretty interesting programs there and much more. It was a fascinating interview, we hope you enjoy the show.

Welcome to the podcast, Leigh!

Leigh Phillips: Thanks, Peter, it’s so great to be with you today.

Peter: Okay. I’d like to get started by just starting with some background. You’ve had a pretty interesting career looking at your LinkedIn profile, certainly not typical of the people I have on the show so why don’t you give us some of the highlights particularly before you got to SaverLife.

Leigh: Well, I’m glad to be a non-typical guest so it’s fun to have different voices on the show. So, I am …gosh, I don’t know what’s interesting to tell you, I started my career working in non-profits and fundraising because if you ever want to create a non-profit, you should learn how to raise money and then you’ll always have a job and that tends to be generally true, but then I actually connected with the San Francisco Treasurer. He was recently appointed and was looking for someone to be his assistant, so I thought that sounded like an interesting job in City Hall at that time.

I actually wanted to be a writer and I thought I could support my writing career with my day job, that was kind of my thinking, but what I wasn’t anticipating was that when I took that job at City Hall that some very passionate advocates would come along with terrific ideas around how to bank the unbanked, how to maximize tax credits and, you know, the City Treasurer managing everybody’s money at the city and county seemed like a logical place to launch some of those programs.

So, that’s how I got involved in this type of financial empowerment work and went on to launch the San Francisco Office of Financial Empowerment for the San Francisco City Government and did a lot of first to their kind of programs there, again, focusing on financial systems, financial equality and I really hope government step in and ensure a more equitable financial system. So, that was how I started out in this field and was very lucky to have that experience and meet so many wonderful colleagues and along the way.

Peter: So then, what attracted you to SaverLife? It’s been a few years now, but if you remember, what…..back to those early days?

Leigh: So, I’ve been CEO of SaverLife for about five years, but the organization itself has been around for 20 actually, since 2001, so we’ll see our 20-year anniversary this year. The organization was originally created under the name EARN and was one of the best-known non-profits focused on helping low-income families to save and build assets so the theory being that income alone isn’t enough to move people out of poverty, it’s really about wealth accumulation. So, helping people invest in those assets that become, you know, inter-generational like homes that really help shore up families like businesses contribute to economy and, of course, education.

So, that was kind of what the organization was focused on that time, but I’m sure you remember, you know, a few years ago, some data really started to emerge showing that liquidity and emergency savings was a really key part to family financial stability. So, if you don’t have money in the bank to withstand the financial emergency or if you don’t have money in the bank to withstand an interruption in income then your ability to stay on track towards long term goals was going to be very impacted. So, the organization decided to go down this path and looking at how they could leverage technology for scale and in my former role, the city I worked with EARN, now SaverLife, very closely. So, for me, personally, there was a couple of things that really prompted me to want to take on this new role.

First was really understanding that kind of $500 problem, right. The fact that almost half of America doesn’t have $500 in their bank, that’s a pretty deeply entrenched problem and very widespread indicator of financial instability so solving that problem and understanding how not being able to cover an emergency expense, like say a traffic ticket or something like that, really can create this downward spiral for families, right. So, the ticket that becomes fines, that becomes a lost driver’s license, that becomes a lost job, that becomes an eviction. So, that kind of a trajectory, unfortunately, is pretty common so that was one issue I was really interested in.

The second issue was really looking at the emergence of financial technology and how we are running the risk and still are of not building inclusive technology and I know that’s part of your topic that comes up on your show quite often. So, you know, living here in San Francisco is kind of surrounded by a lot of innovation and obviously leadership in tech, but where are the voices of underrepresented people in these types of conversations, particularly as it’s related to finance. So, I’ve been lucky enough to be on the advisory board of for-profit stocks called Level Money that went on to be acquired by Capital One and I don’t know anything really much about technology, Peter, at least not at that time.

I’ve learned a few things over the years, but what I was able to understand is how some of this financial technology really could move the needle for low income families, but only if it was going to be specifically applied to the problems that they faced. And I thought the non-profits really had a shot at doing that, right, because you don’t have the same tensions around, obviously, having to have profitability and these other things, you can really design the problem at hand so that was kind of the second thing.

And then the third, just as a woman and a leader, the opportunity to step up and be the CEO and do something that I felt that I needed to challenge myself to do. So, these were kind of the three things that led me to be at the job I loved working for local government and step into non-profit and tech, both of which we were doing at a time.

Peter: Right, right, so that’s really interesting. I want to go back to something you just said there, you said something along the lines that the financial technology companies, the fintech companies aren’t really addressing this population, the people that really have trouble making ends meet. Obviously, I have had some guests on the show that are trying to do that, where is fintech and how is fintech falling short?

Leigh: It’s a great question and I think we still have a lot to learn as well in the non-profit kind of fintech sector which I hope to see grow over the years. So, the first is really understanding the types of problems that people face and how many of those problems are individual and how many of them…and what are those problems that are systemic, right. So, as a field and I would say actually the non-profit field also has focused too much on individual action and too much on individual behavior, right, so it’s about what you do as consumer and less so on those kind of prevailing other kind of systemic issues.

So, one example I can use is income volatility. So, that’s been an issue that’s going to come up over the years, but if you’re looking at someone’s income over a year, an annual household income, maybe you’re seeing a number that doesn’t look that bad, $35,000/$40,000 a year. But, if that money has come into your bank account very inconsistently, you know, $5,000 one month, $1,000 the next then your ability to plan and stay on track towards long term goals and your ability to avoid debt is really impacted.

So, organizations like SaverLife are able to look at that and say, okay, some of the rules around automatic payment, paying yourself first, the things that we hear a lot in the financial sector are necessarily going to be applied well to people who oftentimes don’t have enough money consistently to cover monthly expenses and maybe need to accelerate their savings during certain times of year, by tax time for example, as opposed to focusing on some of these other ways of saving.

The second thing which I think is a challenge that we also face at SaverLife is that for all of its innovation, financial technology is still largely built on mainstream banking. So, in order to participate in financial technology, you have to have a bank account, right, and you generally have to have a bank account that works well with financial technology and that is via a bank account at a major bank. And so, I think that we’re kind of building these innovations oftentimes with our own payments, around saving, around lending, whatever it may be, but if you’re not already in that system, it’s really hard for you to access it.

So, you know, probably I could go online right now and open bank accounts, all over the place, right, in five minutes if we wanted to because we’re already in that system, right, like we’re recognized, Know Your Customer, all that stuff like people know who we are. If you’ve been excluded from banking or maybe don’t have that kind of banking history, it’s really going to be hard for you to get started with some of these innovations. So, you know, at SaverLife we do see, obviously, a lot of folks who are banked and are able to use those products effectively.

We also see a lot of people using alternatives so we see a lot of people using things like PayPal as a savings account, you know, which is kind of surprising in some ways and then we see a lot of people who are unbanked completely or maybe looking at prepaid cards and other things. From a tech perspective that connectivity to those types of accounts is just not the same so I think that there’s a number of things that really need to be solved, but they will only be solved if we have to put that as the end goal, right, like how can financial technology drive inclusion, not, you know, we’ll do it if we can, that really should be the end goal so that we don’t create a digital financial divide.

Peter: And we certainly have the tools today and I know there are fintech companies out there that are trying to address the population that you just talked about there. These are new companies that I read about them almost on a weekly basis, it feels like these days, looking to either tackle a particular minority or a particular segment that’s disadvantaged. But, I want to get into what you offer, your program itself and how….I mean, you’re a membership organization, I believe, so tell us a little bit about what you provide your members and how you encourage them to save.

Leigh: So, our goal at SaverLife really is to make saving money rewarding, engaging and fun and also to match what we do to the practicalities of people’s lives I was just describing. So, SaverLife at it’s core is rooted in price-based savings, price and savings, match savings so a lot of the ideas that came from things like Match Savings and other demonstrations of non-profits over the years who we know to be effective, we are trying to apply that at scale. So, if you, essentially, join SaverLife as a member, if you link your savings account or your PayPal account, whatever you have, checking to save, we monitor savings and then you can win cash prizes, in some cases receive cash matches and so on and so forth.

We do different challenges and pledges throughout the year so right now our focus is really on tax time, right, tax time is the moment when so many low income families have this large infusion of cash. It’s a pivotal moment and so in that in case, we start talking to people before they get those refunds. So, we start saying okay, you know this money is coming, make a commitment to yourself to save, how much of your refund are you planning to save and we have prizes to encourage people to pledge to save, to actually save and so on and so forth. We actually see quite remarkable progress when we do those types of things so we have about over 80% of people who pledge to save their refund, actually go on and do so which is pretty significant.

So, again, it’s kind of looking at like what are the triggers, what are the moments in time where people maybe have more liquidity in their finances and they can save. We also encourage people to save regularly and in small amounts so maybe you can only save $5 a week, that’s great, you save $5 a week, you can still win prizes and have other incentives for doing that.

And the second thing we focus on which we’re actually increasingly finding is very important for our members is a sense of shared community. So, you can access all sorts of different resources on the SaverLife website so that includes financial content, the ability to ask an expert, content that’s really well tailored towards people and our membership and they continually look about who they are, but also the ability to share with each other, to sharing forums, to have discussions with other SaverLife members, sharing your tips. And, we really focus on a very uplifting ground, you know, because a lot of finance lessons can be really depressing or scary so we really focus on celebrating peoples’ wins and also understanding peoples’ unique circumstances.

Peter: So, these prizes, are they random, when you get to a certain level everyone gets a prize, I mean, how does it work?

Leigh: It’s mostly random so it kind of depends on the challenge that we’re running. So, we have a scratch card game so you can own points on the platform for engaging with financial content, for saving regularly and you can redeem those points to play for prizes. We do savings challenges so we found that helping people save about $100 in savings, that’s actually a really important benchmark, so we have a lot of challenges geared around can you reach $100 in savings within 30 days and if so, you’re entered to win, that’s another popular one we do, same with the tax time pledges. We have story competition, sharing your stories, it’s more like you’re selected, you know, based on the stories so a bunch a different ways. Our goal is to keep it really engaging for folks and hope that we have a positive impact.

Peter: Right, right. So, is this…I mean, you don’t have an app, right, is this like just a web-based system?

Leigh: Yeah, right now it’s a web-based system, hopefully, having that app roll out this year.

Peter: Ah, okay, great, great. So, I want to go back to a bigger question here, because I was reading something when I was doing research for this interview, you wrote something, you said that peoples’ problems will not be solved by rounding up spare change or smoothing out pay checks. So, what is the way to solving…basically the systemic problems that we have in our society when it comes to particularly financial inequality?

Leigh: Well, it definitely sounds like something I would say. (Peter laughs) So, you know, here’s the way that we see it, improving your financial life and experiencing financial stability and ultimately, economic mobility, right, that’s what we’re looking for. We’re looking for people to have the opportunity to save, to invest in themselves and their families into ways that are meaningful to them, right, to be able to send your kid to college, to go to live in the neighborhood you want to live in, to start a business that you’ve dreamed of starting.

We know that there’s a great deal of inequality within those systems and you’ve seen that really highlighted in the last 12 months as we look at the impact of the……the desperate impact, economic impact of the pandemic. So, what we believe is that you can achieve financial stability and economic mobility through a combination of individual actions or allowing people to take action today and that’s where savings money really comes into play or, you know, there’s other personal things you can do. So, helping people to take those individual actions, that’s extremely important.

But, the other side of that really then is understanding and addressing those systemic barriers, right, so you’re not going to make your coffee at home and suddenly no longer be in poverty. Those are the types of messages that we put out there, but it’s all about individuals, right, like you’ve made bad choices, you know, there’s a lot of judging, there’s a lot of shame. So, I think the example you used like income smoothing is an interesting one.

So, is it great that maybe people can match…can cover an unexpected expense or loss of income with an app that allows them to advance their own pay or whatever the case maybe. Yeah, this seems like that works very well for some people and that’s a great innovation, but, at the same time, if you’re not looking at the question of why do so many people need that product then you’re kind of missing the point, right, and it’s non-profit and it’s consumer advocates. That’s where we’re really need to focus a lot of our energy. So then, you’re looking at what are the rules around sketch of fair scheduling for the low wage workers, right, like what are the types of policy changes we can enact that reduce that type of volatility because that’s what really gets people into trouble, right, that you don’t have consistency in your income so the employee have to go into debt, to bridge those gaps and then next month, guess what, he works off in addition to having volatility in your income. You’re in a worse position than you were in before.

And so for us, this is where I think financial technology can play a huge role because you have so much data, we connect the peoples’, you know, financial account to run our program so that means we have a lot of insights into their financial lives. So, again, it’s a non-profit and it’s consumers advocates, we can look at the impact of policy on people’s actual financial lives and bank accounts, right. We can look and see…..for example, over the close of the last year when stimulus payments go out from the federal government, who gets these payments, what stabilizing impact they have on families, do we see increase in savings, do we see repayment of debt, do we see increased spending on food.

So, you can actually look at and measure the impact of these things and that’s where, you know, our research center is where those things intersect. So, where can you support people in taking action for themselves, but also where the issues where….you know, you’re not just not going to get ahead if you’re paying more than 50% of your income on housing costs, for example, or your consumer debt is above a certain level. Those are largely systemic issues.

Peter: I want to talk about something that….. really what prompted this whole interview was someone from your office reached out to me with survey results you did and that really piqued my interest because we’ve heard this year….. I’ve had people on the show say that, you know, this year credit card balances went down, loan defaults were not nearly as bad as expected.

In fact, many lenders had their best year in many years, in 2020, as people were paying down their debts, but it struck me when….that hasn’t been the case, you know, uniformly across the economy and what you shared was….the survey you did show actually….the population that you’re focused on, it wasn’t a good news for them. The stimulus checks may not have had the impact they had in other populations so maybe you can take us through some of the results of that survey that really showed the impact of the pandemic on the people you serve.

Leigh: Let me tell you a little bit about these people and who they are. So, sometime, I think, this week, we’ll hit our 500,000th member and 82% of our members are women, about 60% are people of color, average income comes between $25,000 and $35,000 a year. Most of our members are mothers with dependent children in female-headed households and who don’t have (inaudible). So, that’s a little bit about the population, they’re distributed across the US.

So, when you’re looking at who was economically impacted most by this pandemic, it’s these people, right, low income, working women of color who depend on children. There’s been a lot out there recently in the media, obviously, about the impact of the pandemic on women, but, particularly, on low income women. So, you’re looking at people who….almost 60% of our client population, Peter, experienced unemployment during 2020 for some period of time, many of them for many months and there’s multiple reasons for that.

So, when the pandemic hit, it also hit very suddenly, right, so unlike other recessions that may be happening a little more gradually, one day you were working and the next day you were not and you have no idea when you were going to return. That kind of sudden loss of income for millions of people in this country was devastating and so you saw organizations like ours, like SaverLife and many others raise money and step in and actually send people cash and that was one of the first things that non-profits or a fintech platform were able to do. Some of our for-profit friends also did some of this work as well so, people who just lost all their income, we know they don’t have much of a savings cushion, they’ve got kids to feed and rent to pay so we sent out cash. And we recognized that the government worked hopefully then picking the gear and started providing some relief.

So, as you mentioned, I’m also having this conversations with people and making the same vows, amazing, the savings rate has gone up to whatever it is now, 16%, consumer debts have gone down, but not for everybody. I think that’s really important that if you look at these numbers in aggregate maybe you’re seeing a situation like, yeah, employment’s high, but maybe it’s not that high and for some groups it’s 60% and for other groups it’s, you know, 5% or less. So, I think the disparity is really what we’re looking at and why it’s so important that you don’t look at everyone as a whole, right, that you look at these different populations and impact.

So, what you’ve seen is interesting, so we definitely saw people still saving because people know it’s important to do that, there’s so much uncertainty right now. When the stimulus checks did hit, we didn’t see a savings, but we also, obviously, see people covering basic necessities. Then over the summer, you had the impact of employment insurance that was covering for people…it was around August to December where you really start to see things get shaky for folks, right. So, you see this increased withdrawal from savings and increased credit card debts up about 44% at the end of the last year compared to the year prior for our client population, So, again, that one side of it has been…. on the income side has been devastating.

The second thing that we’ve been looking at is expenses, right, so for a lot of us, we may be spending less, right, we’re not going on vacation, we’re not eating out, we’re not buying our coffee, we’re not doing all those things. But, for low-income folks without a lot of discretionary income, well, they weren’t really doing those things anyway to begin with and they also have increased expenses and a lot of that spend was cost of food and the cost of utilities, internet access and school supplies.

So, you’re looking at food, in particular, that’s been a major driver so families who may have had their kids in school receiving school meals or childcare receiving meals that way, now suddenly they have mouths to feed all day long. Same with utilities that maybe you would spend most of your day out of the home and if you live somewhere where it’s very cold then you’ve seen those things increase so it’s been a double whammy,

And then the third piece of that, as I mentioned, is the impact on school closures and so, you know, we’ve heard a lot at the end of last year when they were debating around renewing unemployment insurance and other things. Will that discourage people from returning to work, I said, well, here’s something that will discourage you from returning to work, not having child care for your five-year old.

Peter: Right.

Leigh: Right, And so, to come and disconnect between policy making and the reality of peoples’ lives was actually, you know, alarming to us. So, that’s why I’ve been really focused….again, technology gives you so much information and so much data, how can we use that data to really inform the conversation and to really look at, you know, this is what people are really experiencing.

We’re about to put a report out in a couple of weeks about the impact of the pandemic on parents with kids who are unable to go to school, huge earning loss and at the same time, increase in expenses. So, you know, those are the types of things that with technology you can really measure, right, they can look at where people are spending their money, you can look at what happens when they get government relief, look at what happens to income and you can help inform policy makers about how to build better systems. I’d love to see more fintechs getting involved in that.

Peter: Right, right, for sure. So then, speaking of that, the for-profit fintechs which….obviously,, that’s the biggest part of this vertical, shall we say, I’d love to know, are you working with some of the fintechs directly or how do you interface with the for-profit fintech community?

Leigh: We are, actually. Some of our most successful partnerships are with other fintechs and there’s a lot of them that we really admire and a lot of leaders in that space who are genuinely trying to help and do the right thing.

So, one partnership that’s very valuable to us is with Propel and their FreshEBT app. I’m sure they’ve been on your show and they really to me exemplify best in class about how this can all work together, right. So, they sold their program for folks, it needed to be sold, right, not knowing how much money you have to spend on food, they’ve been very creative in helping people use that technology to budget their food and they’ve also stepped up in times of crisis to really help folks.

So, we have a partnership with Propel where we run ads for SaverLife through that platform and it drives a huge amount of traffic and it’s very valuable to us because it’s a similar target demographic that we’re trying to reach, not just in terms of, you know, income and challenge of saving money, but also in terms of tech savvy. So, it’s a population of folks who are already using technology and that type of referral partnership really helps us because this allows people to take action in the moment, right. You can see something an ad for SaverLife like how am I going to do that now as opposed to, you know, while I’m waiting here, you know, the grocery store or on the bus, maybe I’ll just sign up and see what this is all about as opposed to maybe if you’ve seen a flyer or a billboard or something you plan on doing later, so we’ve had a partnership with them.

We work with another app called Steady which helps people connect to gig employment, that was really successful. We referred some of our members to Steady and if they’re looking for opportunities to increase their income, earn some more money and then also for that opportunity for Steady members to join SaverLife. That was a partnership that ….the Financial Health Network support it so we could experiment with cross referral and prizes as a way to incentivize those cross referrals.

So, if you signed up for both platforms you will be eligible to win a prize. Actually, I’ll tell you, Peter, we run that experiment with them the end of last year and there’s a $5,000.00 grand prize for someone who would sign up and use both platforms successfully. We contacted the woman who had won in Central California and I told her that she won this $5,000 prize from SaverLife and Steady and she told us that she had just been served an eviction notice that week..

Peter: Oh, my goodness, oh my goodness, wow! So, she was able to stay in her home, that’s great.

Leigh: Two weeks before Christmas. She had two young kids and was able to stay in her home. That was a pretty good ending.

Peter: Oh, my God, wow! Yeah, that really is….you can’t get a much better ending than that. Okay, so we’re almost out of time, but a couple of things I really want to get to. What is the difference of the people around your platform, you said you’re coming up with 500,000, I am sure there are some that are really engaging with you well and some that are not, what is the difference between those people that are successful on your platform and those that are not?

Leigh: That’s a really great question, it’s definitely one that we’re always endeavoring to find out more about, right. So, it’s a combination of things. So, we know the people who engage with the platform, the content, play the prizes and the challenges tend to save money and, you know, obviously at high rates and those who don’t. We also awarded a $10,000 prize at the end of last year to the Super Saver of the Year, someone who had done all of the things that increased their savings significantly.

So, I think there’s a couple of things, I mean, I think there’s a….you know, how ready someone is to save, how much flexibility they have and their finances do they even have $5 a week or something, you know, whether or not you have access to a savings account, we definitely see people who have dedicated savings account to move money into as opposed to trying to grow a balance in their checking account are more successful and they are definitely some issues there they we are exploring. We did a fun experiment as well around goal settings and text messaging so we tried out a couple of different personas around different types of text messages and we had three personas.

One was Mother Teresa who had a very encouraging tone, one was Mr T who, the one who works for me knows who that is because they are not as old as me, but you can imagine how to have a more direct term and the third was Michelle Obama who had more empowering term like we can do this, let’s prove them wrong. It turns out that Mother Teresa had a negative impact on savings and Mr T was neutral, but Michelle Obama increased people’s savings rates by 34%. Just to be clear, this was not the real Michelle Obama.

Peter: Right.

Leigh: Our interpretation of what Michelle Obama would tell you if she was going to give you savings advice, but the 34% increase in savings compared to the other groups. So, we’re very into kind of experimenting with those types of things to see how they move the needle, but as we’ve been talking about, Peter, I think the next phase for us is to really understand those systemic barriers, right. So, 64% of people, somewhere in there, who joined SaverLife had less than $100 in savings when they joined. So, what we’re really looking to do is to move people up that trajectory, to move them from less than $100 to more than $100, more than $250 to more than $500, that’s kind of what we’re focused on.

And so we need to understand or receive behaviorally what most people have so empowering text message from Michelle Obama, signing up for a savings account, automatic savings, playing the game, challenges, all that stuff that’s relevant. But, on the systemic side, we also need to understand you could do all of those things, but, you know, if your debt is too high or your income is too volatile or your housing cost burden is too great, it’s not going to help you much, right. So, how can we then attack this from both sides, both individually….this is what makes people successful, let’s do more of that, that’s great, but, then systemically, here is where their shoes are and that’s what we’re hoping to continue learning about and solving for.

Peter: Right, right, okay. I also want to know, how are you funded, who is backing you, do you have a bunch of foundations? You said you learned how to raise money so tell us about how you’re operating, the money that you’re operating with.

Leigh: So, SaverLife is a 501(c)(3), we’re a non-profit organization so we are largely funded from corporate and foundation philanthropy so some of our big funders include MetLife Foundation, Prudential, JP Morgan Chase, Capital One, Intuit because, you know, a lot of focus on that side, some family foundations, individual giving so that’s kind of what makes up the bulk of our revenue.

You know, there’s a great interest in these types of issues right now. Obviously, we know that financial health is kind of an underpinning issue ripe for everything else, it indicates your physical health, your ability to have stable housing, how well kids do in school, whether or not they go to college, it’s kind of the bedrock of so many things. We’re also posting, as we should, a great increase in interest in closing racial wealth gap and the gender wealth gap so, specifically focusing on, again, systemic issues and how they impact the people and now for many years.

That’s actually addressed and we’ve actually told them so that’s where we kind of see this interest from philanthropy which has been great.

We do also have a program called SaverLife Solutions that offers technology to employers, credit unions, other non-profits and people who want to run max savings programs, pricing savings programs and use our technology so we do have some own revenue that comes in from there.

Peter: Great, great, okay. So, last question, I mean, I feel like someone like yourself has to be an optimist dealing with challenging….these are really challenging problems and many people are struggling like never before so then I’d like to kind of get a sense of how optimistic….like are you optimistic about the future. I presume that’s a yes, but what do you see changing that is really going to have these problems….so if we do a survey in five years time or ten years time, that’s not going to be 60% of the population that can’t make $400 emergency payment.

Leigh: Yeah. You know, I was interviewed recently about leadership and I think one of the questions was what’s the trait that you need to be a leader in this field and optimism was I think was actually what I said because these are big challenges, right, deeply entrenched challenges and sometimes it can feel that you’re not making a lot of progress. But, I’ll tell you what, what gives me optimism is the resilience and optimism of the people who use our platform. I mean, that’s what we draw on everyday, I mean, they’re the heroes of the story is not us and so seeing what people do, especially the mothers in our platform and the lengths that people go to to improve their situations, to improve their family situations, take care of their kids, especially in the last 12 months, there are some great stories coming out.

By great, I mean, they demonstrate resilience about this and the impact of the pandemic on women, on working mothers and just people changing jobs multiple times and, you know, people being relentless in trying to get resources for their families. That’s what I think where the real optimism comes from. You know, I think that where I see some change is really, again, and will always be pushing on this, it is about individual action and collective action, right. So, how can we both support people individually and then also make sure that their opinions and their needs are represented in policy conversations and those people themselves are mobilized to go out there and demand more from our leaders.

I think that’s where we’re actually seeing momentum now, obviously there is a new Administration, there’s a lot of policy ideas on the table that I think that we’ve been entrusted in and fighting for a long time. So, I think that the more we can come together and say, you know what, we need to put our values first if we want an inclusive financial system, we need to build an inclusive financial system and that involves everybody in the ecosystem. It involves non-profits, it involves mainstream banks, it involves financial technology, it involves regulators so really like what is the world we’re trying to create and then work backwards from there.

Yeah, I think that we can do it. I’ve also been serving on the Consumer Advisory Board of the Consumer Financial Protection Bureau, again, coming out of that and that agency, how we can really make sure that we are putting people first and I think we’ve learned a lot over the last 12 months, hopefully, we will no longer ignore.

Peter: Right, let’s hope so. Leigh, it’s been great having you on the show. I’ve learned a lot and I think the listeners will as well. It’s a noble cause, I’m glad there are people like you out there sort of fighting this fight because it’s really important and I can see that you’re making a difference. Thanks so much for coming on, Leigh.

Leigh: Thanks so much for having me and for allowing me to discuss these important issues.

Peter: Okay, see you.

You know, I’m also optimistic about the plight of these underserved consumers, the consumers that are struggling today. I feel like we have programs like what SaverLife is doing, we have a lot of the fintech companies that are now focusing on this segment of the market much more so than even three or four years ago. We see many different programs, a lot of them that offer automation, that offer really inexpensive financing and really trying to get away from the predatory lending type products, we see automation happening with savings. I feel like there are lots of different ways that fintechs and non-profits are attacking this problem so I’m hopeful that really this decade we will make a real dent in the plight of these people who have been struggling historically.

On that note, I will sign off. I very much appreciate you listening and I’ll catch you next time. Bye.

Today’s episode was sponsored by Lendit Fintech USA, the world’s largest fintech event dedicated to lending and digital banking. LendIt’s flagship event is happening online this year on April 27th to 29th with the possibility of an exclusive VIP in-person component. The verdict is in on LendIt’s 2020 event that was held online with many people saying it was the best virtual event they’d ever attended. LendIt is setting the bar even higher in 2021, so join the fintech community at LendIt Fintech USA where you will meet the people who matter, learn from the experts and get business done. Sign up today at lendit.com/usa.

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Filed Under: Fintech One-on-One Podcast Tagged With: financial health, financial inclusion, gamification, SaverLife, savings

Views: 125

Marcus Co-Founder Leaving for New Walmart Fintech Initiative

Walmart has lured away Omer Ismail, who was part of the founding team at Marcus by Goldman Sachs, to help lead their new fintech initiative

March 1, 2021 By Peter Renton Leave a Comment

Views: 531

Omer Ismail of Marcus on the keynote stage at LendIt Fintech USA

Yesterday, Bloomberg broke the story that two senior Goldman Sachs executives were leaving to work on the new Walmart fintech initiative. Omer Ismail, who was head of the consumer bank at Goldman Sachs and David Stark, one of his top lieutenants, will be helping to lead the new Walmart offering.

When the new initiative was announced by Walmart in January there were virtually no details made available other than the company would be partnering with leading fintech venture capital firm, Ribbit Capital. It will be a majority-owned subsidiary of Walmart and will have the the CEO and CFO of Walmart on its board as well as Micky Malka, the co-founder and managing partner at Ribbit Capital. But we had no details whatsoever as to what services they will be offering.

Now, at least we know two people who will work on launching and building the business. To get Omer Ismail on board is genuinely a coup for Walmart. When I interviewed Omer for my podcast in 2017 he shared the founding story of Marcus from the summer of 2014 when he and other senior Goldman Sachs met to discuss how they could use their banking license to do new things. Omer actually led the task force within Goldman that explored new ideas the company could launch.

Marcus came out of that task force and Omer immediately took a very senior role in this new division and the success they have had is due, at least in part, to his diligence and creativity. Here, we are today, over four years after they launched, and Marcus has grown to a real force to be reckoned with in fintech. But at the time, back in 2016, many in the industry were predicting it was going to be difficult for Goldman to succeed here. The success of Marcus was not a forgone conclusion, with many people rooting for the big Wall Street bank to fail.

So, Omer knows very well how to create a successful fintech business from scratch inside a large corporation that has done nothing like that before. While Walmart has financial services offerings, including a partnership with Affirm, a credit card with CapitalOne, and multiple prepaid cards there is no cohesion to the offerings. But as the Walmart CEO said their customers “want more from us in the financial services arena.”

What Can We Expect from a Walmart Fintech Offering?

The big question, of course, is what exactly will Walmart be offering? I reached out to Ribbit Capital and they said it was too early to be talking details so it looks like this will stay under wraps for now. But I expect we will see a digital bank account offering of some kind that will have many of the features that people have come to expect today. These include overdraft protection, receiving wages two days early, a credit building service, no fee ATM access, savings features and a small dollar lending product.

I expect it will have a snappy name but will also leverage the Walmart brand. It is Marcus by Goldman Sachs, not Marcus Bank or just Marcus, so Walmart will likely include their brand in the title. I expect they will partner with one of the many banks who now offer services for fintechs, heck it could even by Goldman Sachs, who have already partnered with Apple, Amazon and General Motors on financial products. I am sure there have been conversations between the two companies and maybe that is how the conversations started here. But that is just conjecture.

Regardless, I don’t see Walmart going for a banking license before launch. They famously abandoned their attempts to get a banking license in 2007 after many years of trying and so they will no doubt tread carefully before doing that again. But most digital bank offerings today are provided with the assistance of a partner bank that handles the backend services. Of course, it is a different time now and it maybe in their long term plans again but I expect they will get traction with their digital bank before doing anything on the regulatory front.

This should be a positive for financial inclusion as many people who shop at Walmart are underbanked or even unbanked. These people trust Walmart with their day-to-day shopping and it is not a stretch to think they will trust them for financial services.

So, now we wait. We will share more details when they become available.

Filed Under: Fintech Tagged With: digital banking, financial inclusion, Marcus by Goldman Sachs, Ribbit Capital, Walmart

Views: 531

Podcast 282: Catherine Berman of CNote

The CEO and Co-Founder of CNote discusses bringing tech and scale to impact investing for a more inclusive economy

January 22, 2021 By Peter Renton Leave a Comment

Views: 171

Impact investing is having a moment. While it has been around in some form for several decades, today, many large and small investors are demanding that their money do more. They don’t just want to make an impact investment, they want to see exactly how they made an impact, in a measurable way.

Our next guest on the Lend Academy Podcast is Catherine Berman, the CEO and co-founder of CNote. Her company makes it easy to invest in both cash and fixed income and see a measurable impact. Their investments drive economic justice in underserved communities across this country.

In this podcast you will learn:

  • The founding story of CNote.
  • A description of their mission.
  • How their different offerings are structured.
  • A story about one of the people they helped.
  • How they select the institutions to work with.
  • How they put bespoke opportunities together.
  • How they work with CDFIs and MDIs.
  • The types of investors that come to CNote.
  • The returns they offer investors.
  • How their high yield investments have performed.
  • How the Black Lives Matter movement has impacted their business.
  • How they are getting the word out today.
  • What the process was like for their recent funding round.
  • How CNote makes money.
  • Their goals for this year.

This episode of the Lend Academy Podcast is sponsored by LendIt Fintech USA, the world’s largest fintech event dedicated to lending and digital banking.

Download a PDF of the transcription of Podcast 282 – Catherine Berman.

Click to Read Podcast Transcription (Full Text Version) Below

PODCAST TRANSCRIPTION SESSION NO. 282-CATHERINE BERMAN

Welcome to the Lend Academy Podcast, Episode No. 282, this is your host, Peter Renton, Founder of Lend Academy and Co-Founder of LendIt Fintech.

(music)

Today’s episode is sponsored by Lendit Fintech USA, the world’s largest fintech event dedicated to lending and digital banking. LendIt’s flagship event is happening online this year on April 27th to 29th with the possibility of an exclusive VIP in-person component. The verdict is in on LendIt’s 2020 event that was held online with many people saying it was the best virtual event they’d ever attended. LendIt is setting the bar even higher in 2021, so join the fintech community at LendIt Fintech USA where you will meet the people who matter, learn from the experts and get business done. Sign up today at lendit.com/usa

Peter Renton: Today on the show, I’m delighted to welcome Cat Berman, she is the CEO and Co-Founder of CNote. Now, CNote’s a super interesting company, it’s an investment platform that has been designed purely for social impact so they invest in….we get into this in some depth, as you can imagine, but it’s social impact either, you know, for investing in minority communities, investing in climate change, green technology that sort of thing, but really a platform designed to have every dollar going towards some sort of social impact program.

Now, she has a cash product, a fixed income product, works with institutions and individuals, we get into all of this. It really is an interesting company that has recently raised a round of capital which we talk about as well. It was a fascinating interview, hope you enjoy the show.

Welcome to the podcast, Cat!

Cat Berman: Thanks so much for having me, Peter.

Peter: My pleasure. So, I’d like to get this thing started by giving the listeners a little bit of background about yourself and what you’ve done before CNote so can you share some of the highlights.

Cat: Sure. Prior to CNote, I was Managing Director at Charles Schwab. Prior to that, I was in venture capital for several years and before that I ran two successful companies.

Peter: Okay, okay. So then, was it at Charles Schwab or where did the idea for CNote come from?

Cat: Yeah, absolutely. So, it was around 2015, and I was really seeing the confluence of a few events. One was the rise in socially responsible investing. You know, we had been interested in talking about socially responsible investing of the industry, really started to see the assets flow and not just from the millennial base, which is what we expected, but really from some of our largest clients.

And so, the excitement around being able to align your investments in a competitive way with your values was trying to gain more and more traction. At the same time, it was the presence and acknowledgment of a rising wealth gap and I think for me, personally, it became very, very hard to continue to acknowledge it without doing something about it. Specifically, I sat in a cushy office in San Francisco recognizing the disparity between those who were enjoying a healthy economy and those who were continuing to struggle purely because of where they were born, because of the color of their skin, because of, you know, who their parents were.

And so, the thought that crossed my mind is how can each of us play a role in creating a more equitable economy. I think, for years, we’ve really relied on government sources to kind of close that wealth gap and what we found, over the years, is it’s not enough. Certainly now and at this time in history, I think, most of us are much more aware of that.

But, at that time, I think, it was still an argument of should we do something about it and how can we do something about it. So, my thought process was we absolutely need to do something about it to address the wealth gap and that financial innovation was the way we could do it, really unlocking the power of our investments, particularly cash and fixed income, presented a historic opportunity to really address the rising wealth gap.

Peter: Okay. So then, how would you describe your mission because i know you’re a mission-driven company so what is the mission?

Cat: We are. So, we use the power of financial innovation to help close the wealth gap in this country.

Peter: Okay, okay. So, maybe let’s dig into that, why don’t we dig into the different offerings you have and how you’re actually trying to close the wealth gap.

Cat: Yeah, absolutely. So, you know, our thought was two-fold. Number one is the power of investments, but number two is the power of technology to make it easier to invest in what we call community investments, right. So, what I observed over the years is there is a lot of innovation as it related to social responsible investing and investing with your values in the public equity space, but there was very little innovation in the fixed income and cash base.

So, that’s really the area that we focused on at CNote which is how do we use the power of technology to make it easier to use your cash and fixed income in a competitive and socially responsible way. And so, there’s really two sides of our business; one is the product side, we create competitive impactful products with your cash and fixed income allocation. And the other is the software side of our business, technology that enables institutions to identify, manage and report on their impact investments in a seamless way.

Peter: Okay. So then, let’s talk about the first one for a minute like how is it structured, who you’re working with, just tell us a little bit more detail.

Cat: Absolutely. You know, we focus on cash and fixed income and a really great example of this is our cash technology. In that, we are able to move millions of dollars, if not billions, into Minority Deposit Institutions, community banks, other deposit institutions that are really going to work for low income communities and communities of color.

So, how do we do that? Again, it’s really using seamless technology so that our partners, our clients such as large corporations like Mastercard, large foundations like the San Francisco Foundation are able to count on us to move, again, large sums of money into these communities in a way that, again, is competitive, right, because obviously they have the fiduciary responsibility around capital preservation and around competitive deal, but also impactful, but may also have the responsibility to do this in a way that’s measurable and meaningful. And so, we’re able to do both sides of that, right, really move those deposits in a way that it’s fully insured, FDIC-insured and Seaway-insured, but at scale with tractable impact.

Peter: Right. And I know that’s you’ve got….I watched a video on your website and you’ve got some great stories of people who were directly impacted by what you guys are doing. Can you share one of those stories with the listeners?

Cat: Yeah. I appreciate you asking because one of the things we talk about is when individuals or institutions invest with CNote, right, they’re really affecting people’s lives. It’s not just an esoteric… I hope this company is doing something interesting with my money, there’s real individuals behind your investments and your deposits.

One example I can give you is a very inspiring woman entrepreneur called Jamine Moton. Jamine is an African American entrepreneur out of Atlanta, she had the vision years ago to create her own security company. She worked for other security firms, you know, security for large events, sporting events and realized that they really were devoid of high quality service and, you know, kind of customer first service. So, she said she wanted to launch her own security so she went… like any reasonable entrepreneur she had to capitalize her company and she thought, okay, so if I’m going to get this started, how do I actually get a responsible loan or responsible capital to start this journey.

So, she went to her local bank and she went to a few banks and what she found was she was declined again and again and again and again. Smart woman, great background, obviously great business plan, but kept getting declined. And this, unfortunately, is the case that we see with a lot of black entrepreneurs throughout the country, right. They’ll go to a traditional financial institution and not be able to access the dollars that they need to start or grow their business. So, fortunately, for Jamine’s case, she did not give up, she went to one of our CDFI partners or community development partners and we have a network of them across the country that we work with.

They function very similarly in terms of providing loans, but the difference is they work with entrepreneurs like Jamine, both to provide accessible capital, fair loans as well as technical assistance to really help them grow their business. And so, fortunately, when Jamine went to our CDFI or community lender partners in Atlanta, she was not declined, she was actually accepted and encouraged. She started on that journey, she received her first loan and she was able to really grow her business. If you fast forward today, I’m proud to say that Jamine is a successful entrepreneur, capping to over a million in ARR, hiring local talent out of Atlanta and her firm, Skylar Security, was actually asked to be one of the security firms for the Atlanta Super Bowl.

And so, I assure that to say, you know, that the dollars that Jamine received, that fair loan that Jamine got to start her business came through because of pipes like CNote, right, came through because of what we were able to do with our community lenders to get those dollars that you or an institution have put in moved in through the CNote pipes along the way and get them the end result which was to Jamine. That’s the type of effect, I think, all individuals and all institutions can have when they start moving their dollars from their traditional containers into some of these impactful socially responsible cash and fixed income solutions.

Peter: Right, right. So, you’ve talked about CDFIs, you talked about MDIs, minority depository institutions, like how many do you work with, how do you select them and there’s obviously…I don’t know how many there are, there’s hundreds, I believe, but what’s your process? Do you work with any of these institutions that come along, how do you select them?

Cat: Yeah. So, we love speaking about the deposit institutions, in particular, because we do think for those corporations, institutions, even individuals who are looking to step into this, sometimes the easiest way to try is through an FDIC-insured account, right. And so, the idea of credit risk or the idea of, you know, what’s going to happen to my money is often a very quick conversation because, again, every dollar is federally insured and yet, just by moving those dollars into one of these institutions, you are able to create tremendous impact and inspire and fund more of these entrepreneurs like Jamine.

And so, there is a very large network that we’ve created, CDFI banks and credit unions and continue to create them with some amazing industry partners. And we look at things, obviously, like financial strength, financial performance, financial solvency, track record, right, whether or not they have weathered past recessions, past economic downturns and we also look at impact, right, who is the leadership of those institutions, who are they serving, how are they serving.

And what we find is specifically working in the amazing CDFI industry we’re able to really move dollars into projects ranging from not just, you know, funding incredible black entrepreneurs, but also creating schools in low income communities, you know, building opportunities in food deserts, addressing some of the issues in rural America native communities really, focusing on economic empowerment for women.

So, some of the central themes, I think that are really resonant right now as a country and specifically racial justice fits squarely within what we work on with our CDFI partners and where your dollars go. I think there is the importance of understanding, obviously, the strength of that financial institution and, obviously, the importance of making sure that your dollars are going to a place that reflects your values.

Peter: Right. So, can you just explain to because I really don’t understand this, how is it that you can invest money, FDIC-insured money, into a small business. It, obviously, is a pretty risky investment, I mean, obviously through the CDFI, but can you explain the mechanics of that?

Cat: Yeah, absolutely. So, if you think about two opportunities, one is a federally-insured opportunity with the Promise account and the other is our CNote Promise account and the other is a loan to opportunity through one of our loan funds products. When you are…..most of these small business lending that we’re doing is through our loan funds pipe like the flagship fund which is one of our oldest products with millions of dollars going through it. When you’re investing in our Promise account, it’s really moving deposits, right, that’s really where the federal insurance comes in and then we’re doing a lot more work on things like housing and consumer lending.

So, it’s a great question because the question we ask back to our client is, you know, what are you looking to achieve, right, is it return first, is it liquidity first, is it a specific impact such as I want to make sure that I am funding more women like Jamine or maybe I want to make sure I am addressing the climate crisis. And so, the beauty is because we work with such a vast database of both financial institutions and impact, we’re able to really craft something, either bespoke for that institution or put you in one of our existing products that has the power of diversification, but has elements of those specific variables.

Peter: Right. So, just to be clear then, the money that is going out into the high yield product isn’t FDIC-insured, is that correct?

Cat:  Correct, exactly. It’s really important distinction, it’s just like any, you know, fixed income and cash conversation. You, as investor, have to decide, do I want these dollars to be federally-insured, if so, great, we have the promise account or do I want to have to treat this as an investment and take on more risk return profile. For that, and we have a variety of loan fund pipes, but that’s correct.

Peter: Right. And, tell us a little bit about this bespoke product you said….a large institution might come along and say, okay, we want to do something around climate change or whatever, what do you do and how do you put something bespoke together?

Cat: That’s one of our most exciting opportunities because, you know, one of the mantras we say at CNote is impact is deeply personal. And so, if I ask you, what is racial justice to you, that may be very different than, you know, what that means to your wife or what that means to your neighbor. And so, one of the things we love is because we work across so many institutions with such a large data set, we can actually hyper customize.

So, for example, we may get a call from an institution that says racial justice means to me, I want to see more affordable capital go to communities of color in New York, we can do that. We can create a bespoke fixed income bond just puts that money into the state of New York and addresses and provide fair access to capital for communities of color. We can also say something more thematic, I just want to make sure that all of my dollars are going to native women entrepreneurs, for example, or perhaps to low income schools. And so, the good news is, again, because we work across such a rich data set, we can do that level of hyper customization, both on the impact, but also on profile such as yields, maturity and liquidity.

Peter: So, I get like the entrepreneurs working with CDFI……how do you do it with schools, I mean, what’s the vehicle there?

Cat: Yeah. It should be able to create. So, if you think about the ability to build affordable housing, there’s a similar need to be able to build specific schools, whether it’s early childhood education or unique special education schools. Oftentimes, they’re going after a bond or some type of lending instrument to get it done so that’s really where CDFI steps in is the ability to do that, specifically, neighborhoods that perhaps are not getting the support from local financial institutions or are perhaps not large enough to get an admissible or from a regulated issued bond.

Peter: Right, right. And so, what underwriting do you do because….I mean, you talked about the lady from the security firm in Atlanta, I mean, do you have anything to do with the underwriting process of that particular borrower or is it more…that’s the CDFI’s role and you’re investing in the CDFI?

Cat: It is the latter and it’s a great question because, you know, for the listeners who are not familiar with this acronym, CDFI, it stands for Community Development Financial Institution, but the easiest way to think about them is they’re community lenders. They look and feel a lot like your bank, but the local bank is out there to do good. It’s not a new industry, this industry has been around for over 40 years and with a average loss rate for the industry of less than 1%. So, if you think about who should be picking these borrowers, it clearly should be the 40-year old industry that’s proven this decade after decade that they’re excellent at what they do.

So, when we find out for this, we started building our technology, it was really to empower those incredible CDFIs to do what they do best and do it at scale. And so, no, we don’t pick Jamine per se or Cindy or Jamal or some of these wonderful entrepreneurs that we end up funding, That is absolutely the CDFI’s job, it is on the ground, meeting with them, understanding their business, understanding their profile and making that assessment. What we’re doing is funding up the CDFI organizational loan to make sure that they are getting the capital in a seamless way that they need to continue to do those types of high impact loans.

Peter: Right. But, if you’re doing particularly on the bespoke side, I imagine, if you’ve got like a pension fund or an endowment or whatever, they want to invest just in this particular problem then, I imagine, you go to a CDFI that addresses that particular problem, is that right? Some CDFIs would address multiple different problems, do you say, right, this money needs to go to this problem, is that how it works?

Cat: Precisely, that’s right. And so, that money is actually earmarked, targeted in going to work for that specific part of what the firm is doing.

Peter: Right, right. And so, can you just maybe talk about the investor side. I mean, it seems like you’re open to individual investors, but, I imagine just from what you’ve been saying, it’s really more of an institutional focus and that makes sense. But, just tell us a little bit about the investor side of the business.

Cat: Yeah, absolutely. So, the main investors we work with today are large institutions, to your point, so large corporations, large foundations, banks who are looking to do more efficient investments on the cash and fixed income side, right. Many of them are saying, I’d love to put dollars into community, right, or I’d love to move cash into Minority Deposit Institutions, how do you do that at scale? And I can tell you, this is an industry that has been manual for decades and so for us to bring technology to the table, to bring automation and analytics and say, we can mobilize millions if not billions of dollars in a very efficient, impactful, traceable way, right, is a big step up for these organizations that, again, have shown interest over the years to do something like this, but the friction points around actually deploying those dollars and then measuring those dollars has often felt insurmountable.

So, today like I said, a lot of the large foundations like Sierra Club and others….. but we also do have a great online platform for individuals who are just wanting to take a step into this and say their cash and fixed income can still create, you know, meaningful returns and meaningful impact and certainly a place to start.

Peter: And so, what kind of returns are we talking about? Say for cash account, obviously, this is going to be a really low interest FDIC and everything FDIC-insured is low interest today so what are cash account and what was it, a promise account, was that the one that was the high yield one?

Cat: Yeah. So, on the loan fund side, we have instruments called the flagship fund which is providing a 2.75% return. It is a 30-month instrument, 30-month maturity with quarterly liquidity, right, so pretty competitive as you can tell in the market in terms of both liquidity and yield and, again, 100% impact. I will say that we’ve been offering that instrument for years and have had zero losses, zero defaults, zero late payments to give you a sense of the performance of these vehicles.

And then on the flipside, we have cash, right, so that’s a great fixed income example. On the flipside, we have the promise account which is our cash solution and that’s again mobilizing your cash into these really impactful, strong community banks, CDFI banks, credit unions, Minority Deposit Institutions and that’s paying out between 30 and 40 bits today.

Peter: Right, right, okay, that makes sense. So, what is the legal structure, if I may just for a second, particularly for the individuals is what I’m merely thinking about. Are these like Reg A+ offerings or what are you actually doing on the legal side of things?

Cat: Yeah. They’re both Reg A and Reg D, depending on whether you’re accredited or not accredited.

Peter: Okay, okay, great. So, obviously 2020 was a pretty unique year, particularly for someone like yourself, I imagine, we had the pandemic, but maybe more importantly, we had the Black Lives Movement and so much more awareness from corporations or individuals all across the spectrum of…..you know, there seems to be a tipping point where people have gone from saying, we need to do something about this, but it’s really like now is the time we actually need to act and so how has that impacted your business?

Cat: Yeah. You can imagine, it very positively impacted our business. You know, what we have created from day one was a vehicle to instill more racial justice, a big amount of justice in this country. And so, the fact that the discussion of we do not live in equitable society, the conversation around not every individual has a fair shot at financial freedom and how do we level that playing field, you know, that conversation wasn’t happening, has frequently, as openly……even a couple of years ago.

But, to your point, 2020 was definitely a landmark year where we finally got to have that conversation more openly, more freely and seeing new actors have that conversation, you know, seeing folks …..you know, corporations that perhaps had employees that cared about the issue, but at the highest levels perhaps were not having that conversation. You know, we’re seeing some of the foundations that were more community-focused or thematic-focused and thought that, you know, perhaps racial justice wasn’t an area they had to play for now.

Wait a minute, maybe that’s something we should look at in terms of how our themes interact with that. And so, it really is an exciting time that this conversation of inequity is happening across the map and what we’re most excited about is the ability to deliver it at scale, right, for those organizations, institutions that are saying, yes, we stand for greater racial justice, yes, we stand for more diversity and inclusion. How do we do something about it, how do we do something visibly, authentically and at scale and, again, we’re just proud that we’ve been able to create that technology to make it very easy to step into that.

Peter: Yeah. I imagine that… people, they want to see actual results, they want to see actual change that is being brought by their money and I think that is one of the great things that you guys are offering. So, you know, I’m curious about the….I mean, during this year….how are you getting the word out and how did it change in 2020 because….you know, we first chatted several years ago when you were getting going and I’d love to know the kind of….what changed as far as getting the word out for you guys.

Cat: Absolutely. I think, you know, first and foremost obviously we have a wonderful biz dev and advisory team that is fantastic, just in terms of creating those great connections and really meeting people where they’re at because we do find that as institutions are stepping into that, there are some who find that….you know, start me with FDIC-insured, every last dollar is federally protected and I’m going to step into that, great, we’re happy to do that and we find others are much ready to embrace a little bit more risk and say, no, actually I want to do a bespoke note because we really want to walk the walk on a certain theme.

And so, you know, I give a lot of credit to our team for really being able to meet those clients and prospective clients where they’re at, but, I will also say, Peter, one of our most successful strategies, honestly, had been word-of-mouth. I do think the experience per client is so powerful and you alluded to this. You know, in a world where those of us who consider value as the one investing often end up with our adviser or with our team members into this kind of esoteric conversation of whether or not my portfolio is actually having an impact and how many women are on those board, what was the corporate offering last year. In fixed income and cash, it’s a lot more straightforward.

In the world that we plan it is not a question of whether your money made impact, it’s where it went and we can show you that trail to say when you gave us that $5 Million here’s where it went and here’s who were affected and here’s what it built. And so, the direct impact and the measurability of it and the stories we get to tell around fixed income and cash are so palpable that we find a lot of our clients experience that and end up coming back for more and end up telling their friends.

So, that’s when I think a really exciting part of the journey is I don’t think fixed income and cash were appreciated as a real opportunity, not just on the impact side, but on the competitive return side, right. Our ability to unlock these asset classes is not just good for the community, it’s excellent for your portfolio as measured by our track record and the returns that we’re delivering. And so, I think, again, once you have that experience, we’d like to say the market speaks, right, and those that are coming back for more and sharing it with their colleagues, for us it’s the greatest proof of this being the right direction.

Peter: Right, right, that makes sense. So, are you also open to individuals through retirement accounts like IRAs, is that available?

Cat: Yeah. We are not yet working on the retirement front. It’s certainly something we’re very interested in. You know, there’s been a lot of change in the retirement industry, both culturally and legislatively, and so we’re just keeping abreast of that and then now engaging in some new conversations. We are seeing a lot of pressure from both the top as well as employees saying we want this so we are very excited and very prepared to step into that, but, no, historically, that is not the place that we focused.

Peter: Right, right, okay. So, I want to talk about your funding round from last month, this is a sort of catalyst to this conversation. I saw the news, I need to get back in contact with Cat again and so tell us about the funding round, you’ve got some good names there that have invested with you, how was that process?

Cat: Yeah, absolutely. So, as you can imagine, we saw 2020 take off and we’re so excited to see how many new players were stepping into this type of impactful investing and it was a real growth opportunity for us. We were getting more calls and more interest than we can handle and so that’s really where we went after this next funding round of how do we really catalyze this growth in a meaningful way.

And so, we brought in, obviously, some of our earlier investors who signed up for the next phase and to your point, some really exciting new investors that saw the opportunity from a  financial landscape and from a services lens of this clearly where the industry is going and yet where is the innovation around cash and fixed income. And so, I think it was a nice marriage for all of us and just continue to see their support as we move into this year.

Peter: Right, right. So then, can you explain, what is your business model exactly, how are you making money? Are you taking money on the spread or what do you do?

Cat: Yeah. We have, obviously, the product set of our business where we do take money on the spread as well as custom fees, right, when we curate and customize products. And then on the flipside, on the software side, more customary kind of service fees.

Peter: Okay, okay. And then, what about scale, I mean, can you give us some sense of the scale you guys are at today?

Cat: Yeah, absolutely. So, we’re now working with over 60 large institutions across the country and actually, across the globe now in order to mobilize their fixed income and cash and many of them household names like Mastercard and Sierra Club and others.

Peter: Okay. And then, what about with your team, I mean, I think you’re based in San Francisco, right, or in the Bay Area.

Cat: Based in Oakland, California.

Peter: Oakland, I’m sorry, not San Francisco, yes.

Cat: (laughs)

Peter: And is your team distributed around the country or it looks like you’re working from home. Is that what your team has been doing, I imagine, this past few months?

Cat: Absolutely, yes. So, we were a pretty distributed team before this. You know, in some of the other companies I run, I’ve always felt that there’s real power in actually having diversity in voices, diversity in perspective, diversity in location so that was pretty much our strategy from day one, obviously, set up a pretty connected team. So, when we had to all move into not working from, you know, either our office or our cafes, but working from home, fortunately, there weren’t as many bumps.

But, I will say, like every team out there, right, the importance of just, you know, keeping that connectivity, keeping that alignment with what we’re trying to achieve and then really just taking care of your team, right, the self-care piece of this and making sure that everybody is first and foremost, you know, weathering this from a personal, physical and mental health perspective well. So, I think that’s really been our focus, you know, last year and going to this year. We are only as good as our team and so they are of utmost importance for me and I’m sure for many of the folks listening.

Peter: Yeah, yeah, for sure. So, we are recording this on January 13th, pretty close to the start of the year. We’ve got the whole of 2021 in front of us, what are your goals for CNote this year?

Cat: Yeah. I mean, continue growth and leadership in the space. I think we see this as just an incredible opportunity for both  (inaudible) our clients, right, who are really moving aggressively into this market so I would say, market leadership using our technology, using our vast database, using our expertise to really make this the industry standard for responsible investing in cash and fixed income.

Peter: Okay, Well, we’ll have to leave it there, Cat, it’s been great chatting with you again and I appreciate the work you’re doing and all the best.

Cat: Thank you so much for having me, Peter.

Peter: Okay, see you.

Cat and I were joking after we stopped recording that this has not been an easy undertaking, this is a hard challenge to really bring this kind of platform to bear, but the events of 2020 have certainly given them some momentum and really, it’s getting more and more important that people want to be able to not just say put their money to work and get a return. They want to see what impact, meaning obviously a lot of philanthropists have been doing that for some time, but now it’s more like the average person….they just don’t want to earn a return, they want to see what impact their money has that’s why I really am excited about what CNote is doing.

I think even from individual investors who just want to invest a small amount of money, you can still invest and have manimum using technology to connect those people who want to do that to the recipients who need the money. I think that’s a noble cause and one I think is only going to become more important as time goes on.

Anyway on that note, I will sign off. I very much appreciate you listening and I’ll catch you next time. Bye.

Today’s episode was sponsored by LendIt Fintech USA, the world’s largest fintech event dedicated to lending and digital banking. LendIt’s flagship event is happening online this year on April 27th to 29th with the possibility of an exclusive VIP in-person component. The verdict is in on LendIt’s 2020 event that was held online with many people saying it was the best virtual event they’d ever attended. LendIt is setting the bar even higher in 2021, so join the fintech community at LendIt Fintech USA where you will meet the people who matter, learn from the experts and get business done. Sign up today at lendit.com/usa.

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Filed Under: Fintech One-on-One Podcast Tagged With: CNote, financial inclusion, impact investing

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Podcast 277: Joe Bayen of Grow Credit

The CEO and founder of Grow Credit explains why it is so hard for people starting out to build their credit score and what can be done about it

December 11, 2020 By Peter Renton Leave a Comment

Views: 256

For young adults just starting out in life or immigrants arriving to this country, there is no clear path to establishing a credit history. I know for myself, arriving in this country 29 years ago, I was rejected for a $500 credit limit card time and time again. For many people it is a catch-22, you can’t get credit because you have no credit history. This may be about to change.

The next guest on the Lend Academy Podcast is Joy Bayen, the CEO and founder of Grow Credit. They have a free service that helps people build their credit at no cost. To do this they use a credit card with a low limit that is only able to be used for certain subscriptions such as Netflix, Spotify or Disney+. It is a simple and smart solution to a challenging problem.

In this podcast you will learn:

  • The origins of the Grow Credit story.
  • A description of their product and the three different plans.
  • The impact on consumers credit scores with their free product.
  • The way their platform works.
  • What is attractive about their paid memberships.
  • Who is their primary target market.
  • Who their core partners are in providing this innovative product.
  • Details of their revenue model.
  • How they are getting the word out about Grow Credit.
  • How Grow Credit compares with Experian Boost.
  • How they have actually benefited from the pandemic.
  • Why they only add platforms with fixed monthly costs.
  • How they are planning to scale the business next year and beyond.
  • Joe’s vision for Grow Credit.

This episode of the Lend Academy Podcast is sponsored by LendIt Fintech Digital, the new online community for financial services innovators.

Download a PDF of the transcription of Podcast 277 – Joe Bayen.

Click to Read Podcast Transcription (Full Text Version) Below

PODCAST TRANSCRIPTION SESSION NO. 277-JOE BAYEN

Welcome to the Lend Academy Podcast, Episode No. 277, this is your host, Peter Renton, Founder of Lend Academy and Co-Founder of LendIt Fintech.

(music)

Today’s episode is sponsored by LendIt Fintech Digital, the new online community for financial services innovators. Today’s challenges are extraordinary with the upheaval affecting all areas of finance. More than ever before, we need to come together as an industry to learn from each other and make sense of this new world. Join LendIt Fintech Digital to connect and learn all year long from your peers and from the fintech experts. Sign up today at digital.lendit.com

Peter Renton: Today on the show, I am delighted to welcome Joe Bayen, he is the CEO and Founder of Grow Credit. Now, Grow Credit’s a pretty new company, I think they’ve been around for about a year, but I think they’re super interesting. They have a unique product for people who want to try and build their credit score. It’s a real credit card, a real Mastercard that is free and that you can use only for subscriptions and we get into this in some detail, but really it’s a unique product that they have and it does help people, you know, grow their credit score as the name says.

So, we talk about how Joe got the idea for this, how it evolved, you know, the mechanics of how it works, the types of partners that they’re working with. We talk about how they’re growing the business and the different types of revenue and also what his vision is for the company, they’re a unique company and they have a unique vision, I think so. It was a fascinating interview, we hope you enjoy the show.

Welcome to the podcast, Joe!

Joe Bayen:  Hey, how are you?

Peter: I am doing great. So, I’d like to get this thing started by giving the listeners a bit of background. You’ve had an interesting career, so far, so why don’t you give the listeners some of the highlights.

Joe: Yeah. So, you know, very unusual background. First of all, I was born in Cameroon in Africa, raised in Paris in France, moved to France when I was two years old and then as a senior in high school, I decided that the United States was the best place for me to be. So, I decided to run track as a senior in high school and fortunately, finished fifth at the French Nationals…

Peter: Wow!

Joe: ….and that’s how I booked my ticket essentially here and I ended up with a full track and field scholarship at the University of Miami.

Peter: Wow, that’s a great way to do it if you’ve got the sporting ability, that’s a great way to get your free education.

Joe: Yeah, exactly, yeah. So, I went to Miami, I graduated in International Finance & Marketing there. After that, you know, my entrepreneurial journey started in a very unusual way where I met my first boss on a train actually in Paris on the way to Clermont-Ferrand which is a city in the middle of nowhere in France. They built an amazing technology that was literally 20 years ahead of their time and the name of the company is Allegorithmic and they built procedural  textures for After Effects and Photoshop. Basically, it’s a texturing platform for special effects for movies and video games.

They were really ahead of their time back then and most of their clients were out here in LA. You know, we met randomly on the train and we talked and I told him that I had a Marketing & Finance major, maybe I could help him out and he invited me to his office. You know, it took me about six to eight weeks to learn their technology and they gave me the gig. I flew back to Miami and traveled across the country to LA to start helping them with their business. So, that’s how it all started and the company actually was purchased by Adobe last year, one of the biggest acquisition in France, I was employee number eight, I think.

Peter: Wow, wow, that’s great, it’s a great story. So, maybe tell us then a little bit of the origins of Grow Credit, where did that start?

Joe: So, Grow Credit is an amazing story. First of all, when I came to the United States, you know, I went to college, I didn’t know anything about the credit score system, the credit cards, you know, I was offered a card, of course, and I was late here and there and it took me, you know, four/five years to rebuild my credit score.

In 2010, I started a company that was called FreeAppADay.com that did really well and, unfortunately, Apple had to change their rules and they basically kicked our industry out of the App Store. We were the largest…it was a promotional platform back then and, you know, Apple changed the rules to prevent apps from promoting other apps in the App Store so, you know, we bootstrapped the company to $18 million in revenue and all of sudden, we were generating half to 1 Million a month and instantly, we had to essentially close shop.

I went on to work at a VC fund called Science, Inc. and they’re pretty famous for having seed funded the Dollar Shave Club which was purchased $1 Billion by Unilever a couple of years ago. So, I was there for about two years to really teach them anything related to promoting apps in the App Store and then Venmo became popular, you know, Acorns and Robinhood and all those fintech apps started to become popular in around 2014 and this is when I thought this would be a good idea to basically help my younger self, you know, by introducing micro lending over the phone and credit score education as well.

So, you know, I partnered with FICO back in 2015 to launch a platform that was called Lenny Credit and Lenny Credit was an iPhone app that offered micro loans from $100 to $500 and free FICO score and credit score education. That’s how it all started with Lenny Credit. And then, you know, it’s a story of pivots after pivots (Peter laughs). You know, I bootstrapped that company as well, but this time around I needed some debt financing to grow the business. But we were the first one, first market entrant and it’s good to be first, but it’s very tough in the fintech world because banks had no idea what we were doing, and it was really hard to raise debt financing.

We almost had to close shop again until at the very last minute, a Chinese fund reached out to us to invest…I thought they wanted to invest in Lenny Credit, but, you know, we met with them in San Francisco and after talking to them for about 30 minutes, they informed me that they actually wanted me to pivot to launch a Bike-Share program (Peter laughs). It was like 2017, I had no idea what a Bike-Share program was and they told me that they would invest $1.2 million if we made that pivot. Well, we didn’t have, we pretty much had almost zero in the bank account, so it was an easy decision, but what I did was I stuck with the vision and just adjusted the tactic.

I actually merged Lenny Credit with the Bike-Share Program that ended up calling Lenny Bike and I created a subscription-based Bike-Share Program that would also help, I know, consumers, in this case students, establish and build credit. Essentially, we extended a $600 line to students and they would pay us $20-30 a month and they could use the bike in an unlimited way and report the payments to credit bureaus. So, we were scheduled to launch that platform in of June 2018 and then, you know, Lime Bike raised $330 million, Bird raised $300 million and we didn’t have much, you know, to compete so we had basically shut down that business model.

But then, I realized that…I came up with the solution that used subscription-based subscriptions to build or establish credit and it was fortunate that a gentlemen named Peter Mansfield who was a founding member at Marqeta was also one of our advisors and he put us in contact with their CEO, with their team and over the following six months we, essentially, created the infrastructure around Grow Credit which is basically, which is essentially the first Mastercard, the first credit card actually that is strictly dedicated to processing subscription payments. So, it’s a credit card can only be used to pay for services like Netflix, HBO Max, Disney Plus.

You know, when we have premium plans where actually consumers can apply…..you know, their balance is towards their cell phone plan, from AT&T, T-Mobile, Verizon and Sprint so, you know, the platform basically lives between a secured card and an unsecured card in the sense that it is an unsecured loan, but the funds can only be used towards specific subscriptions. So, we launched the platform back in December 2019, about a year ago, and so far, so good, you know, everything is….you know, we have…closing in on the 10,000 users organically and we are planning on ramping pretty aggressively in the coming weeks actually.

Peter: Right, right. So, it’s really interesting, a really interesting, Joe, it’s such an innovative product. I just want to be clear, these people get a card and they might have a Netflix subscription…well, maybe you take us through the different sort of levels that you have, I know you’ve got multiple plans. It starts off with a free plan that’s really pretty basic, tell us a little bit about the different levels.

Joe: Yeah. So, we have three plans and we are the first platform to actually help consumers establish or build credit for free with our free plan which is completely free, but consumers have access to $15 in credit that they can use towards any subscription. I mean, usually maybe a Netflix or Spotify, but the way our platform is structured, you know, we are actually reporting a credit line of $180 to the credit bureaus so it’s 15 payments, 12 payments of $15 essentially. So, we are essentially extending unsecured loan of $180 which has a significant impact on the credit score.

You know, 81% of our consumers increase their scores by 30 points in four months and it’s trending towards about 61 points in nine months so the platform as a free service is effective. Then we have two Premium Plans, the first one is called the Grow Membership which is $4.99 and it has access to $50 that consumers can use towards the subscription that we offer as well as their cell phone plan and we have the Accelerate Membership which is $9.99 and gives access to $150 in credit and they can apply those funds to their cell phone bills as well.

Peter: Right, right, okay. So, a couple of questions as a follow up on that. So, when you get the card, do you have to say….like you’ve got a Netflix subscription, do you say, I’m going to use this for Netflix or does the card come along and says, Netflix is okay, Spotify is okay, Amazon Prime is okay, how does it actually work?

Joe: Yeah. So, the way the platform works is, you know, the users sign up on the web or download the app and they go through the onboarding process. We’re working with Plaid so we are approved using Plaid and the minimum income required is $1,200 so it’s fairly accessible for most consumers. And then once we’ve finalized, once we’ve confirmed that they have enough funds, enough income, we give them the opportunity to select one of the three plans.

It works just like a catalogue, essentially. Within the app itself you have all the lists of the apps that we’re offering and the consumers also have the option to essentially ….they can submit a subscription that they’re interested in and we select the most voted subscription essentially to add on a regular basis. So, it’s a user-generated platform, but we have 40 of the top subscriptions already on the platform and then we’re adding new ones, about two new subscriptions on a weekly basis.

Peter: Right, right, interesting to know. I read in a book recently, for the sub-prime population, one in eight Netflix charges result in a bank overdraft so that one in eight for the sub-prime population which I thought was just staggering that the Netflix fee is not costing them whatever is $12 a month or whatever. I know it’s more than that now, but it’s costing them, you know……

Joe:  $35.00 extra

Peter: ….yeah, for $35 extra so that to me was a staggering stat….but I wanted to just dig in a little bit. I’m curious about why would someone pay the $5 or $10, is it worth that much to have that extra credit. I mean, I’m just trying to see why they would do that.

Joe: So, you know, you want to look at those plans as an accelerant. You know, the basic plan, the free plan works, the other plans….you know, keep in mind that with the free plan….you know, we are reporting $180 to the credit bureaus, right, but with the Grow Membership we are reporting a $600 loan to the credit bureaus and with Accelerate Membership, we are reporting an $1,800 loan to the credit bureaus and the larger balance has a significant impact on the credit score. So, for users who are trying to purchase a home or purchase a car are looking for an extra 30 or 40 points on their credit score. You know, it makes sense because the savings that they generate by benefiting from a cheaper financing cost are very significant.

We are talking about…..you know, I remember, when I had no credit score, my first car was a Ford ZX2 that cost me $350 a month, okay, because my score was maybe in the 590 or something like that. With my score, with a score of 700 or 720, actually 719 or 720, we are looking at a savings, substantial savings. You know, a friend of mine, she had a great credit score, an 800 credit score, actually I remember, and the car payments for her Volkswagen Jetta was just $200. So, we are talking about $150 savings times 12 so that’s $1,800 in savings for the Grow Membership for $60 cost so it just makes total sense, you know, when a consumer is trying to basically improve their scores to obtain cheaper financing cost.

Peter: So, who is your target market? Is it the student just out of college or school, is it someone who is trying to rebuild, I mean, who is the target market?

Joe:  So, that’s the interesting part, right. According to Experian, it’s on the Experian website, before COVID-19, it was over a 100 million consumers with no credit or thin credit files, pre- COVID-19. Post COVID-19, we are looking at maybe 130 to 150 million consumers who need our platform so they are using Grow to either establish credit or build credit.

For instance, a student after coming out of college, they need to add more credit products. Essentially, a consumer is considered a thin file consumer if they have less than five trade lines on a credit report. We were able to add a trade line for free to consumers so for free, it gives an opportunity to escape being considered a thin file user. When you have more than five trade lines, the credit score will be significantly higher so that’s the reason why it makes sense to use Grow, for instance.

But, we have users who are coming out of bankruptcy and who are trying to re-establish their score, we have users who are trying to purchase a car or a home. Essentially, a vast large number of the population need to build their credit because, otherwise, it’s very expensive to be poor. So, it’s an opportunity to really have…to benefit from a cheaper cost of financing, in general.

Peter: Right, right, that makes sense. So, do you have a national footprint or you’re just working in certain states right now?

Joe: Yeah. So, we’re national and just launched nationally about a month ago and we had a major press release and we also announced our partnership with Mastercard who joined us as a strategic partner to help us expand Grow nationwide. You know, they have a similar vision as Grow in the sense that they are really focusing on financial inclusion and that’s why our partnership made total sense.

We’ve been working with Dave, they’ve been following us for the past year and they saw us going through an enormous amount of hurdles, they saw us partner with four banks, with Bridge Bank, MRV Banks, with Sutton Bank and they saw us partner with Marqeta so they saw us overcoming enormous amounts of challenges to reach this stage.

And, finally, when we completed actually our partnership with Blue Ridge Bank which gave us nationwide coverage….you know, this is really where it was a signal for them to give it a go and we signed the partnership deal back in August. We’re really, really proud of working with them and being part of their financial inclusion initiative, yeah, so the platform is available nationwide since January. Previously, we were available only in California for our Premium Plan, but our Free Plan had been available nationwide since July.

Peter: Okay, okay, got it, got it. So then, what are the sources of revenue are you going after? I imagine, there’s a lot of ways you can take this, but maybe give us some ideas. Is this just going to be purely a consumer play or are you going after other sources of revenue?

Joe: Yeah. So, we are generating revenue from the interchange revenue. When consumers are upgrading to our Premium Plans, we’re generating revenue this way. We have….a good chunk of our users are actually tipping us and also we’ve got a certain amount of users who are giving us tips because we are delivering a true service that is valuable so we’re getting a good chunk of tips as well.

We are going to release a graduation credit card in April 2021 in partnership with MRV Banks, our bank partner, so that’s a card that we will offer to consumers who have spent at least a year on the platform and if they made their payment on time and reached specific FICO score level, we will extend them that credit card. We are also generating revenue from subscription companies because our platform is essentially….we are delivering a high LTV audience, they are using our platform to establish or build credit and subscription companies are more than happy to advertise on our platform to acquire those very valuable users.

Peter: Right. I was wondering about that because that’s the thing, they’re not going to cancel their Netflix subscription if they’re using Netflix to establish their credit.

Joe: Exactly, exactly.

Peter: Very interesting, very interesting. So, how are you getting the word out like what’s your marketing plan, how are people finding out about Grow Credit?

Joe: So, remember, I ran a marketing platform, a mobile marketing platform, FreeAppADay back in 2010 so acquiring users and mobile is my expertise, my core expertise so we have a lot of strategies….I mean, the usual suspects, of course, Instagram and Facebook, social media. But, influencer marketing is going to be a good way, a good channel for us specifically because we have a pretty large amount of influencers who are focusing on helping their audience establish or build credit so it makes a lot of sense for them to promote us, it validates, essentially, their channel.

Then we have a very interesting channel where we are going to be working with corporations to offer Grow as an employee benefit so that’s going to be a pretty significant channel for us. We already completed a partnership with a company called College HUNKS Moving, you know, it’s over a $100 million revenue company with close to 3,000 employees across the nation and they are using us essentially as a financial inclusion tool to help their workers, their employees establish or build credit. If their employees want to upgrade to one of our premium plans, they receive a 20% discount so it’s a “win-win” for the employees and for the employers as well and that’s a program that we’re planning on expanding to much larger corporations. We are trying to talk to the Walmarts, McDonalds’, complete “win-win” value proposition, you know, for any corporation actually.

Peter: Well, I could see the corporation paying the whole fee and encouraging their……I think that’s a huge market and in many ways that might be an easier way to scale your business. I mean, long lead time I know to get those deals closed, but suddenly you add users by the thousands or tens of thousands potentially because it’s such a big problem.

The thing that’s interesting to me is that there is more awareness it feels like, about credit scores today then there even was like three or four years ago, it feels like. Everyone…it just feels like it’s everywhere, you see it on TV, Experian Boost and other things that are really out there in the public eye and I think it’s good timing, I imagine, for you. I mean, that company, the consumers are hyper aware of their credit scores much more than they used to be.

Joe: That is correct. You know, it all started with Credit Karma, they did a fantastic job. They were really the first one, especially pushing the free educational platform that they have, they monetize, of course, by promoting credit cards, but the awareness….they have over 100 million consumers, I think, by now so they did a fantastic job creating more awareness providing with the credit score.

Experian Boost launched their platform actually, I think last year and their platform is solid, however, the credit improvement only happens on Experian and the credit boost is actually very limited and that’s because there is no credit extension involved with Experian Boost. They are looking at the repayment history for utilities, but, you know, the entire FICO system was built to assess the repayment capability of a consumer and to assess the repayment capability of consumers, you need a lot, you need to extend credit to see whether or not the consumers will overextend themselves.

So, without that credit extension, the impact on the FICO score is very, very limited. So, that’s how we essentially contrast ourselves with Experian Boost because we’re actually extending some real credit, an unsecured credit line and the impact is actually on all three credit bureaus. Essentially, extending credit matters a lot if a consumer is attempting to add significant impact on their credit scores.

Peter: Right, right. But, the thing that Boost does is, you know, it’s free, it’s simple and it brings awareness to a credit score. In some ways, I can see how, in some ways you can think it’s a competitor of yours, but in other ways it’s almost like a lead-gen in some ways.

Joe: It’s complimentary.

Peter: Complimentary, yeah, exactly. So, what’s it been like, you know, building this company? You said you launched in December of 2019, the pandemic hit in March, how has the pandemic impacted your company this year, particularly from your consumers, but also just in growing your company.

Joe: Well, that’s very unusual because…of course, the pandemic is a sad event, it’s been traumatic, but on the other hand, for us, we are one of those companies where it actually benefited us which is really unusual. You know, there was an article in The New York Times back in April that identified that the industries that were gaining the most during the pandemic were video streaming and music streaming.

Peter: Right.

Joe: Everything else was going down, but music streaming….and this is where we benefit from it in the sense that consumers, they might have cut off their cable or other services, but Netflix has become sort of a necessity. Now, we have consumers who are at home working, now they can actually establish and build credit with them, you know, a product that’s an actual necessity. So, it’s been an unusual good match for us to a certain extent where we make a lot of sense, you know, during the current COVID-19 times.

Peter: Right, right, okay. So then, as you think about adding new services on, do you have criteria like, I imagine, it’ll be difficult for you to add something like a utility bill or something because that it varies so wildly, I mean, is this something you have to…. does it have to be a fixed price, how do you think about having new services?

Joe: That is correct. You know, we are adding DirecTV, we are planning on adding……you are correct, we are avoiding services with variable costs because it’s too dangerous.

Peter: Right.

Joe:  You know, what makes our platform secure is the fact that….by the way, that is one core reason why we added cell phone bills because over the past six/seven years the cell phone industry has changed, has revolutionized itself by focusing more on a subscription type of service. You know, we have plans for $30 unlimited plans nowadays so that’s why we focused on those type of services, but in the future, we are working with…. we cannot mention the name of the players right now, but we are expecting to complete our partnership with a platform which enables us to instantly extend our reach to a variety of products, of services that we can integrate seamlessly with the Grow credit app. Right now, we only have 40 subscriptions, but by Q2 of 2021, it will probably grow to about 100. So, that’s through a partner that we’re working with.

Peter: Right, right, okay. And you said earlier, you’re about to ramp-up in 2021, I mean, how are you planning to scale this in 2021?

Joe: So, we have a pretty aggressive pipeline, we’re planning on acquiring about a million users in 2021 and four million users in 2022. We are partnering with a lot of actually fintech apps, you know, Chime. At present, Chime is a complimentary platform to ours…a lot of fintech platforms that we’re going to do some co-branding and co-marketing with, for instance. So, we started to talk to Chime and I think we’re going to complete a partnership fairly soon.

Of course, YouTube…as I mentioned earlier, our corporate initiative…you know, it’s going to be a multi-faceted strategy for us to reach consumers, but something that’s interesting is the fact that, you know, our ad assets are shared pretty extensively on social media because the ability to build credit for free with Netflix is a pretty powerful value proposition.

Peter: Right. I can see that.

Joe: Yeah. We already tested it and it’s been incredibly powerful so we believe that social media and influencer marketing will be our top channels, from a value proposition standpoint and fairly cheap because of the variety of the app itself. We also have something pretty interesting, I think, I’ve never seen it in any other fintech apps before, we are enabling consumers to earn a $5 balance increase by sharing the app with their friends and that’s been working pretty well.

But, what’s interesting with the system is it’s a complete “win-win” for everyone involved, right, you know, the consumers share the app with their friends, they increase their balance by $5 and there’s a direct correlation, of course, between a higher balance and a higher credit score. So, you have a higher balance, a higher credit score and your friends get to build their credit score at the same time. It’s a complete “win-win” system that we built and that’s generated a good chunk of our installs right now. So, that embedded virality has worked out pretty well for us, so far.

Peter: That’s super interesting plus, you know, the added benefit there where it becomes a social pressure almost to keep it going kind of thing, you know, how’s your credit score going, that sort of thing.

Joe: And it’s a lot of interesting play on that front later on to challenge, to drive people challenging themselves to increase their score.

Peter: Sure, sure. So, that brings on my last question and that is, you know, there are a lot of ways you can take this. What’s your vision for Grow Credit, where are you taking this company?

Joe: So, our goal is to conquer the world (Peter laughs).

Peter: Good for you, yes, might as well aim high.

Joe: That’s our goal. We have, you know, really the ability to become….our entire goal is to deliver an enormous amount of value for our consumers, right, and with our initiatives to deliver discounts to our users, we believe that it’s going to help us grow dramatically because not only are consumers able to, of course, build their credit, that’s number one, but once they are able to save $50/100 on the overall subscriptions, that’s going to give us a lot of purchasing power to be able to potentially demand lower rates on cell phone bills, for instance.

So, the idea is we need to build a community which allows consumers to really obtain an enormous amount of savings and this is really where we’re all going, really the ability to use Grow to build credit, obtain savings and maybe there’s the banking down the road, the neobank…you know, this is a possibility, we could head into the banking realm, down the road possibility, not sure, but who knows.

Peter: Okay, Well, it’s super interesting, Joe, I appreciate your coming on the show today and sharing your story.

Joe: Thank you, thank you, Peter.

Peter: Okay, see you.

You know, one of the big challenges, I think, for consumers starting out, either arriving in this country as an immigrant or they’re just leaving college and they’re really starting out and getting a credit file for the first time. It’s hard to break into the system because you can get maybe a secured credit card with a $500 limit, that doesn’t really increase your credit score dramatically, it’s not a way that really is going to help that much.

What Grow Credit provides is a free way to really get a trade line, pay it down and then graduate it up. I can see how this…there hasn’t been this sort of one company that say, okay, when you start out and you want to establish your credit score, this is what you need to go do and that is what I think Grow Credit provides. So, I wanted to get Joe on, even though his company is very young, but I think it provides sort of a missing link in a way in the credit system. I think a company like this could be sort of the first natural step in a few years time that everyone goes into when they’re trying to establish their credit score. So, I think it’s a great idea, as I said.

Anyway on that note, I will sign off. I very much appreciate you listening and I’ll catch you next time. Bye.

Today’s episode was sponsored by LendIt Fintech Digital, the new online community for financial services innovators. Today’s challenges are extraordinary with the upheaval affecting all areas of finance. More than ever before, we need to come together as an industry to learn from each other and make sense of this new world. Join LendIt Fintech Digital to connect and learn all year long from your peers and from the fintech experts. Sign up today at digital.lendit.com.

You can subscribe to the Lend Academy Podcast via iTunes or Stitcher. To listen to this podcast episode there is an audio player directly below or you can download the MP3 file here.

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Filed Under: Fintech One-on-One Podcast Tagged With: credit scores, financial inclusion, Grow Credit

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Podcast 276: Mike Cagney of Figure

The CEO and co-founder of Figure discusses the future of securitization, taking on Visa and Mastercard directly, financial inclusion, investment marketplaces and, of course, blockchain

December 4, 2020 By Peter Renton Leave a Comment

Views: 798

Mike Cagney has built a reputation as one of the smartest people in all of fintech. His capacity to raise capital is unparalleled in our space but he is also a visionary who is tackling some of the biggest fintech challenges.

Back for the third time on the Lend Academy Podcast, and his first time as the Figure CEO, Mike Cagney describes several different sectors they are attacking. He said we should think of Figure as more of a holding company with multiple divisions: lending, securitization, payments, investment marketplaces, cap table management and more. All with blockchain underpinning everything. This was the most fascinating episode I have recorded in a long time.

In this podcast you will learn:

  • How Figure has evolved since starting in lending 2018.
  • The different verticals where Figure is operating in today.
  • How they have improved Provenance to make it more attractive for third parties.
  • Why the biggest opportunity with Provenance 2.0 is with mortgage originators.
  • Why it is inevitable that most capital markets transactions will eventually run through the blockchain.
  • What Figure Pay is and why they have decided to create it.
  • Why Figure Pay will really be a solution for underbanked consumers.
  • Why the OCC license will be critical for delivering solutions for the underbanked consumer.
  • How the economics will work for Figure Pay.
  • What their investor marketplace is and the products they will offer.
  • Their plans for Hash, the token for the Provenance blockchain.
  • How Mike’s thinking about banks has evolved over the years.
  • How it has been helpful to have a head of the OCC who really gets what Figure is trying to do.
  • Mike’s vision for Figure and the Provenance blockchain.

This episode of the Lend Academy Podcast is sponsored by LendIt Fintech Digital, the new online community for financial services innovators.

Download a PDF of the transcription of Podcast 276 – Mike Cagney.

Click to Read Podcast Transcription (Full Text Version) Below

PODCAST TRANSCRIPTION SESSION NO. 276-MIKE CAGNEY

Welcome to the Lend Academy Podcast, Episode No. 276, this is your host, Peter Renton, Founder of Lend Academy and Co-Founder of LendIt Fintech.

(music)

Today’s episode is sponsored by LendIt Fintech Digital, the new online community for financial services innovators. Today’s challenges are extraordinary with the upheaval affecting all areas of finance. More than ever before, we need to come together as an industry to learn from each other and make sense of this new world. Join LendIt Fintech Digital to connect and learn all year long from your peers and from the fintech experts. Sign up today at digital.lendit.com

Peter Renton: Today on the show, I am delighted to welcome back Mike Cagney, he is the CEO and Co-Founder of Figure. You know, Figure has been around for actually not that long, but as you’ll find out in this show, they’ve accomplished a huge amount and really taking on several different verticals inside fintech and really making a big splash. Now, we talk about the Provenance blockchain and how they’ve moved from really 1.0 to 2.0 and what that means for a lot of the offerings they have.

We also talk about a new initiative that I just found out about today and that is Figure Pay and that’s launching early next year and, again, somewhat revolutionary in how they are rolling out that product. We talk about the securitization space, of course, because that was really sort of the initial kind of use case for the Provenance blockchain. We talk about their bank charter because they just applied for a bank charter very recently, we talk about what the thinking is behind that. Mike also gives his perspective on the vision for what is coming up for Provenance and Figure. It was a truly fascinating interview, we hope you enjoy the show.

Welcome back to the podcast, Mike.

Mike Cagney: Thank you.

Peter: Okay. So, it’s been a while since we’ve had you on. In fact, this is the first time we’ve had you on since you started at Figure so maybe we can just get into some background and it seems like Figure continues to evolve, it’s a lot more than what you originally started out with. So, why don’t you give us a little bit of history of Figure and also of Provenance as well.

Mike: Sure. So, we started Figure back in 2018 with the idea that we could use blockchain technology to really drive some transformational change in financial services. The idea that we could just remediate a lot of intermediation in not just the lending vertical, but the asset management vertical, the banking and payments vertical and so we worked together to build a blockchain technology called Provenance.

One of the initial things we realized was that, you know, in 2018, the banks weren’t ready to run on a blockchain and, you know, a lot of interest, a lot of focus….you know, every bank had a blockchain technology team that they funded, investigate and do projects in blockchain, but no one really wanted to do production applications. So, we ended up creating Figure Lending really as a first mover to de-risk Provenance blockchain and, obviously, in that context having control and being able to manage your own destiny in that regard. And so, given that we’re building a lending business, we said, well, a vertical to a lending business, let’s do something that’s greenfield and interesting and the economics makes sense.

We chose HELOC to start with and we did a lot of innovation around HELOC origination outside of watching, right, so generating a five-minute HELOC has very little to do with blockchain and a lot to do with just better technical processes and so forth. But, effectively, our goal was to take the distributed trustless, immutable nature of blockchain, the function of a ledger registry in exchange and demonstrate whether we could or couldn’t realize savings using the technology for us, origination, financing and securitization. And what we were able to do is show that with the technology on our first securitization, which was done March of this year, soup to nuts from origination through financing, through securitization about 117 basis points of cost savings.

Another transaction, another securitization Saluda Grade did behind us on Provenance where it was about 125 basis points of cost savings. So, these are important proof points for us in the context that this is real, has a real economic impact, a real economic value and we’ve done a lot of work around lending where we use blockchain for participations, we use it for whole loan trades, but within Figure…..Figure has also evolved into several other verticals. So, for example, we have a banking and payments initiative called Figure Pay and it’s launching in Montana in January, in Missoula, Montana.

The whole focus of Figure Pay is it’s using a blockchain ledger to manage the bank accounts, the movement of money and any two entities on that blockchain who transact. So, for example, if I were to pay you and we’re both on Figure Pay, it’s using a blockchain rail not an interchange rail.

Peter: Interesting.

Mike: This is where we think there’s a huge opportunity to go after the interchange market which is…..you know, everyone hates it, it’s enormous, but that’s how you move money today. So, we think, you know, significant opportunity there, but we’re doing other things, fund services so we have a marketplace that hosts funds where our digital funds services business will do a full package of originating your fund, the documents, custody, admin, all on blockchain and we leverage this feature called Passport that does investor accreditation BSA now for raising capital.

So, I could do a 506c through DFS soup to nuts in a couple of weeks and then use the blockchain as a capital raising vehicle for the funds into that. My favorite thing we’re doing is we have a Cap Table Management Platform called Adnales. And in part it has very little to do with us wanting to go after Carta that we are obviously competing with Carta in that context, but it’s more….it acknowledged the equity for a company is now Digital Certificate on a Blockchain.

What that means is that you get all the benefits of bilateral transaction, real-time settlement, etc. and so it’s built in a way that allows a company to turn on a secondary offering, leverage our Passport for investor accreditation BSA/AML and manage their both primary and secondary market exposure in a much more efficient way. This is really how we’re thinking about the opportunity to go out through exchanges so, you know, within Provenance everything is bilateral, T-0 settlement, no counter party risk, no settlement risk, very different from the NASDAQ or the NYSE or any other stock exchange out there and the top seven exchanges….have about $120 Billion in market cap.

So, Adnales is kind of our beachhead into that opportunity set where we start off with startups in private company Cap Table Management and Private Company Secondary Offerings, but when they go public, we hope to have the capital, the resources to say why list on the NASDAQ or the NYSE, why don’t you just stay here, it’s T-0 you’ve got the market. Our hopes are that it’s going to be a successful way to go after that opportunity.

Peter: Okay. Well, man, there’s a lot to unpack there (laughs). You are in a huge number of different, interesting issues there, maybe we could just take a couple to start off with. Maybe let’s just start with the securitization, you know, I read about the first securitization you did and the second. To me, you’re taking away all these costs so, regardless of whether you….all the other advantages that are obvious when you’re doing transactions this way. I mean, why are people….maybe there are people flocking to try and do this, other originators trying to sort of put their assets on Provenance and do transactions the way you’ve done the HELOCs?

Mike: So, there’s a couple of dynamics to it. So, one is they are striving to do that and so Bob Hershey who runs our capital markets effort is working with several originators right now to begin to originate and leverage the capital market benefit of Provenance. I think one of the biggest limitations that we had was when we initially built Provenance, it was what we would describe as a permission private blockchain. You had to go through Provenance Blockchain, Inc. to access it. Provenance Blockchain, Inc. designated who the stakeholders were on that blockchain which are 12 financial institutions, including names like Franklin Templeton and Experian, all well known names.

But, we did it that way because it was the best way to put a bridge between where the banks and the hedge funds and the buy side folks were versus where blockchain was. So, one of the challenges of that is the way the fee structure was set up is it was designated by Provenance Blockchain, Inc, so you originated loans on Provenance, Provenance would come in and say, you’re saving $100, we’re going to charge you $33. And, by and large, that structure works in the sense that it provides a mechanism of economic for the blockchain, it gets distributed out to the Hash holders that’s why Hash is….you know, in Provenance is one of the most valuable blockchains in the marketplace today. But, it created a significant barrier in that we could not open source it and we couldn’t release an SDK, a Software Development Kit, to allow people to onboard themselves because if we did that, you could circumvent Provenance Blockchain Inc. and not pay any fees.

Peter: Right.

Mike: And so, there was a significant limitation on your ability as a third party to access and….you know, just as we created Figure to de-risk the blockchain, it creates a competitive dynamic whereby going to another QR originator, for example. They’re going to say, whoa, I don’t want Figure looking at my stuff and we couldn’t say, well, then just take this SDK and do it yourself. And so, what we’ve done very recently is we’ve migrated from what we would call 1.0 to 2.0 and 1.0 being permission private, 2.0 being decentralized public and we moved off of a very heavily customized version of Hyperledger onto Cosmos Tendermint as the underlying infrastructure where we have moved all these applications like marketplace that sit on top of it.

Now, we have the ability to charge gas fees, very analogous to Ethereum, where you pay for processing, it allows us to open source the blockchain, publish the SDK out and that’s going to be a huge catalyst to drive adaption because we no longer have to be involved.

Peter: Right.

Mike: Up until now, Figure had to be part of your process to onboard. And so, I think the combination of that plus just people wanting to see some demonstrated economics, I think we’ve de-risked it and now with public accessibility, I expect that we’re going to get significant adoption onto it. The economics are too meaningful to avoid.

Peter: Yeah, yeah, I mean, I can understand that. So, has there been a securitization….it doesn’t sound like there has been on the 2.0 blockchain. Are you…..add another figure, HELOC deals sort of in the pipe?

Mike: Yeah. So, we do, but what we’re really interested in is we’ve got a prime jumbo first lien deal and, you know, what we’re trying to do is demonstrate the efficacy of this beyond HELOC. We’re doing some work on unsecured consumer, we’ve done some work on student loan refi, but the real one we’re targeting is mortgage and we think there’s such an opportunity for mortgage originators and such an opportunity for the GSCs and the FHA to leverage this technology. Much like we did with HELOC, we think we need to do a couple of transactions to de-risk it and demonstrate the economic benefit.

But, the dynamic here is if you think about a mortgage originator today, let’s say I’m selling to Fannie Mae, one of the fastest times from closing the loan to delivering to Fannie Mae is 21 days, usually it takes longer than that. If I’m an originator, I’m eating up my equity capital in my warehouse to aggregate those assets for 21 days. I’m taking market risk in terms of what happens to the price of those assets by the time they’re delivered through. And the agencies, when Fannie buys those loans, they’re creating a 55-day mortgage pass-throughs, the cash flow you get today, was from 55 days ago and they’re paying for the drop on that.

Blockchain solves all of that in the sense that you can deliver the asset the day you fund it because of the immutability and trustless aspects, truth aspect of blockchain…you know exactly what the loan is and because of the real-time cash flows and real-time remittance, you can actually do a one-day pass-through not a 55-day pass-through. So, we think there’s enormous opportunity here and we’re going about de-risking that by doing a prime jumbo securitization, not a conforming mortgage securitization.

Peter: Right.

Mike: But, directionally, it’s the same thing and so that’s one of the big focuses that we have for Q1, is to get that transaction done and use that as a way that kind of crowd in broader adaption from the non-bank mortgage originators and the bank mortgage originators.

Peter: Right, right. Obviously, that’s the biggest market of all so if you can get some traction there, you are well on the way. Do you foresee a time, is this your goal, you think that what…most…half the securitizations in multiple asset classes running through the Provenance blockchain?

Mike: We hope it’s Provenance, but whether it’s Provenance or something, everything is going to end up running through the blockchain as a realistic capital markets because the value……if you think about the impediments to markets today, it’s do I trust you, do I know what you’re selling me is real, do you really have a…and in that context, you’ve got equity trading, for example, there’s actually five parties involved in an equity trade and each take a  little bit of that transaction and it’s because, you know, I can’t trust you and you can’t trust me.

The whole benefit of blockchain is you know exactly what the asset is and I don’t have counter party or settlement risk and that provides a huge amount of opportunity in terms of making mortgage more efficient. So, whether it’s securitization, whether it’s whole loan trades, whether it’s equity trades, I think everything is going to end up moving to blockchain and the issue is, is it going to be Provenance, is it going to be an Ethereum derivative, will it be Bitcoin?

The challenge with Bitcoin and Ethereum is the scalability and that’s the biggest hindrance that we’ve had and, you know, there are certain aspects and benefits of Cosmos Tendermint, in terms of being over in peril instances, to deal with that, and we’ve spent a lot of time addressing the scalability of blockchain where you can pull a 10,000-loan tape off of Provenance right now and it’s just as fast as pulling it from a database. There’s no difference and that was an important aspect to us.

But, you know, one of the things I’ll build on in what you just said, we’re very focused on scale and so we’re constantly looking at situations and opportunities where we can take our technology and partner with scale to demonstrate blockchain in a bigger, more meaningful way. We actually came very close…you know, in the last four weeks, of doing a transaction with one of the very large non-bank mortgage originators where we were going to contribute our technology into that entity and build something that we felt was very differentiated where, you know, we were going to build reduced origination cost and then have this downstream potential for blockchain.

Given the nature of Figure, it is effectively a holding company across all these verticals, you know, I think what you’ll see in 2021……our pursuing certain circumstances where we can either contribute our technology on a merger basis. We’re going to do a SPAC so we’ll have that vehicle on a public company basis and look to take some of this tech and some of this de-risking that we’ve done and rather than organically build it out, merge it with scale and get there faster to prove a proof point.

Peter: Interesting, interesting. So then, you’re imagining Figure and being almost like a SaaS provider of the technology, is that where you’re moving?

Mike: Well, I see we have….Figure has a relatively large SaaS business, and that business is one of the things I’ll probably spin out.

Peter: Okay.

Mike: So, you can think of Figure as a hold-co where we have a large amount of the economic of the blockchain and each of these individual businesses….it’s really the proverbial….the parts are greater than the sum, right. You know, why do you have Cap Table Management Company in the same business that does lending, in the same business that does SaaS, these things are better off broken out. You know, as we start getting maturity with the technology, we’ll start breaking these up in 2021, you’ll start seeing that happen, you know, through M&A, through SPAC, through other types of activities in the marketplace.

Peter: Okay. I want to talk about Figure Pay which I didn’t actually know about until you just told me a few minutes ago. So, who are you trying to go up against there? Are you trying to do …is this like a merchant sort of offering, is this person-to-person, what is the market?

Mike: Sure. So, I’ll give you a little bit of history on it and then what we’re doing right now and how this ties into the OCC Charter as well that we filed at the beginning of the month. So, basically, when we built SoFi Money, what we did is we had an omnibus bank, in that case it was WSFS. It made a good source license profile and we built our own banking ledger, we built our own integration into the ATM and ACH and Wire, etc. and what WSFS was, was really the repository in the integration and the Fed-settle. And so, you know, in the context of Provenance we have this omnibus banks and these are banks that act as a bridge between blockchain and fiat.

So, for example, you were buying $50 Million of loans from me, you would push $50 Million into Silvergate, they will create a $50 Million entry in your digital wallet and you and I would face-off in a blockchain that you have the StableCoin, I have the loans and it will just register the ownership of one or the other, hence, the real-time transaction without counterparty or settlement risk. As we are looking at this, we said, look, why couldn’t we do something where we build a blockchain banking ledger, similar to what we did before, build all the off-ground interfaces into the ATM, ACH, etc., leverage one of our omnibus banks as an omnibus bank, right, integrating into Fed-settle, holding the cash, Fiat, so forth.

We can do some interesting things with this along the lines of, you know, small dollar credit, for example for thin file consumers because we get certain information, transactional history, geo location that allows us to underwrite in a way that we can make up for the fact that we don’t have a thick file. But, it has this really interesting advantage in that because it’s blockchain, it has it’s bilateral transaction capability, whether it’s a loan, whether it’s me paying a merchant or me paying another consumer where it allows us to bypass interchange.

And so, the benefit being that if you’re a merchant and I’m transacting with you on Figure Pay and we’re both on Figure Pay’s backend rails…you don’t necessarily have to be a Figure Pay customer because we private label it for other institutions so, you know, XYZ could offer this solution as well, but it’s the same backend rail. Rather than going through interchange, it’s going to go through the blockchain rail and it benefits the merchant obviously, one, the cost.

I might be a little bit off on the numbers, but I think Walmart had $6 Billion of profit last year, paid  $2 Billion in interchange expenses, so massive number. But also from a merchant standpoint, it eliminates charge back because it’s StableCoin, it’s cash and eliminates the settlement time, right, it’s instant. The whole aspect is the consumer doesn’t need to know, nor do they even care, that they’re on a blockchain ledger, right, it’s just cash and they transact the same way that they always do.

And so, we see this, initially, as a really interesting solution for underbanked consumers and we would have all the bells and whistles like payday advance, etc. that some of the other folks have out there, but we see this as an interesting solution for underbanked consumers. It’s a much better viable alternative than prepaid debit and because it’s not relying on a bank on the backend as a lot of the “US Challenger Banks” are…..you know, very few of them have banking licenses, there’s a significant economy of scale that’s there that we think we can take advantage of.

And so, the challenge we have on this is, you know, we’re looking at our business and next year, we’re going to need over 200 licenses, we already have well over 100. We have to continue add them for money transfer licenses and so forth. We have mortgage licenses, we have lending licenses, we have servicing licenses, money transmitter licenses and the challenge with having over 200 licenses is, you know, not only is it the cost, the consistency of the product, right.

What we deliver in Colorado is different from what we can deliver in California and we had optimism that the states would build some kind of reciprocity, they just haven’t done it. So, we made the decision in early November to apply for a national bank license through the OCC. It’s novel in the sense that we’re not doing FDIC insured deposits directly, we’re partnering with a bank to do that. We are taking institutional deposits toward deposit-taking, but not FDIC insured deposit-taking. We see this as a way to ….it’s sort of ironic that we built this technology, we massively lowered the cost to deliver solutions to consumers.

You can now deliver solutions into that underbanked segment in a profitable way, in a way that’s better than what they have today and then you layer in all the regulatory complexity with 200 state licenses and you start to lose the ability to do that. (Peter laughs) So, this OCC license, we think, is really critical for our ability to deliver solutions to our underbanked consumers and drive real financial inclusion which, you know, there’s been a lot of talk around financial inclusion and around fintech, but not huge amounts has been done there.

Peter: Right.

Mike: And so, we see this as really a meaningful way to do that. You know, obviously, what we’re trying to do on the blockchain side is go after interchange, you know, Visa, Mastercard, market cap… the top three interchange providers, their market cap is somewhere around $750 Billion so there’s a huge opportunity there. This is the first thing that……I’ve been in financial services since the late 90’s, this is the first thing I’ve ever seen that’s a viable way to go after that interchange.

Peter: Many have tried and no one’s really got anything going there. So, like for Figure Pay, are you taking basis points from the transactions similar to an interchange and just making it a lot lower or what’s the economics?

Mike: Yeah. So, that’s right. Look, we still have a Visa debit card on Figure Pay because you can’t be reliant just on the blockchain rail because you’re going to have the chicken and egg problem. And so, it’s completely inter-operable between interchange and between Provenance and we’re just taking on Provenance transactions a much smaller cut because, you know, an interchange transaction has seven parties that are dipping into that and pulling economics out, this is bilateral, just me and you, right, and so we can take a much smaller cut to make it very economical for everyone involved.

Peter: So then, like on the merchant side, who…really you have a chicken and egg problem is, you know, are you going after some big merchants to really….you know, they can benefit as well. They don’t want to be beholden to Visa or Mastercard.

Mike: One hundred percent, so, we’re taking a barbell approach which is we’re having some conversations with very, very large merchants and then when we pilot this in Missoula, Montana in January, we’re doing it with a bunch of farmer market participants (Peter laughs) and getting them set up. So, Figure Pay will work, you know, bluetooth through NFC or work through QR code scanning and we’re setting them up.

We actually think it’s going to be a really important proof point and then go to the big merchants and say, look, this is how it worked. There’s, obviously, a lot of enthusiasm because of the local aspect of doing this, you know, around the signing up and participating. But, it’s a barbell approach and, absolutely, there are big merchants that are going to want to adopt into this because of the amount they pay on the interchange today.

Peter: Right, okay. So, I want to just talk about the investor side. I was on your website on the weekend and I signed up for Hash and I went through the accreditation process, it’s all using Plaid and very simple. I mean, I feel like there’s so many ways you can take that, but are you planning on having a platform of different assets for individual investors or what are you doing with that?

Mike: Yeah. So, that’s really what marketplace is and the idea is that as an investor, a retail investor, an institutional investor, an institution, you can go in and basically go through the marketplace and find what you want. So, for example Figure World Equity Fund is on the marketplace and you want to subscribe, you can do the whole thing without any human intervention, right, and that’s the point, is we’re trying to make it easy for people to be able to access alternative product.

One of the things that we do with Passport is that Passport moves with you so when you go from one investment to another, you don’t re-accredit it, you don’t re-establish so it makes it a much more seamless process. Literally, part of why we built this is I stopped doing private investments about a year and a half ago because I couldn’t stand filling one more accreditation (Peter laughs). You know, they’re all different, they all ask you stupid stuff, you know, they never handle my trust, right, etc. etc.

So, the intent is to have a general marketplace centralized on this whole aspect of trustless bilateral settlement where individuals can come in, they could search what they want so loan buyers can come in and search for, you know, sub-680 loans over 8% coupon in California and they can go to three different marketplaces that have that and participate in.

You could come in and say I’m looking for, you know, venture capital, early stage fintech and be able to find funds listed on the marketplace. The other interesting thing about a marketplace is because it’s built on an exchange, it allows for the secondary trading of those fund interest, right, so, you know, if you own a private equity fund and it’s five years into a ten-year life cycle, you could market that on marketplace and sell on a secondary basis.

Peter: That’s super interesting. I tell you, I’m excited to kind of explore that, but I want to move on to Hash. Hash is the token for the Provenance blockchain and you said that you were intending to do an IPO of that at some point. What are the plans for Hash now?

Mike: So, I’m glad you asked. Provenance, at one point and as I talked about earlier, it was very clear that Hash was a security and so what we wanted to do is we wanted to do a public offering of that. That meant we needed an exchange you could trade on and so we have been working with the SEC and gotten what we needed there. Now, we’re working with FINRA to get approval to operate an alternative trading system on Provenance that will allow us to run marketplace just for securities.

We were very optimistic that we’re close to getting approval for that. It’ll be the first one that’s been approved for a blockchain to trade digital assets, but what happened along the way is we said, you know what, we’re moving from 1.0 to 2.0 and, you know, somewhat analogous to Ethereum where the SEC said, it probably started off as a security, it probably is not a security now. In 2.0, with the blockchain being decentralized, open-sourced, no central control, third party contribution into it, we think 2.0 Hash is really utility token.

And so, what we anticipate is we would swap the 1.0 investors into the 2.0 utility token and that token would list on some of the popular crypto exchanges. So, relatively big transformation, but really underpinned by the evolution of the blockchain and our ability to go to a decentralized public network given that the industry has gotten comfortable with the technology and comfortable with how the process works.

Peter: Hash will underpin everything, right. It underpins Figure Pay, is that like everything gets put into….like all the transactions go through….they are transferred from Fiat currency into Hash, is that correct?

Mike: So, you can think of Figure Pay…..I mean, two things are underlying it. One is, effectively StableCoin, right, because that’s reflecting what’s in the omnibus bank account. Where Hash plays a role is, effectively, every time you’re writing or every time you’re processing on the blockchain, you’re paying gas fees and let’s see I incur $100 of gas fees. I, basically, have to buy $100 of Hash on the exchange to then distribute out to the ecosystem, right, so think of Hash as still the underlying mechanism to distribute the economics of the blockchain, but in a slightly different way that we did with 1.0.

Peter: Right, right, okay, that makes sense. So then, I’m interested to sort of hear the evolution of your thinking here, because…….I mean, obviously, when you were at SoFi, you famously did that, Superbowl ad, with anti-bank like don’t bank SoFi and, obviously, you had that sort of …..you know, there was a position that you were taking and I’m curious to see how your thinking has evolved from that time period.

Mike: Yeah. You know, it’s funny because I’ve been asked about this a lot recently and a lot of times people bring up the comment I made about banks are dinosaurs and I’m the meteor (Peter laughs) which I’ll never live down. Look, a lot of that was from a marketing context, right, it wasn’t that the function of banking was a problem, it was the way that banks delivered service into their customers that we felt we could improve on. I think SoFi has done that and continues to do that.

I think in the context of Provenance, I will say with Figure I’ve created a lending business, I’ve created a banking payments business, we’ve created a Cap Table Management company, all these things, but not because we want to compete with these traditional inline institutions. It’s actually to crowd them in to de-risk the blockchain and crowd in adaption. These businesses have to exist on their own, right, they’ve got to run positive contribution margins to be profitable and so forth.

Effectively, if you think about all the different verticals that we have, in 2021 every one of them is profitable except for one which will take us to early 2022 before we hit that, but, you know, they need to exist on their own, right, but they’re really there to show how to use it, how to access the blockchain, how to unlock value. And so, we’re in a very synergistic relationship with the banks from a partnership standpoint, we actually had some very encouraging support from the banking community related to our OCC application. Whereas, you know, the last time we did a national bank application, we did not get very positive….(both laugh).

Peter: Right, yes.

Mike: And so, I feel like what we’re doing is we’re creating value and even the institutions that you think would be concerned about disintermediation so like a custody bank, for example. We have a huge amount of activity with some of the custodians on Provenance right now, they’re looking at the technology and saying, this is coming, how do I reinvent my business to take advantage of this. So, I’m not trying to eliminate any of these folks, I’m trying to give them a better way to deliver solutions.

Peter: Right, right, okay. So, obviously, the OCC….I mean, you’ve got someone…many of the regulators would not be able to understand exactly what you do, but, I imagine, the current Head of the OCC, with his background, would probably get what you are trying to do pretty well. Is that being helpful in this process?

Mike: I think it’s been extremely helpful. I think, you know, Brian not only gets what we are trying to do, he actually sometimes thinks like two steps ahead of us in terms of the business evolution. So, I’d say, he’s very steeped in blockchain and the benefit as to the financial system so it’s been extremely helpful to have someone like Brian in that seat.

I think he’s really trying to drive situations and one of the things he likes about what we’re doing with Figure Pay is, you know, it really is really around financial inclusion in a sustainable way and I think that’s a big thing for Brian which is blockchain technology to level the playing field rather than further delineate the haves and the have nots.

Peter: Yeah, now he’s got the whole Project REACh thing he talked about….I mean, he’s very big on that. Okay, so we’re just about out of time, but before I let you go, I mean, you’ve got a lot on your plate here, you’ve got a lot of different, you know, things that could really…..each one of these could be a revolutionary company, but what’s your vision for Figure when you look down the road?

Mike: So, I think our vision is that Provenance is the preeminent blockchain for financial services. You know, I think what you’ll see with Figure is it will break apart into four, five, six different companies along the verticals that we have and, you know, as I said, each of them will be viable and hopefully a market leader in what they compete in. I think when we get to that point, it will have succeeded in what we set out to do.

Peter: Okay. Well, it’s going to be fascinating. I wish you all the best, I’m always inspired when we chat, Mike, it’s fascinating to see what you’ve accomplished in a very short amount of time. So, thanks so much for coming on the show.

Mike: Thank you for having me.

Peter: Okay, see you.

Wow. You know, as I said, I come away from my conversations with Mike inspired, but also somewhat in awe in all of the different things he’s doing and how quickly that Figure and Provenance is moving. As he says, any one of these initiatives really could be groundbreaking for fintech and he said five, six of these things that can really change the world. You know, I am really looking forward to seeing how these things play out, I mean, securitization, payments, capital markets, cap tables, all these things, I said they’re fascinating in their own right.

You know, the fact that he’s wanting to go and get a banking license at this time is telling and I think it’s a very different approach than really doing it inside the banking system, inside the industry rather than trying to come out from an outsider perspective. I think that’s important. As he said, he’s getting a much better reception now than he did initially.

Anyway, before I sign off, if you enjoyed this show, please go to iTunes, Stitcher or whoever you listen to the show and please give us an honest review. I read every single one, we appreciate that you’re doing that.

Anyway on that note, I will sign off. I very much appreciate you listening and I’ll catch you next time. Bye.

Today’s episode was sponsored by LendIt Fintech Digital, the new online community for financial services innovators. Today’s challenges are extraordinary with the upheaval affecting all areas of finance. More than ever before, we need to come together as an industry to learn from each other and make sense of this new world. Join LendIt Fintech Digital to connect and learn all year long from your peers and from the fintech experts. Sign up today at digital.lendit.com.

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Filed Under: Fintech One-on-One Podcast Tagged With: Blockchain, Figure, financial inclusion, Mike Cagney, payments, securitization

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Podcast 270: Tim Flacke of Commonwealth

The Executive Director and Co-Founder of Commonwealth discusses creating real solutions to help low and middle income consumers improve their financial health, what is working and where we need to focus our efforts.

October 23, 2020 By Peter Renton Leave a Comment

Views: 133

The low and middle income consumer has been struggling for decades. And while the pandemic has made things a lot worse there is a great deal of work being done to try to improve their situation. One of the key pieces is savings, as a country we simply do not save enough.

Our next guest on the Lend Academy Podcast is working hard to help. Tim Flacke is the executive director and co-founder of Commonwealth, a non-profit dedicated to creating real solutions to some of the most challenging financial problems that we face as a nation. He explains why savings is the most important piece in helping the financially vulnerable feel more secure and actually start building wealth.

We recorded this podcast on Zoom so you can watch this interview on YouTube or view it below.

In this podcast you will learn:

  • Why Tim and his co-founders started Commonwealth 20 years ago.
  • How he describes Commonwealth today and what they bring to the table.
  • The big regulatory success they had around savings initiatives.
  • What lower and moderate income populations need most.
  • Why employers are one of the keys to increasing savings rates.
  • What the CFPB has done around automatically enrolling people in emergency savings.
  • How they became part of the BlackRock Emergency Savings Initiative.
  • What they are doing with JPMorgan Chase.
  • Some of the work that fintech is doing to help lower and middle income consumers.
  • How Tim is thinking about the challenge of income volatility today.
  • How Commonwealth engages with fintech companies.
  • How they are working with regulators today.
  • Where their operational capital comes from.
  • How Tim thinks about the progress we have made in the past decade.
  • Where can we get to as a country when it comes to savings and having a healthy financial life.

This episode of the Lend Academy Podcast is sponsored by LendIt Fintech Digital, the new online community for financial services innovators.

Download a PDF of the transcription of Podcast 270 – Tim Flacke.

Click to Read Podcast Transcription (Full Text Version) Below

PODCAST TRANSCRIPTION SESSION NO. 270-TIM FLACKE

Welcome to the Lend Academy Podcast, Episode No. 270. This is your host, Peter Renton, Founder of Lend Academy and Co-Founder of LendIt Fintech.

(music)

Today’s episode is sponsored by LendIt Fintech Digital, the new online community for financial services innovators. Today’s challenges are extraordinary with the upheaval affecting all areas of finance. More than ever before, we need to come together as an industry to learn from each other and make sense of this new world. Join LendIt Fintech Digital to connect and learn all year long from your peers and from the fintech experts. Sign up today at digital.lendit.com

Peter Renton: Today on the show, I am delighted to welcome Tim Flacke, he is the Executive Director and Co-Founder of Commonwealth. Now, Commonwealth is a really interesting organization, they’re a non-profit focused on helping the financially vulnerable gain financial security and they do this in a number of different ways.

You know, they first got on my radar with the BlackRock Savings initiative that was announced last year so we wanted to get Tim on the show for a while. We talk about that initiative in some depth and how it’s going to work and the impact that it might have, we talk about the challenges, the biggest challenges for this group for the lower and middle income consumers who are struggling with financial security and we talk about the role of government and some new initiative, new guidance that came out of the CFPB.

We talk about income volatility and the challenges there and we talk about how Commonwealth is looking to work with fintechs and how they do work and Tim sort of gives us his perspective on what’s happened over the last decade and why he is actually optimistic about the future. It was a fascinating interview, hope you enjoy the show.

Welcome to the podcast, Tim!

Tim Flacke: Hi, Peter, glad to be here.

Peter: Okay. So you’ve been doing this for a long time now, but maybe you could cast back, I don’t know, 18/20 years whenever it was, when you started. Tell us about what you were thinking about when you started Commonwealth.

Tim: Yeah, yeah. So, it feels like a long time ago, but really, the thing that brought the three of us who started the organization together was this idea that we have spent a lot of time in this country thinking about, you know, needing to keep roofs over our head and food on the table for everybody and that’s critical. We haven’t succeeded, but we all understand that thinking about how to solve really poverty of what had been …it’s kind of a new idea that inspired us was the sense that if you’re serious about lasting change in households, you really have to focus on what people own and their assets.

That idea just made a ton of sense to me and I ended up connecting with a Finance professor, Peter Tufano, who had relatively recently been tenured and a fair gentleman who had been both a community organizer and a banker throughout the 1980’s. We came together because we had thought this idea of helping low income, moderate income families build some assets and wealth deserved our attention, deserved some real effort.

You know, there are sort of three things that I look back and I see brought us together. One was as that point which was, you know, 1999/2000, it really felt like there were revolutions in technology that made new ideas possible. The thing I really remember was just this radical idea that the regular people, even low income people, could access the Internet and use technology for themselves and a lot of people thought that was not …..you know, it wasn’t clear that was really true.

The second thing was the sense that, you know, we needed some “ands” instead of some “ors” that we were serious about solving big problems, we needed to tap into technology firms and large financial service firms and also we had to go out to communities and talk direct to the consumers and the ability to kind of bridge that gap felt really powerful. So, I guess actually those are two things so, yeah, that was what brought us together.

Peter: Okay And so, maybe…you’ve obviously done a lot of things over the last 20 years, maybe you can talk about…firstly, maybe just talk about how you describe Commonwealth today, let’s just start off with that and then we can dig into some of the history.

Tim: Yeah. You know, we are structured as a Not-for Profit so for us it starts with the Mission and the Mission is financial security and opportunity for low and moderate income families, you know, really sort of hardworking people who don’t have a whole lot. So then the next question is that’s a big mission, what do you bring to it? I’d like to say we bring innovation and influence.

We’re in this really fortunate position that we get to look for challenges that families are facing and try to figure out solutions and do that with an emphasis on social impact first always knowing that we can’t figure out a way for it to be sustainable, we won’t really achieve anything. So, we still have that constraint, but that speaks to designing new product idea, sometimes new policy ideas trying to do it rooted really in the customer and that’s hardworking, often say single parent holding up a couple of jobs just trying to make it through the month.

And then the second side is influence. You know, when we do is innovation work and we come up with something and we have evidence, purely work, you know, people want it and when they use it, they’re better off and we think there’s some way that it can be delivered sustainably then our theory of how we make a difference in the world is to take that to market actors and policy makers who have a lot more reach than we do and say, here’s something to really look at and see what you can do with it.

Peter: Okay, okay. And so, then maybe let’s just….love it if you could focus on two or three things since you began, particularly maybe even the last ten years that you would say have been, you know, successful partnerships, ventures, projects, whatever you want to call it, what are some of the things you’ve done?

Tim: Yeah, I know, and thanks for the question. So, we believe that in many ways savings is really the single most important thing for households. You know, the problem is that none of us like to save and it’s not a fun thing. So, we begun a while ago really with this notion that if we can reward savings with chances to win prizes…that something as simple as that can really make a difference in making it possible for people to save so that’s a simple idea. It turns out it was illegal in this country, more or less, a decade ago so, you know, this is what we do.

We found a little hole, we were able to test that idea initially with credit unions in the state of Michigan. We built out a value of evidence that people would use it and a lot of them would never have had savings before and then we took that to policy makers in more than 30 states now and Congress and got a little bill from Congress and have cleared the way, sort of the legal pathway to allow this product idea. In parallel, we’ve seen an explosion of fintechs/startups that have seized on this idea, some depositories, especially credit unions.

We’re very excited that several years back now, Walmart incorporated a prize based savings feature under their MoneyCard which is their premiere pre-paid card so that would be an example. We’ve done a ton of work to link up tax time and the large tax refunds that come from the IRS to working families to make that possible that it can go into savings. We actually pioneered and the Obama administration introduced an option for families to have some of those refunds into savings bonds so that would be another thing.

More recently, very recently, we worked with an organization called The Workers Lab to test out what happens if you offer gig workers a chance for just emergency cash assistance. Let’s say something happens, we’ve got you, no questions asked up to a certain dollar amount. So, that was very recent, we have some literature about that on our site. Yeah, so, that’s just a quick tour of some things we’ve been up to.

Peter: Okay. So then, when you’re looking at your population, the lower and middle income people in this country, we always hear they don’t have very much savings, they’re struggling, particularly, they’ve been hit by the pandemic worse than other areas of the population so what is it…I mean, you talk about savings, but how can we change the…. that’s a big question, but what do they need most, I guess, is what I’m really trying to get at.

Tim: Yeah, I really appreciate that question, Peter. So, I’ll give you an unsatisfying answer which is, you know, low and moderate income people are a huge universe increasingly in this country so it varies a lot just like it does for any population so what are those cross cutting themes. Well, I guess, one thing is the amount of anxiety, financial anxiety, that most working people in this country live with is extremely extraordinary.

So, at a cross cutting level one of the few things that are going to bring down that temperature a little bit in these consumers’ lives …..so, I would say, yes, savings is the thing that we think about first and that having even a modest amount, you know, even a few hundred bucks set aside really makes a difference in how you feel when something unexpected happens. Well, you know, there clearly have to be other ways to bring down that temperature.

The second thing that feels cross cutting is that experience of living, you know, very much in the moment and the present and thinking about next week or sometimes, you know, this week and will the cash be there to cover the rent and this sort of thing. It tends to squeeze out the ability to kind of be hopeful about the longer term.

Peter: Right.

Tim: And so, you know, I think we really need to look for ways to make that hope real for people. What are the things they can do for themselves longer term and oftentimes and their kids. I guess the last kind of cross cutting thing I’d say is some of these start with simply seeing these customers, you know, really understanding that reality in whatever your business is, you know, whether it’s credit or insurance or what have you kind of go into extra measures to really understand what that experience of living very, very tight over long periods of time and then deciding on that basis.

Peter: Right, because, you know, I have a friend who is financially struggling and he said something to me many years ago that stuck with me. He said, if you have an unexpected expense come up, and I actually helped around a little bit, but she said, when you’re living tight and then something bad happens, he said, you can’t think about anything else, that’s just all you think about every minute of every day, how am I going to get out, how are we going to get out of this.

And it just struck me like so that’s all you think about and I think people like us who are comfortable and most of the listeners of the podcast are comfortable, I think we forget how hard it is when you are living paycheck to paycheck and then something bad happens. It’s good to remind ourselves from time to time.

So, I want to move on and talk about the CFPB because I think it was just this month I think it was, new guidelines from the CFPB encouraging automatic enrollment of employees in emergency savings programs and I think we’ve done 401(k)s and it has been a huge success. I think this is a really great move, but I guess it brings up a question that I want to ask you, are employers the key to increasing savings rates in this country.

Tim: I think they’re definitely one of the keys, absolutely, so why ….I mean, the first thing that I imagine many of your listeners know is that savings is not an obvious business case. The smaller the balances and the shorter durations, the tougher that business case gets. You know, in the extreme case someone who wants to be able to set aside $50 or $100 this month and then next month draws that $50 or $100 out and then the next week put it back. You know, how do you make money on that?

And so this is one of the geniuses of the workplace is the reason that an employer cares about the financial security and stability of their workers is they’re not trying to make money on a product level, you know, P&L, they’re really in it for other reasons. So, that’s one piece on why we think the workplace is really powerful.

A little bit more sort of, you know, operational, they’re right there at the moment of the income, right, so there’s just a ton of research and basic intuition that the ability to be right there at that moment of riding the waves and say, would you like to use split direct deposit and have a little bit of that paycheck go into a savings account. It’s the same rationale that gets money into retirement savings, that’s just very, very powerful.

And then the last point is that, you know, employers…..first we all read about the changing nature of work and all of that is happening for sure, but for people who work for firms or institutions today, you know, they’re used to getting benefits and some essentially financial advice, explicitly or implicitly, so to tap that infrastructure and that system around this issue is just so compelling. So, that’s a long way of saying, yes, we believe a lot in the power of the employer around financial security and savings.

You know, if I could maybe just flesh out what you’re alluding to from the CFPB, what they have done is provide a, it’s called a CAST, Compliance Assistance Sandbox Template, it’s a catchy title, but what it really must service is a guideline for safe harbor for firms that want to try this. As you said, automatically enrolling people into emergency savings and we have, right now, under something, hopefully, I have a chance to talk about, we are part of BlackRock’s Emergency Savings Initiative. What that means to this conversation is we have both our time and access to some of the best legal minds in the country that we can bring to firms that want to test this out.

Let’s say, I like to figure out, you know, what happens if we automatically enroll our workers into an emergency savings option obviously with opt out and so forth. You know, it doesn’t deliver the way it has in the retirement space and we see those as facts in terms of workers” productivity and just overall financial wellbeing. So, this is a….blatant advertisement, if that sounds like you and you work for a company, call us up because, right now, for a limited time we’re in a position to really offer a suite of resources that’s pretty extraordinary to help you out on that.

Peter: Right, right. I actually want to dig into that because, you know, I’ve seen the Commonwealth name here and there and then I saw the BlackRock Savings Initiative coming out. You know, obviously BlackRock, the world’s largest asset manager with…I don’t know how many trillions they’ve got now, but it’s many.

When they do something like this, they have the power to move the needle and I saw you guys and couple of names, I think it was….there was another organization that’s part of that as well, from memory, maybe you choose to say that, but maybe…how did you kind of get involved with this and what is Commonwealth specifically bringing to the table for the BlackRock Savings  Initiative?

Tim: Yeah. yeah. Like you, when we first learned that BlackRock was asking itself, and this is their social impact team, what could BlackRock really do that would be impactful and make sense, you know, for their firm given their capabilities and their reputation and the like. We were fortunate to get in conversation with them and we started talking about this importance and centrality of savings and, you know, through ongoing conversations with them and many other conversations I’m sure they had, they really came to see this as the issue just to dig into. So the Emergency Savings Initiative is Commonwealth and the Financial Health Network and the Common Cents Lab out of Duke and the three of us are anchoring this really ambitious effort to move the needle on emergency savings.

The way I think about this is really on the supply side so what does that mean? It means what is it that will make it possible for a large employer to offer its workforce a chance to build emergency savings. How do we make the retirement system which in many ways is just a fantastic piece of infrastructure and so well established, how do you make that work so that people who need to build up modest amounts of liquid savings can do so. How do we work with fintechs to make this more possible, you know, for those that are interested and inclined and so our work in that is just that, it’s to work with those partners.

My colleagues are working with UPS, for example, and some record keeping firms that I don’t think we can disclose right now to make this possible in a very large scale. And the legacy that I think we will leave is part demonstrating that this can work, that firms you would recognize the names of who have large numbers of workers or customers or stakeholders will do this, can do this and it achieves real impact so that’s what we’re up to and we’re super excited about.

Peter: And so is there a duration for this program, is there an end goal where you say right, we’re done, I mean, what’s the future of the program?

Tim: Yeah. So, we’re about midway through a three-year initiative so we have another…..through the end of 2021 and our focus right now is to open up really the channels, if you will, that I spoke about; large employers, retirement system, payroll companies, fintechs and then this automatic enrollment that I described. If we can show substantive progress of really marquee brands in each of those categories that’s really what we’re aiming for.

Peter: Right, right, okay. So then, I was also reading about another marquee brand that you’re working with, JPMorgan Chase, the country’s largest bank by assets so maybe you can share what you’re doing with JPMorgan.

Tim: Yeah. You know, actually we had a long relationship with JP Morgan Chase and proud of that and they are supporting us to work on what we call emerging technologies and, you know, this is just the basic storyline and I think we’ve all read that there are a handful of technologies that, you know, pretty indisputably are transforming the world around us and will for decades.

And so, we’re talking about Artificial Intelligence, machine learning, talking about distributed ledger and blockchain, things of that nature and so the work with Chase is taking just a piece of that, the AI piece, and saying how is this relevant to underserved consumers and what do we need to know for that revolutionary technology to produce good positive impact in the lives of low and moderate income people. And so, the work for us is some original consumer research with underserved customers; what do you know about these, what are your fears, what are your perceptions, what are your aspirations.

Crucially, are there use cases that by going in deep in underserved communities we might raise up that might otherwise be overlooked and then to take those insights and work arm in arm with fintechs who are excited to kind of act on them and see what we can learn from that process. At the end of it, we should have insights and guidance that, you know, as a not-for-profit we just put out into the world for public good that we hope and believe will shape and influence the development of these technologies.

Peter: Right, right So, let’s talk about technology for a minute and talk about the fintech space because, you know, from my perspective we’ve come a long way. I’ve been thinking in the last five years there are many…..just take overdrafts, for example, which is one of my pet peeves. I think it’s a horrible product and, you know, banks have made huge amounts of money over the years at the expense of pretty much exclusively the low and middle income consumer and we’ve got a bunch of fintechs now that are really addressing that problem head on.

Dave might have been the first one that really built their business to try and create a better product than an overdraft. There are now many, it’s almost becoming table stakes now for fintech…. if you’re trying to go after that population you need to have something like that. So, maybe ….I’d love to get….you don’t necessarily have to name names, but I’m sure you’re following these companies as well, what are some of the approaches, not necessarily just on overdrafts. but fintechs that you think are moving the needle. What are the approaches they’re using that really are helping lower and middle income consumers?

Tim: Yeah, I mean, that’s obviously an enormous question and so I’ll….there’s two that I wanted to mention. I mean, one, we have just seen that….the way you cast the question sort of between the banks and everybody else that in the middle there are these prepaid providers. You know, when we first started this work we were sort of this stepchild, you know, that we didn’t know what to do as an industry or something, but those prepaid cards have really graduated to the point where they’ve built a niche that is not otherwise built.

Peter: Right.

Tim: I mentioned we worked with Walmart, Green Dot around their MoneyCard….you know, I’m not advocating for that one as an example, but, you know, they have enormous scale and if you look at their customers that is clearly filling a need in a way that other products weren’t. Maybe you prefer don’t name names, but one that we’ve gotten to nail is MoCaFi which is a prepaid card that is probably black-owned and black-led and is specifically serving and aiming to serve black customers and bring a suite of products together on that platform. They’re, frankly, would be tough to get from other sources so I think there’s a lot there even if it doesn’t feel like the latest and the newest.

The second thing I want to mention is more far out there….you know, as I mentioned at the outset, really the big motivating idea for me personally and for us was what can we do to strengthen the family balance sheet, you know, get some assets. There’s an organization called Universal Basic Data Income (UBDI) and what they’re trying to do is figure out how the data that we all are generating, you know, we can own that data and monetize it at the individual level.

I think that’s, you know…..I love that, it’s a source of found money for households who really need it or use potentially  so very, very excited about that and, you know, there are some overlaps between this emerging tech concept I talked about and those sorts of individual enterprises that are asking where does the data come from and what can be done with it.

Peter: Right, right. I think that’s a great idea and I feel like….it’s interesting, I feel like this decade we’re going to make….I think we’ll have some changes when it comes to owning your own data and I’d love to see…..I think, eventually, you’re going to grant permission to anybody who wants to use your data. I don’t know how long it’s going to take, but there’s lots of companies out there that I know of that are really attacking this problem head on and I think it’s going to be interesting.

But, I want to switch gears a little bit and talk about something else we haven’t really discussed, but I feel like it’s a huge issue for so many people, and that is income volatility, where so many people don’t have a W2 income that is the same every single pay period. They’re the gig workers or they’re working part time jobs where the hours change a lot. So, when you look at those people, how are you thinking about them and how can we address this volatility problem of their income.

Tim: Yeah. I don’t have a grand solution for this one. I mean, the first thing I’ll say is, you know, at the risk of being a broken record, we do such a poor job on savings that if we can lift everybody up in having that baseline savings, I think that is probably the single biggest hedge on the volatility.

Peter: Yeah.

Tim: You know, I think the second thing to say is that in terms of the changing nature of work, you know, there’s clearly a need that nobody has quite figured out how to fill yet to replicate the stability of the infrastructure of that, you know, old school employer. You know, I predict that it will get filled at some point in some way, but we’re in a moment where we don’t have great answers to that although I’ve seen, I’m sure you have too, some startups and fintechs that are trying to plug that gap.

Peter: Yeah.

Tim:  You know, and then the third thing is I just think we have to at least keep in the conversation what are the limits of what private sector fintech can do and where is there a need for a broader government solution. You know, maybe it is around volatility, but increasingly that’s part of the political conversation and so it makes sense for us to keep that in mind too.

Peter: Yeah, for sure. So then, if there’s a fintech CEO listening to this and they’re interested in kind of a lot of things you’re talking about, how do you engage with fintechs, what’s the message that you want for them to know about Commonwealth?

Tim: Yeah. I mean, we’re an outside ally that can help you get where you want to go, I think it’s probably the quickest answer. What does that look like? Sometimes we do research together either with your existing customer base or a customer base you would like to serve and, you know, obviously we work out those details. We really like to test actual ideas in partnership and as I mentioned on the emerging tech work that we’re launching, we’re actually actively looking for partners who want to test things. We can often bring an outside additional resources so that it’s not a case of we all have to take off our roadmap to test something or even better, if it’s something’s already on your roadmap.

You know, in the long run we do just straight up advise fintechs in some cases, particularly on things we spend a good team of time on. I mentioned prize-linked savings as an example about the use of prizes to make savings fun and, you know for us, the first question is, is this our mission, is this about trying to make financial security and opportunity happen for low/ and moderate income people. If that test is met then really the sky’s the limit in terms of how we can work with fintechs.

Peter: Right, right, okay. What about the government? We’ve talked about the CFPB already and I’d love to sort of know….I mean, what are you working on right now with the regulators, what are some of the policy goals you have that you think would help this community?

Tim: Yeah. We have talked about one of them, you know, in a very sort of tactical level, right, we really believe this idea of automatic enrollment needs to be tested and, you know, a little more broadly that’s a comfortable place for us to be thinking about a very specific idea that can be advanced that has a policy dimension.

Having said that, you know, the second thing that really for 20 years has dogged us is that getting to a place for everybody has access, it’s really, really tough. You know, one click down, everybody having access to a savings opportunity. Even if we get all the employers, it’s tough and we know that….frankly, the Treasury Department has capabilities that nobody else has in that regard so it’s been a professional interest of ours, you know, is there a way to use some of that apparatus, the most unique capabilities to make sure everybody has a good place to save. So, that would be something that’s an evergreen interest of ours.

Peter: Okay, that makes sense. So then, how are you guys funded, what’s your source of operational capital?

Tim: Yeah, no, great question. You know, there is a little bit year to year, but actually three quarters of our revenue does come from philanthropy which is a very privileged place to be, but it allows us to kind of put the impact metrics higher up on the heirarchy and, you know, roughly a quarter comes from some part of our revenue, consulting, contracts and the like so that’s us.

Peter: Right. So then, we’re running out of time, but I want to get a couple of more things in here. I’m curious about…you know, you’ve been doing this a while and put the pandemic aside for a second because that’s really a, you know, unforeseeable event, but I’m just curious, if you look back at, let’s just say, the last decade, after the financial crisis we had that and we’ve been in this recovery for about a decade. Are you surprised we haven’t made more progress than we have when it comes to really the financial health of the lower and middle income consumer?

Tim: Yeah. I am surprised, but I think the key point there is it’s just to repeat it, we haven’t had progress that we should and that we need to. I guess, I’m leery of trying put a silver lining, you know, label on the events this year. I think they’re too painful and too horrific, but I do think it’s really brought home…..you know, just how many of us are pretty close to the edge and just can’t go on like this. So, I guess I prefer to think about that question, what does the next ten years look like.

Peter: Right.

Tim: You know, this is a turning point and ……you know, the other fact that I just want to  try to express is that everywhere I turn it’s so clear that people are desperate for institutions they can trust in and then ….you know, we have a lot at stake in that collectively and fintechs are not first order institutions that everybody thinks of in terms of shaping their sense of our society, but there are these examples of fintechs that transparently put out a business model that say, look, I only win if you win.

Peter: Right.

Tim: Right. (laughs) That feels pretty different and so I take a lot of optimism from those little signs of different ways of thinking, different ways of relating to customers, with empathy and really seeing where people are at and I think those are things that I take, you know, just I feel for what we can accomplish as a field, as an industry.

Peter: Right. So, just expanding on that as the last question here. I mean, obviously some of these is a political kind of conversation that I don’t really want to get into at all, but where would you like us to be, where do you think we can get to as a country over this decade when it comes to savings and having a healthy financial life for the vast majority of consumers?

Tim: Well, I’ll give you one answer. If we could preferably in the first part of the next decade (Peter laughs) come to a statement about what sort of outcome is acceptable for us as a society and a country around a whole bunch of metrics, but even in just in the personal finance space, you know, then I think we’ve set the terms of the conversation.

I just was recently reminded by getting some data……I don’t remember that precisely in Canada they have some miniscule fraction of population that’s not part of the banking system, right, and in this country it’s not a very new idea, but there’s a sizable fraction. You know, those are policy choices, right, but these things can be….they are choices we make. And so, I think we need to think about that instead of the hand wringing and, you know, there’s nothing to be done, it’s just the nature of markets or it’s just the nature of the world.

It’s actually, no, we probably do have choices to make about where the floor is, in terms of household financial well being and we get that nailed down the first part of the decade. I mean, you know this better than I do, there’s a world of innovators out there that will operate in the envelope once it’s established, but let’s try to get clear on what the outcome we want to achieve in the next ten years.

Peter: Yeah, that’s great, that’s a great place to end. I feel like we have the capacity to do this, we have the capacity to solve this problem as a nation. I applaud you for the work you guys are doing, I think it’s very important. We need organizations like you that are taking the lead here. Thanks very much for coming on the show today, Tim.

Tim: Oh, thank you so much for the chance, really appreciate it.

Peter: My pleasure. See you.

Tim: Great, bye.

Peter:  You know, Tim and I were chatting after we stopped the recording and we were just commenting that this country…we have it in us to solve this problem, to really vastly reduce the numbers of people who are, you know, financially vulnerable, but it’s going to take a multi-pronged approach. It’s going to take, I think, some regulatory initiatives, it’s going to take fintechs and banks really working together to create products that are “win-win.”

They should not be a financial product available today that is “win lose” and we certainly have many of those kinds of products, that needs to go and I think….you know, there’s plenty of fintechs, as we said on the show, that are addressing certain areas in a “win-win” way and I think we are really going to have to rely on the entrepreneurs because this has to be….well, government has a role here, I think the entrepreneurs are going really have to implement products, create products that actually help the lower and middle income consumer and deliver products that really improve their lives. I feel like that’s one of the reasons why I’m excited about fintech, I feel we have an obligation and an opportunity to change the world and I’m excited about what we can achieve this coming decade.

Anyway on that note, I will sign off. I very much appreciate your listening and I’ll catch you next time. Bye.

Today’s episode was sponsored by LendIt Fintech Digital, a new online community for financial services innovators. Today’s challenges are extraordinary with upheaval affecting all areas of finance. More than ever before, we need to come together as an industry to learn from each other and make sense of this new world. Join LendIt Fintech Digital to connect and learn all year long from your peers and from the fintech experts. Sign up today at digital.lendit.com.

You can subscribe to the Lend Academy Podcast via iTunes or Stitcher. To listen to this podcast episode there is an audio player directly below or you can download the MP3 file here.

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Filed Under: Fintech One-on-One Podcast Tagged With: BlackRock, Commonwealth, financial health, financial inclusion, JPMorgan Chase

Views: 133

Awards Re-Launch: Nominations for the 4th Annual LendIt Fintech Industry Awards Open Until August 14th

The annual LendIt Fintech Industry Awards recognizes the leaders in fintech and digital banking.

July 30, 2020 By Todd Anderson Leave a Comment

Views: 122

In its fourth year, the LendIt Fintech Industry Awards highlights the great accomplishments of the people and companies that are driving the fintech industry forward. It is a celebration of the industry, for the industry, by the industry. Please note the awards are for activities that cover all of 2019. Obviously, there will no Awards Dinner this year, unfortunately, but we still intend to honor those companies and people who our judges deem worthy of an award.

We are currently accepting award applications on the LendIt website. It is important to note, because we continue to get questions about this, there is no cost to apply and you are supposed to nominate yourself and/or your company. So don’t be shy, let us hear from you. You have until August 14th to get your entries in and the more complete your entry the better your chances are of winning.

The LendIt team will be selecting the finalists for each category and then a team of independent industry experts will select the winners.

Winner will be announced the week before our Virtual USA 2020 conference on September 29 through October 1. We encourage fintech companies from around the world to apply for the categories that are the best fit. You can apply for multiple categories.

To date we have received more than 500 applications, don’t miss out on your chance to apply today.

  • Executive of the Year
  • Fintech Innovator of the Year
  • Fintech Woman of the Year
  • Innovation in Digital Banking
  • Most Promising Partnership
  • Top Technology Service Provider
  • Most Promising Fintech Region
  • Top Service Provider
  • Top Small Business Lending Platform
  • Top Real Estate Lending Platform
  • Top Law Firm
  • Excellence in Financial Inclusion
  • Top Accounting Firm
  • Top Consumer Lending Platform
  • Emerging Lending Platform of the Year

We have already confirmed thought leaders from the industry who will be judging the various awards categories. We look forward to reviewing your applications soon.

Filed Under: Fintech Tagged With: digital banking, financial inclusion, fintech, fintech partnerships, LendIt Fintech Industry Awards, online lending

Views: 122

Podcast 245: Mayada El-Zoghbi of CFI

The head of the Center for Financial Inclusion talks about the work that still needs to be done, how they are responding to the crisis, the gender gap, the role of fintech and more

May 1, 2020 By Peter Renton Leave a Comment

Views: 155

There are still three billion people around the world who are currently left out of the financial system. While many great organizations have done important work here there is so much more that needs to be done. And that was before the current crisis. The impact of the coronavirus will be felt more harshly in the developing world so the work being done in financial inclusion is more urgent than ever.

Our next guest on the Lend Academy Podcast is Mayada El-Zoghbi, the Managing Director at the Center for Financial Inclusion (CFI). Her organization, part of Accion, has responded to the crisis quickly.

In this podcast you will learn:

  • Mayada’s background in inclusive finance.
  • The work that she did on the Global Findex database.
  • Why she decided to take the job to be the head of CFI.
  • The mission of CFI today.
  • Why improving financial inclusion is about far more than technology.
  • The geographies they focus on and the types of demographics.
  • The relationship between CFI and Accion.
  • How COVID-19 has impacted the agenda for CFI.
  • The silver lining that could come out of this crisis.
  • How it will affect the gender gap.
  • What more fintech companies should be doing today in this area.
  • The priorities that CFI is focused on beyond the current crisis.

This episode of the Lend Academy Podcast is sponsored by LendIt Fintech USA 2020, the world’s largest fintech event dedicated to lending and digital banking.

Download a PDF of the transcription of Podcast 245 – Mayada El-Zoghbi.

Click to Read Podcast Transcription (Full Text Version) Below

PODCAST TRANSCRIPTION SESSION NO. 245–MAYADA EL-ZOGHBI

Welcome to the Lend Academy Podcast, Episode No. 245, this is your host, Peter Renton, Founder of Lend Academy and Co-Founder of the LendIt Fintech Conference.

(music)

Today’s episode is sponsored by LendIt Fintech USA, the world’s largest fintech event dedicated to lending and digital banking. It’s happening on our new dates of September 30 and October 1, at the Javits Center in New York. This year, with everything that’s been going on, there will be so much to talk about. It will likely be our most important show ever, so come and join us in New York to meet the people who matter, to learn from the experts, and get business done. LendIt Fintech, lending and banking connected. Sign up at today at lendit.com/usa

Peter Renton: Today on the show, I am delighted to welcome Mayada El-Zoghbi, she is the Managing Director of the Center for Financial Inclusion, also known as CFI. Now, CFI is an interesting organization, they’re basically a think tank that is focused on responsible finance, inclusive finance really with a lot of consumer protection and with a goal of, you know, enabling the 3 billion people who are currently left out of the financial system, they’re trying to bring them in and improve their lives.

So, we talk a lot about the mission that CFI is undertaking, we talk about some of the impact that they’re having, and geographically, where they’re focusing, the types of population they’re looking at. We also talk in depth about the impact of the COVID-19 crisis, particularly the economic crisis that is coming out of this, what that’s going to have on the developing world and we talk about some of the silver linings that actually could potentially be a long term impact there. We talk about what’s going on with the gender gap, we talk about what their focus is on the future and much more. It was a fascinating episode; I hope you enjoy the show!

Welcome to the podcast, Mayada!

Mayada El-Zoghbi: Thank you do much for having me.

Peter: My pleasure. So, I’d like to get this thing started by giving the listeners just some background. You’ve had an interesting career to date and, you know, why don’t you just give the listeners some of the highlights, particularly what you did before you got to CFI.

Mayada: Sure. So, I’ve been in the inclusive finance field for 25 years which is an incredibly long amount of time when I think back, and I see three kind of phases. So, I started in my career in the microfinance field and I was out working in developing countries.

I lived in Gaza, Bosnia, Croatia and Kosovo before setting up financial inclusion, that was kind of the first phase, and then spent ten years as a Consultant to donors, financial institutions, non-profits and I ran a small little consulting company called Banyan Global in, you know, giving support in inclusive finance. And then, the last ten years, I spent at CGAP which is kind of a global think tank on inclusive finance based at the World Bank.

Peter: Okay. So, CGAP stands for Consultative Group to Assist the Poor, why don’t you just tell us a little bit about the work you did there exactly.

Mayada: Sure. Yeah, CGAP was created about 20 something years ago and it was essentially created as a member organization of the donors who were very interested in elevating, at that time, microfinance and then later, inclusive finance. It was, basically, a knowledge organization that initially served the donor community, donor and investor community and then expanded to serve the broader inclusive finance industry. I had very many different jobs at CGAP, but I started there focusing on the donor and investor community and I was based out of Paris.  Basically, my focus was on how do we ensure that financing for the inclusive finance field, whether it was coming in the form of for and profit capital, or whether it was coming in the form of investment capital, was used effectively

And so, we did a lot of work to inform the donor and investor community in terms of data information, we also did a lot of technical assistance directly, I used to do a lot of advisory work on donor strategies and that kind of thing and then shifted and focused quite a bit on CGAP’s own strategic vision and focus and then supported….you know, CGAP as this industry body has a very, very large constituency. So, we spent about a year and a half engaging quite broadly with anyone who was interested in inclusive finance on guiding to get work in the next kind of 5-year phase and so, I did the strategy work. We did a lot of R&D research on trends and, you know, the critical things that CGAP needed to keep on its agenda.

For example, you know, the growing digital divide, what do we do with people that are being left behind as a win for the digital economy and these kinds of things. And then, the very, very last thing that I did at CGAP before I left was reflecting back on why the inclusive finance field existed in the first place which is what’s the impact we’re trying to have. And so, we spent quite a bit of time trying to understand what does the evidence actually tell us about what we’ve done as an industry in the field and why is it that we have not had the kind of impact that we wanted to have.

You know, we achieved quite a lot in terms of access, a bit on usage, but we weren’t really having kind of the impact that we wanted as an industry. So this was a very research-focused initiative where we reflected on a theory of change, do we have the, you know, clarity in terms of what we’re trying to do and how we’re trying to achieve it. We spent a lot of time, like I said, reviewing the evidence and then the idea was to articulate a new narrative of where inclusive finance can actually lead to impact on people’s lives.

Peter: And so, do you have anything to do with the Global Findex database because I know it’s a World Bank initiative and some of the things that I know your organization now, CFI, actually has a great study that they released after analyzing the Findex database and just basically pointing out what you just said there where really….while access is being improved, usage still has a long way to go. So, did you have anything to do with that while you were at CGAP.

Mayada: So, it’s funny because when Findex was initially being discussed, it actually was offered to CGAP. At that time CGAP said, we want the right organization for it and that’s why it went to the Research Department at the World Bank, but CGAP was involved and in that various stages I’ve been, you know, a peer reviewer on some of the questions and have validated findings in terms of specific regions of the world that I know well. So, it’s done in a very collaborative way and CGAP was always involved in that process, but the Bank’s Research Department actually is the one that does the data collection.

Peter: Right, right. So, let’s move on to CFI. You’ve been there now for a few months, I think it was September last year if my memory serves me, and why don’t you just maybe explain what you saw in the opportunity there and why you decided to take the job.

Mayada: Yeah, absolutely. So, the main reason…you know, CGAP is a place I love, I have to be vey honest about that, and it was hard to leave, but when the opportunity did come up at CFI, I was very intrigued. One of the reasons is that CFI was at this very interesting kind of inflection point and I felt it was a younger organization than CGAP and it was, you know, created and had been managed up until that point by its founder, Beth Rhyne.

And so, it was at this very interesting point where it could actually go in many different directions and it was best known for its work on consumer protection through The Smart Campaign and there was this real question of where could CFI could next and that is really what attracted me. So, I’m very passionate about inclusive finance, I feel like there’s so much to be done and we need more organizations that are actually pushing the frontier and that could experiment and could share knowledge and so on.

I felt like CFI could really step up its work and I saw this as a great opportunity for myself to kind of step into that space and take CFI in that direction. You know, because of my background with CGAP and because of my networks with the donor community, I felt like this was something that could be really useful for CFI to continue….obviously, we’d be collaborating with lots of organizations, but bringing in some of the donor and investor experience that I have I thought could be really helpful for the organization for it’s next phase.

Peter: Right, okay. So, maybe just talk about that for a second. What is the mission today of CFI, where do you see it going?

Mayada: I mean, I think the mission for the most part will stay the same. I mean, our mission is, when you think about it, is we really care about enabling the three billion people who were left out of the financial system to participate more fully and also so that they can have impact on their life. So, that is a very kind of noble mission and I think we will continue to kind of work towards that. I think that what I see happening is that we’ll probably expand our set of tools, beyond what CFI’s been doing in the past, and so I want to strengthen CFI’s research and advocacy work.

That’s where I see spending a lot more effort than we’ve done in the past. I also want to delve deeper into the kind of areas where the inclusive finance field has really struggled to identify viable solutions. So, for example, I know we’ll talk about more about our strategy moving forward later in the interview, but, you know, there’s a lot of people left behind still and even though there’s been a ton of work, for example, on reaching women, we, as an industry, are very far behind, in terms of reducing the gender gap and access to finance, for example.

So, you know, there are certain areas where they have been kind of intractable which I feel that we, as an organization, could devote a lot more effort in experimenting and testing some new approaches and synthesizing the evidence and helping providers and also regulators, policymakers and others and the donor community, of course, to make some real progress.

Peter: So then, I’d be curious to get your take on the tools…..when it comes down to boots on the ground, we’re trying to get these three billion people to really engage with the financial system. Obviously, technology has to be a part of that solution. This is a fintech podcast, I’m curious about how you view the tools that have to be used on the ground, how do you view that as sort of an enabler to bring these three billion people into the financial system?

Mayada: Yeah. You know, you’re 100% right, there’s no question that technology has to be a major part of the solution, but there’s still just so many things that haven’t happened in a lot of countries to make that a reality for everybody. And so, you do have very large groups of people who are still excluded from participation in a digital economy, from owning even cell phones, so there’s huge amounts of work that needs to be done on that kind of a customer segment, in the customer research side of it, in the customer capability piece of it that are actually preventing people from participating fully so, I see us doing a lot of work on that.

Believe it, or not, still a lot of regulatory and policy issues that have to be addressed in order to actually allow providers to work in some of these markets. Everybody knows, of course, East Africa, the East African success stories, but, you know, there are lots of other places in the world, the market has been much slower and some of the bottlenecks are regulatory in nature so, there’s a lot of work that has to happen on that side. The area that CFI has kind of experienced and which I think we can really try to scale more broadly, which I think is actually holding some of the progress back, links to consumer protection.

So, you see a lot of technological innovation that doesn’t take into consideration the users and the risk that these particular users face and so, trust can be enhanced if proper consumer protection are actually embedded into products and the design of these products for low income consumers. And so, I see a huge opportunity to actually embed consumer protection principle in technological innovation enabling consumers to feel more comfortable and then participating more fully into the financial system. So, there’s a lot of work that can be done on all of these issues and I think CFI is well positioned to do that.

 

Peter: Okay. So then, what are the populations that you’re working with, I mean, where are you primarily focusing your efforts because, obviously, throughout the world there are different challenges. You’ve already mentioned Africa, but maybe tell us where and the specific sort of demographics. I mean, is it really just any one who’s excluded, you’ve mentioned women, I mean, are there certain demographics you are more focused on than others?

Mayada: Yeah, that’s a great question. So, one of the benefits of CFI is geographically, we’re very open to where we work, we can work anywhere in the world which is great. When I was at CGAP, we had a narrow we’re set up countries just because our members really wanted us to concentrate very heavily in Africa, for example.

CFI, because of its connections to Accion, we have a lot of experience and touch points in Latin America, but we also can work in Eastern Europe and work in Africa and Asia, we can really cover the world so geographically. In terms of segments and kind of users, we’ve been prioritizing the excluded, of course, and that tends to be women, farmers, small holders, rural communities, but also, we are focusing quite heavily on micro and small enterprises because we do see that as a very important kind of economic player to support poor people’s well being and so we are doing quite a lot of work on supporting micro and small enterprises’ use of digital channels in their own access to finance.

Those are the kinds of things we’ve been focusing on. I mean, this is not forever, we will, of course, change our priorities as the markets evolve, but the idea is that we’re trying to build knowledge gaps and we’re trying to help solve some of the problems that private sector players on their own wouldn’t be able to invest in. So, we want to use our, you know, publicly resourced capital, or philanthropic capital to partner and to do research on some of the areas that a private provider may not be able to do by themselves.

Peter: Right, right. And so, maybe you can just tell us a little bit about the relationship with Accion. We had Michael Schlein, the Head of Accion, on the show a couple of years ago, but are you just a part of Accion? What’s the relationship between CFI and Accion?

Mayada: Yeah, I get that question a lot, so it’s a good question. Accion is this incredible non-profit that has, you know, been evolving over the years. It used to be a microfinance network and over the years, it kind of evolved into …….you can call it kind of a holding company that has different funds that it invests with directly, it also has an advisory side and then it created CFI as a public good for the inclusive finance industry.

So, we are housed inside Accion, so, you know, we share back office, shared IT, shared data and so on, but we are fairly independent in terms of the voice and the agenda that we work on. So, in a way we’re very, very privileged to be sitting in a non-profit that allows us that kind of freedom. We also have a separate advisory council that directs CFI’s technical areas of focus and these are just individuals from different organizations around the world who come from the inclusive finance field, or the private sector who can, actually, help connect us to knowledge and information, technical support and so on. And so, we are quite independent from Accion, even though we are housed in it.

Peter: Okay, good to know, I appreciate the clarity there. Now, we’re over halfway through this interview and we still haven’t mentioned the corona virus, or the crisis caused by COVI-19 and I imagine that it’s impacting everybody, and I imagine it’s impacting CFI as well. Maybe, I want you to start off with a high-level kind of…obviously, the economic crisis is really just beginning and it’s going to continue. There’s many countries in the world where the virus is really just beginning so, how is…the economic conditions that have changed in recent weeks, how is that impacting the work you do?

Mayada: It’s impacting, essentially, everything we’re doing because we’ve really sought the need to pivot our agenda. When I came in, I was very focused on what’s lacking in inclusive finance…what can we do. So, we were on this path to development strategy and then, all of a sudden, COVID-19 hit and we realized, okay, all of that can wait, we need to be prioritizing the need of low income people around the developing world, what’s happening to them, how can we help donors and investors and others understand their plight and how can we advocate on their behalf.

So, we’ve really shifted our research agenda pretty substantially and we’re spending quite a lot of time doing….we’re going to be doing panel research in minimum five developing countries where we’re trying to understand the COVID-19 impact on micro and small enterprises and we’re doing it through a kind of panel survey process where we’re going to be interviewing the same set of micro and small enterprises every two months for over a year to try to see the trajectory of COVID-19 on their operations initially as the crisis increases in their countries, but then, eventually, hopefully, as they recover.

We want to see how they’re able to recover, how they’re using financial services, whether and how they are moving towards accessing more digital channels, whether they are moving some of their sales online, and so on so, we’re going to be tracking that. We’re also recognizing that the institutions that serve, the BOP, are also being effected quite substantially and our industry is mobilizing quite rapidly on the issue because we are very concerned that the financial services providers themselves are suffering.

Liquidity is the biggest issue here and so, that’s what it is today, but then, down the line, we’re talking about solvency could be a real problem and so, there’s a huge amount of work that needs to….organizations need to come together, just try to see what can be done to actually protect these institutions so that we don’t have….so that they don’t die in the course of this pandemic. So, we’re doing quite a lot in terms of the investor community, bringing the investor community together.

One of the things that CFI houses is what’s called the Financial Inclusion Equity Council so, some of the leading equity investors that we….you know, we, basically, have this platform where they share knowledge, they exchange information, and so on so, we want to elevate that work. We’re currently in discussions with CGAP and other organizations that work with investors to really look for an industry response from the investor community to support the institutions that are impacted by COVID-19. And then also, we’re looking at kind of a policy response because, obviously, in developing countries a lot of countries will not have the trillions of dollars like the US to push out cash to low income people and to the financial institutions.

And so, we are looking to understand what are policy makers doing in terms of their response, what are the responses that could be the most impactful for low income people, but also micro and small enterprises and also for accelerating the digital economy which we know is needed. What this pandemic has shown us, more than anything else, is that companies that are online are actually the ones that are doing better and so, that’s a key learning here. This is, actually, going to be accelerating another digital transformational of a lot of economies.

Peter: Yeah, I was thinking that just as you were speaking because…I mean, we still don’t know how deep and long this crisis is going to be, there’s already habits that I see changing now. In the very few times I’ve been out and about the last few weeks, I don’t use my credit card, I don’t want have anyone touch it, I use the contactless payment on my phone and I’m using ApplePay when I go out and about.

Obviously, everything that we can do online, DoorDash and what have you that you can do for us, there’s many, many options, but I’ve been thinking about the developing countries and there could be a silver lining here, right. While many of these countries are going to be devastated economically, I’m sure, in the long run do you think that this is going to be a catalyst that actually brings more people into the financial system in a digital way?

Mayada: Absolutely. So, I’m an optimist by nature so I tend to see the kind of…yeah, what’s the silver lining in this situation, that is the one silver lining that I see. So, undeniably…..for example, there was some research that came out of China that Kaffee (?), kind of a think tank similar to CFI that’s based out of China, they actually looked at micro and small enterprises in China and they also looked at wage earners and low income wage earners and they found that those who are already on e-commerce platforms, those who are already active in the digital economy had actually no impact on their business, can you imagine.

Ten percent of those businesses actually increased their profit during the pandemic, so those were exactly the ones that were able to just increase their delivery, or increase their sales online and so on, but China is a little bit kind of further afield in the sense that it’s a much more developed digital ecosystem than most other countries. So, yes, we kind of see where we could be going with other markets and, I think, we, as an industry, we need to accelerate the path to get there. It will not be easy because there’s a lot of different countries at very, very different stages of this kind of transformation.

So, there will be people who are going to suffer quite a lot and, of course, that’s the tragedy. The good news is there’s been just a huge amount of focus on just getting cash out the door which I think is absolutely warranted, so most countries have announced, you know, increase of in-cash transfers and where they have a digital ecosystem that’s going to be great, that’s going to be efficient and you’re going to get money out the door quickly. Where that ecosystem is not quite built out, this is going to be a challenge and I’m not really sure. Actually, it’s still to be determined how that cash is going to be distributed.

Peter: Right, right, yeah, that makes sense. So then, I’m curious about the impact that you might…like we’ve talked about women and how they’re…. in developing countries specifically, they really have been excluded. Do you think…what’s your gut feeling on how this crisis is going to impact the gender gap?

Mayada: So, one of the lessons that a lot of organizations that I’ve been doing cash transfers have learned is that when cash transfers……the evidence shows that when cash transfers are targeted to women’s accounts, these transfers are actually used, you know, in many cases to support the family, the family’s food consumption, children’s education and so on, and so, there’s been this movement to find target cash transfer programs to women. And so, if we’re talking about 80+ countries expanding their cash transfer program and a lot of them doing so targeting women, I actually anticipate that you start to see more women entering the financial system.

The challenge has always been…..the challenge with this kind of path where women…..I call it “on-boarding into the financial system,” the challenge there is that unless there is value for women to stay and use those accounts that have been created for them, there is little impact that can be achieved. There still has to be, you know, value for women to continue to use those accounts, whether it’s a digital wallet, or whether it’s a bank account, or whatever the cash transfer system is using, there still needs to be value for women and that’s the piece where we, as a community, still need to do a lot more work because, so far, we haven’t yet made that happen.

Peter: There are certainly……I mean, when you look around the fintech community these days, there are certainly many companies that are focusing on the underserved, both in this country and around the world, and I’m curious about what you think is needed….maybe you could just talk about this country as well as internationally. What do you think fintech companies…what more can they be doing and what should they be doing to help bring, you know, more people in. Obviously, they are thinking about it, they are not philanthropic organizations, these are organizations that want to make a profit so, what do you see as their role?

Mayada: Yeah, there’s this organization called the MIX which is the data and information hub for our industry and they’ve been…..I don’t know if you’ve heard of this thing called Inclusive Fintech 50 what they’ve been looking at, the fintechs that are serving the poor. So, they just did a quick survey of several of these Inclusive Fintech 50, what have they been doing in light of COVID-19, and so, some of the things that have been done have been, you know, limited in the sense of mostly they’re waiving fees or, they’re trying to put out information through their platform, some of them that are doing digital credit, some of them are issuing grace periods, or again, canceling late fees and things of that nature.

A couple have also been trying to put out tools for micro and small enterprises to help them manage their cash flow, or inventory and so on and they’re doing that for free for now. These are all very useful things and I think that, you know, more of that would help. I see an opportunity, in particular, related to the area that I just mentioned which is this massive increase in cash transfers, whether it’s coming through the humanitarian community, or whether it’s coming through the government, the World Bank is also very, very involved in helping to expand a lot of these cash transfers program.

So, there is an opportunity for fintechs to really support in the distribution of this money and then to add and layer on other services that they can provide for low income people, but also to micro and small enterprises that will be participating in some of these schemes so, I think there is a huge opportunity. I don’t know the US market so well, but I am familiar with, is it called Propel in the US…….

Peter: Yes.

Mayada: …which is, apparently just recently partnered with GiveDirectly around helping to distribute $1,000 to low income people in the United States affected by the coronavirus so, I think, that kind of model… You know, there is a huge opportunity here because there is going to be a lot of money flowing to low income people and small businesses around the world, and maybe there’s an opportunity for fintechs to participate. They can do so more efficiently, possibly than other channels and so I see this as a kind of “win win.”

Peter: Okay, we’re almost out of time, but one more question before I let you go. I mean, you look at your organization, you said you’ve really, really sort of pivoted to focus on the current crisis, but maybe you could just tell…..I presume that’s what you’re going to be focused on for the rest of this year, but maybe beyond that, tell us some of the priorities that you’re going to have down the road.

Mayada: Yeah, sure, thanks for the opportunity to speak about that as well. So, we want to continue our work on consumer protection, this is one of the core strengths of CFI. I think what we’re trying to do in the next phase on consumer protection is really delve deeper into how do we make sure that the new players, whether it’s the big techs, or the fintechs, or whatever are how can they embed consumer protection in their design, in their product. So, that’s a big area that we want to focus on.

We also care a lot about regulators and supervisors and how they are able to understand when there is harm in the market, we want to elevate our work with them on market conduct. On the consumer side, we are prioritizing, like I mentioned earlier, work on women’s financial inclusion and also, we want to prioritize issues related to the role of financial services and help people adapt to climate change. So, we recognize that there’s a lot of poor people whose lives are going to be impacted by this global issue and we could be thinking about the role of financial services in helping them do that, whether it’s increase in access to insurance, or whether its helping people, you know, use financial services to migrate, or to just completely change their source of livelihood.

So, link to some of these is also just this issue around…as the digital economy takes hold of big issues around data and data privacy so, that’s another area which we’ve identified as an area of focus, so we really want to understand. In low capacity countries, how should we be thinking about data rights, how should we be thinking about data privacy and so on. These are the things we’ve identified for our long-term agenda.

Peter: Interesting. Well, we’ll have to leave it there. Good luck.

Mayada: Thank you so much.

Peter: It certainly is a noble mission, I really appreciate your coming on the show today, Mayada.

Mayada: My pleasure, thank you so much for having me.

Peter: Okay, see you.

Mayada: Bye.

Peter: You know, I tend to be an optimist as well and as horrific as this crisis is for many, many people, those who have lost loved ones, those who have lost their jobs, I don’t mean to underplay that at all. I feel that there are very many people that are struggling severely right now, but taking a bigger picture, I think there’s a good chance when we look back at 2020 and see that there’s a lot of change that has come out of this.

Many great companies were created out of the financial crisis of 2008/2009, so I think we’re going to see a lot of new approaches, new companies that haven’t even started yet that are going to have a dramatic impact, not just on financial inclusion, but on how financial services are delivered around the world. We talk about the contactless piece, but I think there’s so much opportunity to do things in a better and more efficient way and I think this crisis is going to be a catalyst for those kinds of changes.

Anyway on that note, I will sign off. I very much appreciate you listening and I’ll catch you next time. Bye.

Today’s episode was sponsored by LendIt Fintech USA, the world’s largest fintech event dedicated to lending and digital banking. It’s happening on our new dates of September 30 and October 1st at the Javits Center in New York. This year, with everything that’s been going on, there will be so much to talk about. It will likely be our most important show ever. Come and join us in New York to meet the people who matter, to learn from the experts and get business done. LendIt Fintech, lending and banking connected. Sign up today at lendit.com/usa.

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Filed Under: Fintech One-on-One Podcast Tagged With: Center for Financial Inclusion, coronavirus, financial inclusion

Views: 155

Opportunity Fund and Accion US Network Join Forces

The two organizations are coming together to advance financial inclusion for small businesses in the US

March 12, 2020 By Ryan Lichtenwald Leave a Comment

Views: 223

Opportunity Fund is a nonprofit small business lender and Accion US Network leads a nationwide network of community lenders. Opportunity Fund has the largest small business loan portfolio of any nonprofit Community Development Financial Institution (CDFI) in the nation. They also integrate with LendingClub, the largest provider of personal loans in the US, where they lend to small businesses. Opportunity Fund became significant partner of LendingClub in April 2019 when they ceased making small business loans themselves, instead offering a co-branded experience with Funding Circle and Opportunity Fund.

Opportunity Fund and Accion US Network now will become Accion Opportunity Fund. Their plan is to develop a national microlending strategy in order to better serve small businesses. Some of the plans according to the press release include developing new products, establishing new partnerships, promoting research and financial education, and leveraging digital technologies and data analytics to support mission-driven lending.

Access to capital for small businesses is massive problem. It is estimated that there is an $87 billion annual market gap for loans less than $100,000 for Main Street entrepreneurs. Loans that will be offered by the newly created Accion Opportunity Fund tackle this problem head on so these businesses can thrive.

Luz Urrutia, CEO of Opportunity Fund and the newly-formed Accion Opportunity Fund provided the statement below as part of the press release:

“Collaboration and partnership are key ingredients to better serving our customers…Opportunity Fund and Accion share a common vision for an inclusive, healthy financial system that supports the nation’s small business owners. By coming together, we can accomplish what may have seemed impossible to some. This is the first national effort that can transform the small business lending and advising sectors and, with it, the lives of families running small businesses across the country. We are thrilled that building the future of American small business credit and advising services brings our two organizations together.”

Here at LendIt Fintech we have been big supporters of both Opportunity Fund and Accion, and are eager to see the impact of the combined entity will have on small businesses in America. If you’re interesting in learning more about the organizations pre-merger we interviewed the CEO of Opportunity Fund, Luz Urrutia as well as Gina Harman, CEO of Accion U.S. Network.

Opportunity Fund will still be an independent Community Development Financial Institution (CDFI) where it works to expand lending and provides advisory services in US markets. The management team and board of directors will also be in charge of Accion Opportunity fund. Other changes as a result of the news include:

  • Gina Harman, CEO of the Accion U.S. Network, joined Opportunity Fund’s management team
  • Michael Schlein, President and CEO of Accion, and board member of the Accion U.S. Network; Esteban Altschul, COO of Accion; Mickey Konson, Co-Founder and President at StreetShares, and board member of the Accion U.S. Network; and Solana Cozzo, Senior Vice President, Global Debit Product Management at MasterCard, and board member of the Accion U.S. Network – joined Opportunity Fund’s board of directors.

Filed Under: Peer to Peer Lending Tagged With: Accion US, financial inclusion, Opportunity Fund

Views: 223

Nominations for the 4th Annual LendIt Fintech Industry Awards are Live!

The annual LendIt Fintech Industry Awards Dinner recognizes the leaders in fintech, nominations are open until February 29

February 3, 2020 By Todd Anderson Leave a Comment

Views: 252

One of the highlights of LendIt Fintech USA every year is our Industry Awards Dinner which will take place on the evening of May 14th. In its fourth year, the dinner highlights the great accomplishments of the people and companies that are driving the fintech industry forward. It is a celebration of the industry, for the industry, by the industry.

We are currently accepting award applications on the LendIt website. It is important to note, because we continue to get questions about this, you are supposed to nominate yourself and/or your company. So don’t be shy, let us hear from you. You have until February 29th to get your entries in and the more complete your entry the better your chances are of winning.

The LendIt team will be selecting the finalists for each category and then a team of independent industry experts will select the winners.

The dinner will be held on May 14, 2020 at Tribeca 360 in New York City and the event will celebrate 500+ Fintech influencers and innovators and their outstanding achievements in 15 categories. We encourage fintech companies from around the world to apply for the categories that are the best fit. You can apply for multiple categories.

  • Executive of the Year
  • Fintech Innovator of the Year
  • Fintech Woman of the Year
  • Innovation in Digital Banking
  • Most Promising Partnership
  • Top Technology Service Provider
  • Most Promising Fintech Region
  • Top Service Provider
  • Top Small Business Lending Platform
  • Top Real Estate Lending Platform
  • Top Law Firm
  • Excellence in Financial Inclusion
  • Top Accounting Firm
  • Top Consumer Lending Platform
  • Emerging Lending Platform of the Year

We have already confirmed thought leaders from the industry who will be judging the various awards categories. Beyond recognizing the success of the companies chosen as winners, the event serves as a unique networking opportunity. We hope to see you there in May!

Filed Under: Fintech Tagged With: digital banking, financial inclusion, fintech partnerships, LendIt Fintech Industry Awards, online lending

Views: 252

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