I Think I Like Consumer FinTech

Updated: Aug 30

I almost quit tech entirely.


But I found myself, yet again, in tech. Consumer fintech to be exact.


I’ve always had the perception that the space was boring. Credit scores? Payment processing? Round-up savings? Fractional shares? Checking accounts?!?!!?!?!?!??!?!


LET’S. GET. PUMPED. UUUUUUPPP!!!


...yet I still somehow managed to trip spread-eagle in fintech. Turns out, the industry is way more compelling than I had anticipated.


It started with blockchain

Cue eye roll. Before I had any inkling what Bitcoin was in 2013, some developer at my job casually encouraged everyone on HipChat (remember that?) to buy some. Why? I seriously can’t remember, but the three barely intelligible lines of text were enough due diligence for my dumb ass to buy in. I barely had any money at the time, but I thought I’d “invest”. Use your money to make money, right?


Turns out, I was unknowingly lying to myself all those years when I’d readily reassure people that I didn’t like to gamble. Of course, one month later I found I had essentially bet on black. And lost. I pretended the gamble should be viewed as tuition to the new world. It made me feel better about the decision, so I educated myself.


The ideals of Bitcoin were lofty. Build an alternative financial system. Skirt archaic regulation. Wrestle power back to the people. Leave no one behind. I learned about money, oppression, behavioral economics, mining algorithms, democracy, philosophy, derivative trading, exchanges, networking, and most of all, how crappy every blockchain products’ user experience was at the time.


The anxiety was palpable every time I fumbled my way through a new blockchain product. I quickly ascertained that the value propositions of blockchain technology inherently lead to inconvenience. Decentralization necessarily slows systems down. Security and privacy put all the responsibility back on the consumer. Even the act of sending money to another person required unnecessary cognitive overload. The gray and white matter in my thick skull can only hold so many things at once.


We embrace technology because of convenience. Some would argue, we’ve gone a little too far. I agree to some degree. But the fact still stands: blockchain is not convenient, which makes embracing difficult.


Another reason why the user experiences sucked? Because the makers involved were exclusively developers and enthusiasts. “Command line is so easy to use” was an assumed mentality. “Store your secret unintelligible key that gives you access to all your money on a hard drive that you insert only into a computer that has never had internet access in a dark room with no windows.” It’s that easy.


I will admit the amount of creativity in the space did blow me away. It was new, bleeding-edge technology. There was no time to think about how people interacted with it.


In 2017, I finally felt the developer sandbox open up to spectators like me. I wanted to get involved to focus on the customer experience to bring more users into the new economy. I wanted to contribute to the revolution by creating a product my mom could use.


So I joined an agency to build blockchain products. We worked hard on building messaging to guide users through complex setup and operations. We worked hard on abstracting the complicated technology into simple interactions.


Yet, the products and user experiences still felt incredibly clunky. The only way to really make the experiences convenient was to curtail the advantages of blockchain: decentralization, security, and privacy.


Then, what was the point? How were we supposed to build a new financial system for people most disadvantaged by the old? We can’t expect those in need to invest the time and energy when they’re still working on their basic financial needs and improving their financial health. If we’re not building for them, then why were we even wasting our time? To make the rich richer?


I started to lose sight of the forest for the trees.


Working within the system

The trees. Oh, the lovely trees. We spent so much time looking for problems to apply this advanced technology, this revolutionary platform. I’m still confident the seedlings will mature into their own thriving forest one day, but you know what? The existing forest is right in front of me, and it needs help. There's so much rot in the current consumer financial services industry to be exposed and excised.


Take bank fees for example. Specifically, overdraft fees. The Center for Responsible Lending found that big banks earn about $11+ billion annually by providing “protection” for “overdrafting” your account. That alone could pay for Trump’s impractical wall. And that sum only accounts for banks with over $1 billion in assets. Additionally, the Consumer Financial Protection Bureau has found that a majority of overdraft fees at an average of $35 a pop were caused by purchases of $24 or less.


Let’s just call “Overdraft Protection” for what it is: a goddamn loan. If you borrowed $24 for three days and paid $35 in fees on top, you’d be looking at a whopping 17,000% annual percentage rate (APR). But a bank is not going to call “Overdraft Protection” a loan (see 36% rate cap). They’re protecting you!


What’s even more atrocious is that 9% of bank account holders pay for 84% of that $11+ billion in overdraft protection (aka payday loan) fees. These customers are the least likely to afford it, but they’re paying for all the free checking and savings accounts many don’t think twice about.


That’s just one example. Traditional banks and financial services have inevitably left out a large population most in need or actively preyed on them. It doesn’t need to be like that. Anyone should have access to capital for emergencies or big purchases. Anyone should have the ability to save and invest in their futures. The current system should be supporting those without the privilege of financial literacy.


There’s a young crop of consumer fintech companies that agree. There’s still plenty to do in the current system. A few major developments have been necessary for fintech to accelerate innovations:

  • Mobile - This one is easy. Almost everyone carries around a mini-computer in their pockets. Access to finance is easier than ever.

  • Democratization of data - Traditionally, banks and big institutions held all of the financial data about you and I. Like Zillow did with MLS data for real estate, companies like Plaid and Credit Karma have enabled transparency to traditionally opaque systems allowing organizations or customers themselves to access data like bank account transactions or credit scores.

  • Easier access to financial rails - Generally, it was inconvenient to tap into the networks that move money around the financial systems. However, companies have built convenient layers on top of the legacy systems so it’s now easier than ever to start a digital bank like Chime or Varo.

Notice how none of the above is related to forcing a revolution. With increasing access and transparency paired with a mobile-first point-of-view, new consumer fintech companies can start to repackage the way people interact with their money.


Money and how we deal with money has always stayed the same. The customer experience is the innovation. That’s exciting!


Overdraft fees? Just don’t charge them! People can’t pay back on time? Be flexible and give them more time! Not enough to buy a share of Amazon? Let them buy fractions of a share!


I’ve found it empowering that it’s as easy as asking, “what sucks about this”? And then...not doing the thing that sucks. And there are a lot of sucky things to interrogate across three major financial health pillars:

  1. Helping people manage their day to day finances like budgeting and cutting costs (overdraft fees, I'm looking at you!).

  2. Creating fair and easier access to capital (money) typically reserved for the privileged for emergencies or longer-term needs.

  3. Developing opportunities and behaviors for people to save and invest in their future.

Crazy, right? It can’t be that simple!


This is why I love being in consumer fintech. The time is ripe. There’s so much to solve right here, right now. My current contributions at Possible Finance have a direct impact on people’s financial well-being, and it's been incredibly rewarding. It's a new feeling. It's a great feeling.


Maybe I will stay in tech for a while longer.

Tropical Plant
  • output-onlinepngtools (1)

© 2020 宣可為