May 8, 2019
Studying the properties and composition that make up the FinTech ecosystem
Welcome to this week’s industry analysis with the FinTech Chemist. While I may not be literally mixing solutions and preparing reagents, I am studying and testing out the latest and greatest in FinTech. I recently attended the LendIt Fintech USA conference in San Francisco, and here’s what I was able to formulate over the two days:
Just like how the quantum theory ripped apart stereotypical notions of physics and destroyed common ideas around concepts of reality, FinTech has done something similar within the ecosystem. Constantly challenging the status quo, and evolving to anticipate business and consumer needs, LendIt certainly shed light on this phenomenon.
Digital banking is no longer a theory; in fact, it has evolved to become part of our everyday lives. According to Stash CEO Brandon Krieg, since 2015, they have had over 5 million subscribers. The reason they’ve been so successful is that they’ve studied the consumer, and discovered that the average person wants to live a better financial life. Their average user is 29 years old and makes $50k a year. With their app alone, they’ve made it easy for people to invest and learn about it. A common theme throughout the event was financial literacy and the fact that consumers aren’t getting what they want out of traditional FinServ products, and they’re not catering to helping the middle class (sounds a bit like politics, right?).
Now, we don’t need to solve E = mc2 to understand that companies are hyper-focused on personalization. As the digital bar continues to be raised, the successful ones are meeting the customer where they are and are finding ways to connect advice, banking, and investing in one experience. Stash also stressed the importance of breaking away from penalty fees.
During his panel, Krieg went on to say, I think it’s bullsh*t – we don’t charge an overdraft fee. Overdraft fee in America is like a 20-billion-dollar revenue stream for the top incumbent banks. The beauty of technology is that you can get rid of these fees and put the money back in the customer’s pockets. Eureka!
Look, I need glasses because my vision is terrible, and as a chemist, well, I need to see. What in the world does vision have to do lending, you say? Well, the session with Kabbage CEO Rob Frohwein titled You Need Glasses, Your Vision Sucks really resonated. When he was first starting out in the business, an investor asked him this simple question: What’s your vision for Kabbage? Unfortunately, he wasn’t expecting it, and potential investors don’t just want to hear growth.
Frohwein drove the point home by saying, When you don’t have a clear vision, you will lose out on investments. Your vision should be about the customer, not yourself. Throwing a bunch of random products out to the market is not a vision.
Glasses or not, LendIt had a vision this year with a plethora of content focused on making the lives of consumers better. Now, onto my next scientific… I mean FinTech hypothesis adventure. And as always, remember to take your vitamins!