Transcript
Hi, Mary Wisniewski here, Cornerstone Advisors editor-at-large and host of Money Isn’t Everything. Happy Halloween.
On today’s show, we have Katrin Kaurov, co-founder and CEO of Frich, a young fintech firm with ambitions to make money concerns less taboo with Gen Z.
This episode is a bit of a reunion, as Frich partnered with Cornerstone earlier in the year for some research on Gen Z and, dare I say, a vibrant webinar. Links are dropped in the show notes.
But in today’s chat, we talk about the budgeting content the industry should ditch, judgy personal finance tips like “skip the coffee,” and something Katrin thinks the industry gets wrong about the generation, namely that they are entitled.
We also answer the questions we didn’t get to in our joint webinar. Consider this episode the after-party.
Here’s our conversation.
Katrin, welcome to Money Isn’t Everything. Thanks so much for being on the show.
Thank you so much for having me. Super excited for the episode.
I know, it’s our reunion tour.
Our one-stop reunion tour.
For the listeners that don’t know, Cornerstone partnered with Frich over the summer on a report and also for a webinar.
There was so much engagement, so many questions, that we wanted to hop on for the show to follow up on some of the questions we didn’t get to.
But we also wanted to get into your brain power of how to reach out to Gen Z and hear a bit more about the Frich backstory.
Before we get into some of that, I wanted to get into your journey here.
You’ve created a product that’s making it less of a taboo for younger adults to engage with their money.
One of the things that I found striking in what you’ve been saying from the months that I’ve known you now is that you can’t preach at younger people as your financial education plan because it won’t be engaging.
Let’s talk a little bit about that. Tell me about that.
Yeah, absolutely.
I kind of think the same way people were preaching Millennials about not having their avocado toast so they can buy a house.
I think it’s often very similar with Gen Z as well.
I feel people consider Gen Z lazy and entitled, but that’s simply not true.
If you look at the data, for example, most Gen Zers already not only have a nine-to-five, but they have multiple side hustles.
They have ways to earn money online.
They’re trying their best to take control of their finances as early as possible.
But I think Gen Z is in so much of a tougher spot than any generation before because they’re just bombed with information everywhere, right?
Whether it’s TikTok and Instagram ads, it’s influencers where you don’t know if you can trust them or whether it’s sponsored.
There are just so many products out there that I think Gen Z is really lost and confused about what to do with their money.
That’s a huge reason why we created Frich, just because frankly, most young people are very scared and very lonely when it comes to money and making those big decisions.
Yeah, and it’s just such an overwhelming time of life.
We’re talking teenagers up to people in their upper 20s, so all under 30s.
Especially if you’re still in school, or if you’re at that age group where maybe you’re already working by then, it’s just very confusing.
Where does your money go? How much do you need? What are other people making?
I’m really excited to be able to have this conversation with you again.
The only segment on the show that we do all the time is “That’s What You Said,” so we’re doing it here.
You said this in another interview, and I believe I pulled this from TechCrunch, but you said, “We realized that Gen Z has no clue what to do with money, and we’re all pretending on social media that we have our lives together when in reality we don’t.”
Do you still feel that sentiment?
Because Gen Z, unlike other older generations, has grown up in social media, which can be an opportunity, but it can also be a little bit depressing.
I mean, as the oldest Gen Z, 28, I definitely still feel that.
The upper end. I’m the elderly Gen Z.
I can definitely preach that this is true.
More in general, social media just adds this whole other layer where, besides you actually having to figure things out, at the same time you’ve got to show it to the whole world that you already have it sorted out.
You’re going on lavish trips and dinners, and you’re having career success at the age of 19.
Then before falling asleep, you’re scrolling for hours on your phone seeing how amazingly everyone else is doing.
I think it just creates so much anxiety.
I think so often, because we don’t have access to that data, at least before Frich, we don’t know if people are actually affording those dinners or maybe they just overdrafted their account or maxed out their credit card just to afford that last dinner with friends.
Then they’re going to starve themselves for the next week, which we are actually seeing from our users, just to make that happen and kind of provide that illusion.
I think that’s something none of the previous generations ever had to deal with.
Yeah, it is that pressure, especially when you’re young, because you don’t want to look like, “Hey, I’m the one that can’t afford to do this.”
But things are really expensive, and everyone’s up against all these soaring bills, especially rent.
There is another side of this, but we’ll unpack that a little bit.
I want to get into Frich.
You have a personal story here, and you obviously saw a big hole in financial services, or a gap in marketing to this audience.
What was this aha moment for you where you were like, “Yeah, I need to build this company to solve this problem”?
Well, I hope I’m not going back too much now, and I promise to be quick.
I’m originally from a tiny country called Estonia in Northern Europe, and I started my career working as a professional model at the age of 14.
In many ways, it’s very similar to being an athlete.
The way it works, they take you from a small town and then you’re all by yourself in all those big cities, basically living constantly on the road.
I lived in 20 countries by the time I was 18.
I just had to be an adult and make all those big financial decisions and invest my money when I was 14, 15, when a lot of kids maybe were bicycling and getting ice cream with their friends.
I always feel like I had this natural interest in personal finance because it was a way for me to survive as a teenager.
Actually, my first app that I created was very much like Frich but for gig workers and that specific community, which I really created to solve a problem for myself.
That did really well, and that made me think, maybe it’s not just models or athletes that are struggling.
It’s everyone who’s just entering adulthood or trying to become financially independent.
Then a couple years forward, me and my co-founder just saw such a big need for help.
Everything that we looked at, all the other apps, they just felt boring and they felt intimidating and scary.
It just felt almost like you already had to have it together to start using those investing or saving tools.
But there wasn’t anything for step one.
If today I’m in college and I have no idea what to do with my financial future, what’s next?
So we wanted to create a place that feels like there’s a community, that it feels social, it feels like anyone can join, and there are no wrong answers, there are no stupid questions.
Community has really been kind of the pillar of Frich from day one.
I would say today, really two things that set Frich apart.
One, at Frich you can anonymously see how you compare to people just like you.
If you’re a University of Florida student, how much are other students at University of Florida investing?
What do they spend on a first date?
Are they already saving for their future?
Then if you’re behind your peers, we actually match you with resources to get ahead, which is where credit unions and banks come into play.
Yeah, I love that.
I think that’s so important, to remove the intimidation factor because it is really scary.
There are a lot of complicated terms, and it’s so formal, and it has so many wonky words.
To eliminate that is such a, I hope that’s the way financial services just grows up.
For a concrete example, your ambition for Frich users is to be like, “Effing rich.”
That’s what you...
Yeah.
It’s candid. It’s fun.
Okay, I think we’ve got to get into some of the questions we didn’t get into during the webinar.
I was thinking, do we call this the webinar after-party?
But then I thought, wow, that sounds like something no one would attend.
But they’re here, so maybe they will.
So far.
Yeah, we made it so far.
I think this gets into some of the things you were talking about, but it also sets the stage too.
One of the questions we got was, what are the top three things that set Gen Z apart that banks cannot afford to miss?
Yeah.
I would say the first one is definitely community and understanding that Gen Z cares so much about what their friends are doing, what their peers are doing.
Gen Z wants to have that social approval.
As a bank or credit union, the way you can make it actionable, maybe you have quotes from other students on the campus saying that they love this product.
Maybe you give other students a benchmark that, okay, X% of our users who are using a savings product are saving X amount, or their credit score is X, just to give users a way to compare themselves, which is really motivating and also triggers users to actually convert for those products.
I think the community part is really big.
The second part, I would say, is Gen Z has so much higher expectations.
They don’t want a bank just to be a checking or savings account, right?
They want a bank to be someone who supports them on their financial journey.
That’s what’s going to make you stand out.
Whether it’s them trying to find a job, or them trying to find an internship, or maybe they started a side hustle and they need some preliminary business tools, those are all the things that Gen Z almost takes for granted and expects.
I think it’s definitely a big opportunity that banks are missing out on by not providing those services.
I would say, as the last part, probably just thinking about financial literacy.
I feel like this word is so overused, and there are so many long PDFs people put together with all those complicated words, so Gen Z doesn’t understand.
They are looking for guidance at the end of the day.
For example, why should they get a credit builder?
What is that going to do for their future?
Why does it matter to start saving so early?
I think just breaking down those pretty complicated and big concepts into very simple words, even a couple bullet points, can make such a big difference.
I just feel like financial institutions should take advantage of that.
I totally agree with that.
It makes me think of when I was starting off.
I remember I opened my first savings account late, but I was still proud of myself, a year or two into full-time work.
But I didn’t read the disclosures because I just thought, “Oh, a savings account, pretty basic.”
Then I learned, oh, they charge you a fee if you don’t have this minimum.
It was pretty low, I think it was a few hundred, but that was high actually because I was just starting off.
I remember, oh, I lost money in my savings account.
It depends where the person is, but to me, just being gentle upfront, “This is how much you’ll pay unless you do X, Y, Z,” I feel like that should be an entry point too.
It’s obvious what you’re paying or what you’re getting.
One hundred percent.
I think just showing how easy some of those things can be, whether it’s automating savings or automating investing.
For me, investing was a big one.
For some reason, I kept pushing it off for actually years.
For years, I was like, wow, one day I’m going to be this person, this boss babe who invests.
It just seemed like such a big thing that the day I started investing, everything was going to change.
I remember when I actually opened up my first investment account and transferred, I don’t know, my first hundred bucks there just to get started, I was like, huh, it literally took five minutes, and I prepared for three years because I was so intimidated.
I think there are so many other people like that out there who are just so afraid to do that first tiny step to get started.
Well, it is intimidating.
But also, you’re definitely a strong female to be thinking about that.
I don’t know if everybody’s thinking about investing at a younger age, but of course your journey was, like you said earlier, you’re already working.
You’re already managing all this income source from all kinds of places.
Okay, so this one blurs into it, and it’s also topical because in the summer, it hit TikTok.
There was a big scandal of check fraud, and it was like a money tip and it just went terribly wrong.
But the question that we got before that terrible story broke was, for education and whatnot, what works best?
TikTok, podcasts, YouTube videos, blogs?
I tend to think all of them, but what do you see working best at Frich?
I would say, in general, just bite-sized content.
It can be whether it’s on YouTube, whether it’s on a newsletter, or it’s in-app.
But I think you just can’t have long paragraphs.
It needs to be quick.
This is a checklist to do.
You want to start investing or you want to start saving, X, Y, Z, those are the next steps you’ve got to take.
We’ve seen that people really like actionable lists.
If you do a to-do list, let’s say to start building your credit, and there are just quick tips, and under every tip there’s a resource to learn more or to start taking action, I think pairing that knowledge with a quick actionable step that you can do in a couple of minutes works really well.
Frankly, let’s say we take a credit score.
Most Gen Zers, if you’re a college student, you’re not really going to care how a credit score works and even why we have a credit score.
I think people go too deep into this.
A Gen Zer is mostly going to care about a credit score because maybe they’re going to get a car, or they’re going to get their dream job, or they’re going to get the loan that they need, or their apartment.
That’s really it.
I feel like you almost have to show the carrot first and show that this is the end goal.
Here are three quick tips for how you can start building your credit today.
I think it can be just very easy and quick, and that works the best.
Yeah, and I think that, I mean, you’re speaking to a copywriter skill.
It matters a lot here, not necessarily for the wordsmithing, because some of it’s pretty basic, that one screen leads to the next screen and you’re getting more information as it comes.
So you’re not just bombarded with, whoa, here’s this scroll, scroll, scroll, scroll, scroll for the sign-up process.
I’m curious, for someone signing up for Frich, what’s the first thing they see when they’re like, “I’m signing up”?
We actually start tapping into their curiosity immediately.
Basically, we just ask a couple of questions, and already you’re going to see, for example, how do your savings compare to others?
How does your investing strategy compare to others?
We know that people are just so curious about what other people are doing with their money.
People have always been curious about it, but they’re now more snoopy than ever before.
Then actually, the first newsletter that people get, that’s exactly when we list the problems that are top of mind.
We’re like, okay, trying to build credit? Here are two resources.
Trying to get a job? Here are two resources.
Trying to earn extra income ASAP, which especially works at the end of the month? Here are two resources.
Really getting straight to the point and starting to add value instead of promoting our brand too much works really, really well.
Yeah, wow. That’s really cool.
I want to get into this money voyeurism.
I think of Money Diaries, which is where people share how they spend their money for the week.
That’s really blown up.
Bon Appétit now has, like, this is how this person with this much money spends in any week, but I think this is notable for banks and credit unions too, and fintech companies, because historically people don’t really share how much I make, kind of thing.
There’s this openness that’s happening that I think will have to influence the way budgeting tools, or whatever name they get now, evolve to adjust to something that’s already happening.
Yeah, it’s cool.
I think one of the things that I see from credit unions and banks is almost thinking that Gen Z is just like, okay, they’re still kids, they don’t matter.
They’re not making that much money, so they’re not a priority because they’re not bringing that many deposits.
But I think Gen Z thinks inherently differently than any generation before.
They have so much more exposure, so many more options put in front of them, that I think the only way for all those institutions to survive is to have a Gen Z strategy.
I think it’s just something that already, at this point, when the oldest Gen Z is as old as I am, 28, Gen Z is already way in the workforce, having meaningful deposits and being very different.
So I just think it’s something that credit unions and banks can’t put off anymore and think it’s a future strategy to think about.
That is so important because I’m a Millennial, middle-aged, a middle-aged Millennial, and it’s still like, oh, some bankers think that’s the young person still.
But no, I mean, it can be, but not really.
It’s this false belief.
You see what you see, and if you haven’t staffed Gen Z much at this point, there will be a major gap.
Yes, everybody’s getting old.
I think also, in terms of building brand loyalty, especially if you’re not one of the largest banks out there, the only time you’re really going to get a Gen Zer, I would say, is when they’re in college and you can prove your value and show your community approach to them.
Because the moment they graduate and they have significant income, Bank of America, Chase, Capital One, all of them are going to market so heavily toward them with such huge budgets that it becomes so expensive to get them at that point.
So you’ve always kind of lost that generation if you wait for them to graduate.
At that point, everyone will be going after them.
I feel like that’s a common mindset mistake that I keep seeing over and over again as well.
Yeah, that sounds fair.
Another one I hear a lot, and we got into this during the webinar, is just this dismissiveness of Gen Z in terms of thinking they’re flighty at work or taking a lot of days off or whatever.
I’m like, no, they’re just, yes, use all your paid time off. That’s why it’s there.
I feel like that’s another thing that is a tension in the different groups.
Okay, here’s another question that blurs into this that came from either a bank or a credit union, and this is a really important one.
What will it take to incentivize a Gen Zer to move their funds from Cash App to a traditional credit union?
Okay, came from a credit union.
Mission alignment? New products? What’s their leading motivator?
Yeah.
I would say, especially when it comes to credit unions, I think the mission is so huge.
I’m frankly surprised that credit unions are not having mass popularity with Gen Z yet because Gen Z is all about small institutions giving back to the community, being against those big, bad corporations.
I think playing into that mission and playing all into those community incentives is going to have such a big role.
One of the campaigns that just sticks to my mind is that credit union who offered seeds that you can use to plant a new tree for every member who signed up.
The seeds cost like 50 cents, right?
Even the bankers were like, “Do those kids know that?”
It wasn’t even a Gen Z campaign, but it signed up all those Gen Zers for them.
They started inviting their friends to the branch because they wanted their friends to get the seeds so they can feel good about planting a tree.
I think making people feel good and making them feel that they’re doing something meaningful in the community by partnering with you, there’s a huge benefit, which is so much bigger than giving them a $20 incentive to open an account because they can easily do that with any other bank out there.
Yeah, I think that’s such an important nuance.
I think a typical credit union person or banker would think, yeah, the 20 bucks makes more sense.
But it’s so much sweeter to say, here’s this seed.
It adds to that physicality thing too.
I know this is something we’ve talked about, Gen Z growing up on all these digital channels, but there’s this desire for a physical thing as well, which we found in our research.
Some of them are using physical envelope budgeting type of thing.
There’s this, I don’t know, it seems like a pent-up desire for tactile money experiences.
Yeah.
I think Gen Z is kind of interesting also with their film cameras.
There’s certain nostalgia about things that were done in the past.
They almost want hyper-digital experiences, but then they love putting their money in an envelope.
So I can see how that can be confusing for banks.
Confusing.
Also, don’t keep all your money on your body.
Okay, well, this kind of ties to it.
How does a bank utilize streaming to best serve Gen Z?
What resonates with them?
Climate change? Giving back to a specific charity?
You just mentioned the tree.
Earning points at a favorite restaurant?
I think this all kind of blurs into this.
Anything you’d add to it?
Yeah.
Again, I think giving back to the community and making sure that it’s pretty specific, that it’s not just a general charity.
Maybe it’s something that’s tied to that local community so it feels personal.
Again, I think that can have a bigger effect.
This one might sound a little shallow, but I know it works.
Being able to share as a Gen Zer that by partnering with that bank, you’re supporting a charity.
Maybe there’s a way you can directly share that on social media to kind of brag a little bit about how much good you’re doing and how much you’re supporting the mission.
That definitely works.
Then kind of on the flip side of things, I would say that perks definitely are great.
Whether it’s getting free drinks at a restaurant, anything that feels tangible.
I feel like points can feel very abstract sometimes.
But I think if you have tangible perks, whether it’s even something as simple as a student getting a free drink at your local bar once a month, those tiny perks can feel so special and much more special than some very complicated product features.
Yeah.
On one of our other podcasts that was recorded recently, there’s a bank whose account gives money back for streaming.
I think it’s like $20 back for your Hulu or Netflix every month for a certain amount of time, and if you direct deposit.
I’m like, well, that’s really interesting because you don’t see it that often.
People are overwhelmed with subscription fees, so that seems like a nice perk to lure people to the brand.
Yeah.
I think so often, this is a whole other conversation probably, but so often when you look at even big banks’ perks, there are so many brands that don’t resonate.
There are some random brands that I’ve never even heard about, and I’m like, I’m probably never going to use those perks.
If instead of those hundred random brands, I had five local restaurants that I’m using that would give me, I don’t know, a free appetizer once a month, I feel like that would feel like this bank is really doing something for me, and it would feel so special.
So, the perks are much more curated and personal.
I think there’s such a huge missed opportunity there as well.
I would absolutely get the bank’s appetizer partnership.
I’d also be like, let’s do it for clothes too, and workout classes.
There are a lot of things I like to spend money on.
Okay, we have time for one more question that we didn’t get to during the webinar, but I still have one or two for you as well.
Again, we blurred into this, but what job-related benefits are most appealing to Gen Z?
What motivates them to do a good job?
That’s good because it also hints toward what we were talking about early, where it feels like there’s this dismissive thought that they’re not working hard.
Do they want to advance, or is it a myth that they don’t care about having management positions, thought responsibility?
Yeah.
I think two things that Gen Z cares about.
One is definitely feeling like their job is meaningful.
I think that more than caring if they’re a growth manager, a senior growth manager, maybe they led a program that helped a hundred students now feel confident about investing.
I think those kinds of meaningful milestones make such a big difference.
Honestly, I think it even trumps having a higher salary or having this fancy position.
I think Gen Z just cares about feeling like their life and work are meaningful, which I think is a little different from last generations where it was maybe about your specific career enhancement.
Then the second thing, again, I think compared to high salary, perks are just so huge.
Getting your employees a meditation app monthly subscription can go such a long way, much more than having that same amount in your salary.
I think perks, whether it’s a bank customer, credit union member, or it’s your employee, are just kind of the key to this generation.
Yeah.
It came to my attention recently that Ally Bank was offering a Calm subscription, and I’m like, oh, that’s so cool.
Because you also see this blurring of financial health and mental health coming together, which I think is so important.
I totally agree that the way people think about their full-time jobs is very different.
People are doubling up.
Certainly the ambition isn’t to be like, “Hey, I worked here for 30 years.”
Maybe it’s still there, but it doesn’t seem like it.
Very rare.
It’s very rare, and I can’t imagine that journey.
But I do know it happens.
I know we’re almost out of time, but I wanted to ask you one question because we were talking about this openness to sharing money.
When Frich users find out they’re behind, let’s say, that can’t feel great, right?
What kind of feedback do you get?
I know you said you serve up, “Here are some things you can do,” but how do you tackle that challenge?
Yeah.
We always try to take a tone where we’re like, it’s okay.
Wherever you are today is fine, but this is what you can do next.
Or let’s say, instead of being like, “Boohoo, you’re worse than others, down, negative, red,” like, okay, this worked really well for someone just like you.
Or maybe, I went through a similar challenge.
Every Friday, our users can submit money questions to us.
Every Friday, our money expert picks one of the most popular questions and just walks them through, this is where you are, I’ve been through this, this is everything you can do.
So, it’s a pretty in-depth newsletter that we do.
To give you just examples of questions people submit, they’re like, “I’m moving in with my boyfriend. It’s our first apartment together. I’m freaking out that we’re going to break up about money. What should I do?”
We get a lot of stuff like that that is very real life.
It shows that money is not just a credit score or your savings account.
Money is behind every single decision that you make in life.
Money affects every area of your life, your dating, your career, your hobbies, your food.
I think that’s a big element to understand as well, that money is no longer just a bank or finance.
Money is just behind everything we do.
Yeah, and it’s emotionally charged.
It’s been such a treat to reconnect with you.
I still have one last question, but before I get into it, any last thoughts you want to leave listeners with and/or how do people find you?
Yeah.
You can either find us on our Frich website at GetFrich.com, or feel free to reach out to me on LinkedIn.
Always happy to chat about anything related to Gen Z and money.
Awesome.
My last question for you, Katrin, is what is the image on your phone’s lock screen?
It’s very corny, but it’s my fiancé proposing to me on a rooftop.
Well, congratulations.
That’s very sweet.
What rooftop?
It’s the Williamsburg Hotel in New York.
Wonderful.
I used to live in Williamsburg.
Oh, that’s awesome.
Yeah.
Well, again, congratulations, and thanks for reconnecting with me.
Yeah, absolutely.
Thank you so much. Love the chat.
One thing I learned is, be creative with perks.
There’s something interesting about a credit union that gives free appetizers at a local restaurant, for example.
In two weeks, I sit down with Tansley Stearns, who is the president and CEO at Community Financial Credit Union in Michigan.
We talk about the darker sides of finance and why Tansley’s credit union is promoting these areas to potential members.
See you then.
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