The Touchiest Issues in Fintech Right Now

Hi everyone, Mary Wisniewski here, editor-at-large at Cornerstone Advisors and host of Money Isn’t Everything.

This episode is actually going to be the last episode for the year, and it’s a very fitting episode.

I started the show by interviewing Ethan Bloch, who founded Digit, one of the first, if not the first, automated savings apps.

Now I’m closing it with someone who worked with Digit and helped educate me about financial health when I was reporting at American Banker.

In today’s show, I’m so happy to tell you I’m speaking with Jennifer Tescher, who is the president and CEO of the Financial Health Network, which, among many things, shines a light on financial struggles and disparities.

She also founded it in 2004, so this year marks the 20th anniversary of the Financial Health Network.

We get into all of the hot topics, including how banks are in the business of financial health, whether they know it or not, open banking, and AI.

We also recorded this episode a little bit early and actually had this conversation right after the presidential election.

Jennifer weighs in on what it says about financial health.

Here’s our conversation.

Jennifer, it’s great to have you on Money Isn’t Everything.

Welcome to the show. Thanks for being on today.

Thanks for having me, Mary.

It’s so nice to reconnect with you. It’s been a while.

It’s been a long while.

I was just thinking back to, it must have been my American Banker reporter days, because I know you were my go-to source for, like, let’s talk about financial stability and income volatility.

So, what a treat to be able to reconnect with you.

Yeah.

Well, I’m thrilled about this podcast that you’ve put together because it touches on so many of the issues and themes that I really care about.

I’ve been an avid listener, so I’m glad to be here.

Well, thank you.

Hopefully we’ll keep that up.

But I wanted to set the stage because there are a lot of more innovator-type or digital banking leaders listening to the podcast.

For more of the traditional bank or credit union executive that may be on the line, I thought it would be great to open the stage with something I’ve heard you say, that banks, or credit unions, are in the financial health business whether they know it or not.

I thought, let’s start there.

Let’s unpack that a little bit.

What do you mean by that?

I love that.

Thank you for starting there.

What I mean by that is, what bank and credit union customers, and fintech customers for that matter, want is someone to help them improve their financial lives, to have their back when they’re struggling, to be there to provide both product and advice when they’re thinking about how they might be able to get ahead, and to be able to count on them for the day-to-day needs that they have in managing their cash flow.

Too often, financial institutions really see themselves as being in the product business.

In fact, they’re often organized around products.

There’s a group that manages the checking accounts and a group that manages the savings accounts, et cetera, et cetera.

But that’s not how people live their lives.

To suggest that all they’re doing is selling products really puts them in the commodity business.

No one wants to be in the commodity business.

It’s not a highly profitable, not a high-margin business.

The products are simply a means to an end.

I believe that financial institutions need to care about the end in order to best serve their customers and to make money doing it.

I’m curious, just because this has been your line of work for a while now.

This would probably be more anecdotal, but do you see a pendulum moving in the right direction of the industry’s embrace, or opposite of embrace, engaging in this line of thinking?

Yeah.

I have to say, this year marks the 20th anniversary of the Financial Health Network.

I founded the organization 20 years ago.

Thank you.

It was originally called the Center for Financial Services Innovation.

Twenty years ago, we were founded to really think about how the power of the internet could include way more people in the financial system than had been included to date.

We were really focused on inclusion and access.

But it was the invention of the smartphone, and the financial crisis and the Great Recession, which ultimately led us to this need to focus not on getting in or the product that you might use once you get in, but what you’re aiming for.

What are you hoping to accomplish by engaging with a financial institution?

We decided to call that financial health.

We’ve spent the last 10 or 12 years now defining it, creating a framework and measurement methodology around it, and really working with financial services companies of all kinds to help them understand the big idea, understand how their customers are faring and how their workers are faring, understand how the country as a whole is faring, and then understand what actions they could take.

What could they do differently if they actually wanted to have a positive impact?

I’m thrilled to say that we have seen huge change over time.

We’re seeing new norms in, this is just how business is done.

There are dozens and dozens of people who have financial health in their titles at these institutions.

Many of these institutions have cross-departmental working groups who are thinking about financial health across the lifecycle of the customer.

In some ways, maybe the most exciting development that really demonstrates how far we’ve come is the OCC’s announcement earlier this year of Vital Signs, in which it really called on banks to start measuring a handful of indicators of consumer financial health, their vital signs, using their own administrative and transaction data so that banks can actually make good decisions based on how their customers are faring.

So, we’re incredibly excited about just how much adoption there’s been.

There’s still more work to do.

There’s always more work to do, it seems.

But this has been such a big year.

All kinds of news breaking.

The most recent one being who the next president is.

I wondered, just a lightweight question for you, in this new political environment that we’ll be in, what do you think it might mean, or what should the industry pay attention to, as it ties to financial health so intimately?

Yeah, I appreciate the question.

Just for context for listeners, we’re recording this on the day after Election Day, so feelings are raw.

Frankly, I think we’re all still assessing.

We barely even understand what the exit polls said yet.

So, I think there’s a lot more reflecting that all of us will need to do.

We’ll have to see who wins the House and how all of that shakes out in Congress.

But I think for me today, just my raw reflection, it’s that it has never been more clear, the connection between a healthy democracy and the financial health of that democracy’s citizens.

Because at the end of the day, too many people in this country feel like they have been left out or left behind in one way, shape, or form or another.

In those moments, people ultimately turn to a populist, turn to someone who could make them feel like they’re heard and seen.

In many ways, it reminds me of, remember Zuccotti Park during the Great Recession in the wake of the financial crisis?

Yes.

In many ways, today is the ultimate reckoning.

Now, that’s not the only cause.

It’s not like the financial crisis was the single precipitator that led us to this moment.

But I think it’s emblematic of what happened, right?

The view of Americans that banks were let off the hook and no executives went to jail, and yet millions of people lost equity, lost their homes.

I feel like it’s useful to remember that in this moment because I think for many voters, the expense of their rent, or their inability to even find a place to live, the cost of healthcare, the cost of higher education, the cost of eggs and milk, even though inflation is down, I think those are all things that really drove people to their breaking point.

Here we are.

So, I think it means that we need to double down on this work of making sure that both the nation’s policies, but also the policies and practices of the institutions serving American people, really need to be focused on helping shore up their financial health.

Gosh, I really hope that will be the broader takeaway for lots of banks and credit unions because that would be great.

Actually, I remember walking by Occupy Wall Street.

I was walking from my job at American Banker to my apartment, and that was the walk home.

Being a little bit of déjà vu there.

Well, here’s something that could be considered more hopeful, or more concrete, or not concrete because it is actually very controversial still, which is open banking and the rules that were set.

I feel like I’m sure we’ve had interviews about this from years and years ago of, what’s wrong with screen scraping, and what’s this little thing buried in Dodd-Frank called 1033?

Now we’re in a different moment.

Of course, there are all kinds of spats around it.

But I am curious about your takeaway of its potential and also maybe what you would think still needs a little tweak here and there to actually realize the potential.

Exactly what’s going to happen, I don’t think any of us knows.

Not just because of the change in president and Congress, but because there’s a lawsuit that’s been filed.

We don’t even know whether there’s going to be an injunction, whether this thing’s going to move forward while the case plays out.

So, I think there’s a lot of uncertainty right now.

But on the positive side, I think open banking is an incredibly powerful tool, I’ll call it a tool, to really empower consumers and put them in the driver’s seat in a way that they really have never been before.

It’s why eight years ago we published the very first set of principles on what high-quality, safe, and effective consumer data sharing should look like.

That led to the CFPB creating its own principles, which ultimately led us to this point.

So, this is something that we’ve had a stake in now for quite some time.

If you think about it, asking consumers to really focus in on managing their financial lives but not being able to access easily and safely their own data from across their financial relationships in order to best do that is like tying one hand behind their back.

So, I think just the sheer democratization of access to one’s own data is huge.

But then I think it’s going to unleash creative juices, and not just by fintechs.

I’m hoping banks and credit unions will also recognize the opportunity here to help make sense of that information for their customers in ways that add value for them, as opposed to just more ways to sell more stuff.

Whether it’s helping make it easier for consumers to switch banks or switch their deposit accounts, to being able to understand their usage patterns and then see which competing products at other institutions might actually be a better fit or a better deal for them, I think the possibilities are endless.

God willing, this thing becomes a rule, a real rule.

I’ll be especially curious about that ability, that added transparency, to maybe better see the fees or the rates, or just be able to compare in a more thoughtful, accurate way.

Because, of course, in some ways you can grab the data.

You’re doing it.

I always heard someone compare this to, “Oh, here are the keys to my car, perfect stranger,” when I’m giving my bank username and password to use something like Venmo, for example.

But, of course, it’s not reliable.

It’s not safe.

There are all kinds of issues.

I guess, from the fintech startups that you work with, do you already see a tangible example of something they’re thinking about that, if they have this more reliable data, then they can do this and it’s way more interesting than, let’s say, the Mints of yesteryear?

Yeah.

Well, I’m thinking in particular about Credit Karma.

I can’t really call them a startup anymore, can I?

Right.

It’s almost 20 years on now.

But doesn’t it feel like it?

It feels like it.

I remember the CEO at my desk showing me the product.

Exactly.

Intuit a few years ago made a huge bet on GenAI across the company.

Now every single one of the products that Intuit sells is experimenting with, or has, a couple of AI use cases.

Credit Karma is one of those.

I think that in that case, the ability for the consumer to say, “Hmm, how can I go about borrowing $500?” instead of saying, “Hmm, which is the best credit card for me?”

Instead, taking a step back and enabling people to understand the various options that they might have.

That’s a really cool, it doesn’t seem like rocket science, but that’s really helpful.

Again, it’s not taking the product point of view.

It’s taking the end-goal point of view and starting from there.

We’ve just finished doing a little sprint trying to understand what’s going on in the landscape.

A couple of other thoughts, less about what are the actual use cases, but more some key takeaways.

Advice isn’t enough.

AI can put information in front of you.

Maybe it can even make better sense of it.

But the power of AI is going to be in helping consumers actually take action.

Because if you don’t ultimately drive action, then tree falls in woods.

I think that’s harder to do, but I think it’s important.

Yeah.

Well, let’s get more into this because I was just at this event that was focused on AI.

Multiple people kept bringing up the limitation right now with large language models.

It’s not so great at math, for example.

When I first started hearing about ChatGPT a while back, I was like, oh, think about what it could do for your money and answering questions.

But we’re not there yet.

It seems like it’d be in the distance.

How are you thinking about it in terms of its limitations with math right now and what it might be in the future for helping people with taking action, as you say, for their money decisions?

It’s interesting.

I have heard this sort of, it can’t do math well.

But when I think about the kind of insights and optimization that AI could be good at, I’m not sure the math part is going to be so critical.

Certainly nothing particularly complex.

We’re not asking it to do algebra or calculus for the purposes of helping people manage money, right?

Yeah.

But think about this.

I’m living paycheck to paycheck.

My cash inflows are uncertain.

They’re not standard because I’m working a gig job on the side.

I’m trying to figure out when to pay which bills, in what order to pay them, and when during the month.

A computer is in a much better position to figure that out than I am.

The generative part is only that it can then communicate that to you in a natural-language way.

Those are the kinds of things.

That feels like a relatively small thing, but that’s the kind of thing that could really take the bandwidth, thinking time, that people are spending worrying and stressing over this.

Imagine if you could have your computer do that for you, or at least suggest it for you and let you review it before you say, “Okay, do that for me.”

Just how freeing that could be.

I’m curious how you think about this too because empathy and just not losing patience.

I’ve had a few chats with my bankers over the years, and I would say some of those interactions weren’t so great for my self-esteem when I was young.

They’re like, “So, what are you doing?”

When I took an internship at a men’s humor magazine called Cracked, I remember this vividly because I was in a branch, and I was young and feeling embarrassed.

Now I’m just like, well, that’s really annoying.

But I do think there’s this potential of removing that fear of shame if you’re talking to a nonhuman.

I think that could be removing a barrier for someone who’s avoiding the scenario because they’re afraid of getting negative feedback or judgment.

Do you see it in this way?

Do you see it in a different way?

I love that idea around empathy.

It’s so counterintuitive because, at the end of the day, it’s a computer, right?

It’s not a human.

But think about the movie Her.

It can very much feel like, and that’s both good and bad.

It could be good because no judgment, won’t lose patience.

But on the other hand, it can also create trust where maybe there shouldn’t be.

We have to remember that they’re not really in charge.

If they are, we have a problem.

But I do agree completely that money is emotional.

In fact, I loved that episode you did on financial therapy.

Yes.

Because we like to think, we sometimes design products and experiences and advice as if it’s just black and white.

A, B, and C.

Do these three things.

But not only are people’s lives complicated, there’s huge emotion.

We really have to embrace that idea if we’re going to be successful in engaging with our customers.

It would be a little like a doctor not recognizing the emotional content of the health decisions we make.

They teach whole classes in bedside manner.

Where’s the bedside manner class for bankers?

Oh my gosh, I want to teach it.

You would be qualified.

I could be like, “Oh, just, you know...”

Thank you.

You have a very sunny personality.

You’d be perfect at it.

Thank you.

Because we’re both people who go to these conferences, and I’m sure you get commentary like this.

Certainly I do.

I’m like, well, I didn’t think I invited this in.

At the worst extreme was when I was covering debt collectors and they were calling people in debt “financial terrorists,” which is just like, are you not thinking about the person who just got cancer, or just had this huge medical thing, or their parent died and they’re providing more money?

The list goes on and on.

To me, I think the terrorist is the bill collector who’s calling 20 times a day despite laws against that.

Yes.

We share this.

But yeah, there seems to be this bizarre, this is the bad guy, this is the good one, blah, blah, blah.

So, I think if there’s a way, and I don’t even know how this would play out, but I am really fascinated by how mental health and fintech and money things can all sort of intertwine a bit more to hopefully address the real things.

Because, as we both are aware, the budgeting tools, that doesn’t really do much for people.

It needs to evolve into the action.

But it also needs to relate to someone’s reality.

Completely.

It’s been really interesting to see a growing number of companies, for their own employees, embrace a broader focus on all kinds of wellness, but especially mental wellness, mental health, self-care.

They are tying that in often with physical wellness, financial wellness, et cetera.

One of the members of my board, Dr. Tamara Duperval-Brownlee, is the chief health officer at Accenture.

It’s a new job that was created in the pandemic.

She’s actually a doctor by training and a health equity expert.

She’s not the chief medical officer.

They have one of those because they have hundreds of thousands of employees.

She’s really there to think about health in its broader context.

I was just on the phone with someone from Edward Jones who was saying they now have a new Wellness Center of Excellence, again, for their own staff, thinking about this set of issues.

So I think more and more people are understanding the connection between those two things.

Well, that makes me happy.

That’s what you’re feeling and sensing because that’s what I hope it becomes more and more.

Super hard transition.

This made more sense when we were talking about robots and empathy, but whatever, you know, changing it up.

Which is, you will know it since you listen, “That’s What You Said.”

But in this case, it’s “That’s What You Wrote.”

You wrote, “No one wants to get stuck in a chatbot doom loop, especially when they are dealing with money issues.”

I think that is also a really important point because I definitely know of myself calling the 1-800 numbers going like, “Give me, give me,” trying to get to a human.

What’s the hack?

When you call and you want to speak to an actual human and they keep, you just keep hitting zero and saying, “Agent, agent, agent.”

I know.

So, what’s even the hack when you’re dealing with the chatbot?

I guess you would be writing the same thing.

What advice do you have for a banker, credit union, or a fintech company that is playing around with chatbots but does not want to cause this issue for a customer or member?

Yeah.

So, I wrote that in the context of thinking about the fall from grace that the fintech community has had, both as part of fintech winter, but more recently downstream from Synapse and the failure of that banking-as-a-service program, and all those people waiting months and months to get tens of millions of dollars back.

If there was going to be one incident we could point to that would say, that was the end of trust in fintech, that would certainly be it.

I think that for a long time, because fintech was new and cool and we all love technology, they could get away with being less buttoned up on things like customer service.

I don’t mean they were seeking to do ill on purpose.

I just mean they might not have had as robust customer service, as an example.

Or they wanted to try cute things like tipping instead of just charging a fee.

Tipping is not a thing.

I don’t know how it became a thing.

Tipping is when someone gives you good service.

Tipping does not make any sense in the context of a financial product.

I want a button that says, “You tip me for this bad app.”

Right. Exactly.

Consumers are very confused by it according to our research.

So I really was calling on fintech to get back to the basics.

One of the things is, it’s not cute to get stuck in a chatbot doom loop.

When you hear people talk about the benefits of why they like fintech, there’s a very long list.

But then there are a bunch of things they don’t like about it, and that’s one of them.

Now, there are things they don’t like about their bank, but there are things that they do like.

I know I can walk in that branch if I absolutely need to talk to someone.

I can walk in there and get ahold of somebody.

Yeah.

I think that is really significant because you do run into these issues.

The phone number, the computer, the chat, it is not usually when you’re in a frustrated moment.

You want a quick response, and it doesn’t ever feel like it’s quick enough when you’re really freaked out.

But I want to go back to the Synapse thing because, yes, that was, I have to say, hopefully, well, I don’t want to predict.

It was bad.

It is bad.

I’m wondering, but it also feels like it’s revealing how hard it would be for a consumer just to know where their money is safe.

Do you have any thoughts on what’s a good way for someone to find out whether, hey, this is actually safe or this isn’t safe?

I don’t have an answer to the question.

I thought I would because I’ve studied a lot of consumer-facing fintechs and things around that.

I’ve had someone suggest Consumer Reports, but I still don’t think I’m aware of a good resource.

Are you aware of a good resource for someone who’s very confused about how to find a solid fintech app?

Unfortunately, I agree with you that the answer is not quite.

There are lots of different places to go if you’re trying to choose amongst various things, right?

Like, I’m in the market for a credit card, or I’m in the market for this kind of, or I think about the various marketplaces.

You like to think that they’ve done some level of vetting for who they choose to have on their platform.

Now, I don’t think that’s a guarantee.

Consumer Reports does fantastic work.

But in financial services, it tends to, again, be a narrow swath of product by product or by company.

There is no seal of approval.

What’s interesting is that the closest thing we had to that was the FDIC insurance logo, and that’s really at the center of the challenge.

Because it turns out that FDIC insurance doesn’t really kick in if the institution in the chain that failed is one that’s not your bank where the money was being held.

So, I actually think it’s a really interesting challenge that the FDIC and the regulators really need to deal with so that consumers can be making good choices.

It’s hard because ultimately the regulators don’t regulate these fintechs.

The CFPB does in many instances, although not all.

So there’s a little bit of a question of whose job is it right now.

I think this is going to be a very important thing to tackle in 2025, actually.

Yeah, I totally agree.

Let’s hope that it is tackled because it is very confusing.

It is a very confusing experience.

I wanted to talk about also, I saw that your upcoming conference, I think it’s in San Diego, had some mention of showing attendees people with money issues.

I think I read that.

Will you just tell me what the show-and-tell part of the...

Yes, thank you.

We do a big conference every year called EMERGE: Financial Health, and it’s kind of like the gathering of the financial health community.

It’ll be June 3rd through 5th in 2025 in San Diego.

I hope you’ll join us.

I’m not even going to get the exact tagline correct, so sorry to my marketing team.

Apologize in advance.

But the key theme is really hearing from consumer voices.

It really goes back to where we started the show around, we’ve got to be centering the person, the customer, individual.

The only way we can do that is by hearing from them directly.

I don’t believe that if you had asked someone 20 years ago, they would have said, “Oh yes, invent the iPhone please, Steve Jobs.”

I’m not expecting consumers to do our job.

But we can’t do our job if we don’t actually understand their lives, where they’re coming from, what they want, how they see the world, how they experience things.

That’s what we’re trying to bring forth in June, and I think we’ll do that in a variety of different ways.

Well, I’m excited for that.

It also makes me have a follow-up, which is, banks and credit unions always tend to say, “We listen to our customers.”

But this seems to suggest maybe there’s room for improvement, or there’s room for broadening one’s circle.

Am I interpreting that right?

What comes to mind is that show Undercover Boss.

Yes.

Where the CEO goes undercover as a worker in his or her own company.

I see this as the same thing in a way.

It’s not enough to run a focus group.

You’ve got to put yourself in the shoes.

You have to experience it as a customer.

When’s the last time a bank CEO sat down and tried to open a new account?

In a branch.

They visit branches all the time, and they have their minions behind them and with them.

How many times have they called their own call center to see what the experience is like as a user?

I think we need more of that.

I think that’s true across professions, by the way.

I don’t think this is unique to banking.

But I think it’s particularly important.

I agree with you.

This is just a quick aside.

At Bankrate, one of the things, we didn’t end up running this, but it was like, oh, we’re going to test how quick it is for me to open an account at a branch versus online or whatever.

I was like, I’m totally going to win.

You’re going to be surprised, but I’m going to win.

And I won.

I won because the person trying to apply online had some flags because of the geography of her phone or whatever.

I’m like, well, yep.

You don’t know these things until you test them out.

It’s a very interesting experience.

But I felt undercover even though I was going as myself.

Totally.

Back connecting this topic to the empathy issue you raised earlier, for years now we have run an experience called FinX.

It’s kind of like a cross between mystery shopping meets The Amazing Race, and it’s an empathy-building experience.

We take a group of people.

It could be an executive team, or it could be folks across an organization.

We put them in a neighborhood, and we give them a persona, and we give them a series of financial tasks to complete on their lunch hour, and we send them off.

Invariably, they come back surprised, frustrated, annoyed, angered.

Their eyes are just completely opened.

These are people who, in some cases, are the manufacturers or offerers of these products and services.

They’re the ones who have built them in the first place.

It never ceases to open people’s eyes and cause them to think differently.

We all need that.

Especially in this moment, in such a divided country, we have to be able to walk in someone else’s shoes.

We really have to find more ways to do that, get out of our own bubbles.

Yeah.

I love that.

We do have to get out of our own bubbles.

I had just one last question for you.

Before I do, any last words of, watch out for this, or where to find you, or something you’re following into next year?

I would encourage you to check us out at FinHealthNetwork.org.

We do a tremendous amount of research, and if you’re ever looking for data on what’s going on with consumers and their financial health, that’s the place to go.

In 2025, I think I’m really going to be looking for, what does financial regulation look like in this next era of governance?

I think everyone is likely to agree that it will mean less regulation.

Less is not always good.

Sometimes it can be. Sometimes it can’t be.

It really depends on the details.

I’ll be looking closely to see how far the pendulum swings back yet again.

Because regardless of where one thinks it should be, the swinging like this, that’s no way to run a regulatory system for any industry, but particularly for financial services companies, because it creates complete uncertainty.

Uncertainty inhibits innovation.

So, I really hope that wherever we’re going to land, we land there and we kind of stick there for a while.

Well, here’s to that.

Last question is just, what’s the image on your phone’s lock screen?

Good question.

I have to remind myself.

It’s a picture of my family.

Aw.

They’re from Chicago.

What’s yours?

Mine is a photo, yes.

My photo is very old, and it’s the shadows of myself with my dog walking up Griffith Park.

It was one of our first moments where he didn’t charge somebody, so it was a proud mother moment.

Oh, very nice. Very nice.

Good last question.

I’m going to steal that.

Yeah, steal that question.

Thanks so much for being on the show.

It’s a pleasure to reconnect with you and talk about, these are really heavy issues, but you bring delight to me today in talking about them.

So, thank you so much for joining us.

I feel the same way about you.

Thank you so much for having me.

Really appreciate it.

Okay, so one thing I learned in this conversation is that if AI pulls off empathy in financial moments, there are still pros and cons.

The good is potentially no one’s judging you, in theory.

The bad is potentially someone feeling like they trust this thing when it hasn’t really earned that trust.

Again, this is a wrap for 2024 for Money Isn’t Everything.

Thanks so much for being here with me.

We’ll kick off some new episodes starting in 2025.

But until then, catch me with fellow Cornerstone podcast hosts for GonzoBanker Awards Live.

It’s December 18th at 10 a.m. Pacific.

Come to find out some of our winners and stay for the banter.

See you then.