Transcript
Hi, welcome to Money Isn’t Everything. I’m Mary Wisniewski, Cornerstone Advisors editor-at-large and host of the show.
In today’s episode, there’s a change of schedule, and that’s because I wanted to talk about the wildfires here in California.
You’ll hear me speak today with Matthew Goldman, a fintech founder multiple times over. Now he heads and founded Totavi, a fintech product consultancy company that is based in Pasadena.
I live in Los Angeles, and today on the show we talk about the fires, some ways you can help if you wish, and we also get into card trends and what open banking can and maybe can’t do.
Here’s our conversation.
Well, hello, Matthew. Welcome to Money Isn’t Everything. Thank you so much for being on the show today.
Yeah, it’s my pleasure to be here. Thanks for having me.
No, it’s quite a moment in time.
We’re both in California, and I would say we’ve both been lucky.
This episode is dropping one week later, but we’re still in the thick of the fires and processing it emotionally.
We wanted to start there in the conversation.
So, Matthew, I don’t know if you wanted to kick it off with the experience you’ve been forced into.
Yeah.
I mean, it’s been terrifying.
I live in Pasadena on the west side, and my family is safe and my home is undamaged.
But the level of destruction and devastation in the community is really astounding.
We were evacuated for a few days in the middle of the night Tuesday night.
I grew up in the mountains of New Mexico, and when I was a senior in high school there was a huge forest fire.
The whole town was evacuated, and a big portion of it was lost.
So I’m pretty paranoid.
I’ve been using Watch Duty as a paid subscriber for years now.
I know everyone’s like, “What’s this new app?”
I’m like, “Oh, it’s my favorite. You can track all the fires.”
So we got prepared on Tuesday night when the fire started.
We checked our go bags and all that good stuff.
I was awake in the middle of the night when the police came on our street and told us to evacuate.
So, it’s very scary.
Very scary for my kids.
But we’re okay.
Now, I think the hard part is just beginning in many ways.
A lot of people have stepped up and donated too much stuff, and there are too many volunteers, and that’s awesome.
But the real work is going to be years long.
It’s going to be the people who are still helping in the long run that are going to make the really big difference.
Yeah, I’ve been thinking about that.
I definitely want to throw some ideas to listeners of ways that might be of use.
Just as backdrop for me, I’m in the Hollywood area, so I was closer to the Sunset Fire.
But that was contained relatively quickly, and I did leave for the night.
Matthew, I have had to evacuate before in New York City because of hurricanes, but this was the first fire situation.
I can see why you would have that deep paranoia, having experienced something before.
I do want to bring up, yeah, the help will be needed for a very long time.
People want to donate as soon as something happens, which is so wonderful, but to keep going at it.
Also, just know that people have lost the way they earn income and their homes.
That is not a problem that will be solved in the short term.
What are some resources you think are actually useful to, let’s say, fintech entrepreneurs or bankers and credit unions listening?
If they want to be helpful, what would you recommend?
Yeah.
I think, as probably people in finance know, cash is what really matters.
Personally, I’m a big believer in community-based donations.
I think it’s really interesting, the emergence of, it’s been years, but of GoFundMe and all the individual fundraisers.
There are a lot of interesting challenges there in terms of equity and distribution because people whose GoFundMes are raising a lot of money probably know people who have money.
I worry a lot about the people who aren’t part of that network who are deeply affected.
I think there are some really great broader organizations.
One that I’m particularly, we’re doing matching donations out of my consultancy for, is the Pasadena Community Foundation.
If you’re familiar with United Way, it’s sort of like a United Way in that it’s a nonprofit that funds other nonprofits, but it’s based here.
They have an Eaton Fire Relief Fund.
I’m sure there are similar things in the Palisades.
There are all these organizations doing all these things, and it’s awesome.
It’s almost overwhelming right now.
But it’s going to take years for people to get back into houses.
Even if your house didn’t burn down, if you’re in the zone you have to strip out your walls and replace things because of the smoke.
Kids aren’t back in school, and I feel really terrible for the kids.
I mean, they just went through COVID, and now there’s this, and just the interruptions.
I think cash, and making things like waiving payment fees.
If a bank wants to make a difference, they could waive their fees.
They could waive late fees or overdrafts.
Be proactive.
I heard Lululemon just gave everybody who lives in a ZIP code affected by the LA fires a $200 gift card, which is great.
They have good margins, so it’s probably not that expensive for them.
But I think that the biggest way a bank or a fintech, or whomever, can build their brand and help is to just proactively do stuff.
Don’t make people apply.
You know where these people live.
That’s a thing that banks have.
We know where people are.
They’re in a ZIP code.
Whether their house is destroyed or not, just waive their monthly fee.
Realize that maybe they’re not going to get their direct deposit because the job stopped.
Make it as easy as possible for them to just get that benefit, because it’s probably not really that expensive, and it will build that deeper relationship and serve the community.
Yeah.
I would definitely underscore that.
That seems like, I want to say the bare minimum, but sort of, you know what I mean.
That’s super important.
I’ll make sure I drop some of these links in the show notes if anyone wants specific recommendations of places to donate.
If anyone wants me to share someone’s GoFundMe profile, just let me know and I’ll add it to the show notes as well.
Matthew, I’m thinking a lot about this too.
I care a lot about financial health, and of course this is something that basically undoes someone’s financial health, even if they have money, let alone if they don’t.
This is such a big question with no obvious answer, but where does one start to rebuild?
How does one start thinking about financial health stuff when one of the worst things has happened?
Yeah.
It’s really amazing.
Again, even if you have insurance, home policies have huge deductibles on them typically, which maybe people aren’t really prepared for.
It might be five or ten thousand dollars on a home deductible.
A lot of folks will not be able to rebuild necessarily with the money that’s in their policy.
They might be underinsured.
I’ve seen a lot of really sad stories of people who had cash in their house.
Huge amounts.
One story in The New York Times, like $16,000.
Someone said they lost $40,000 in Treasury bills.
I don’t know why that’s in your house, but this is the thing.
People don’t trust banks or they’re not comfortable, and they’re doing these things and it’s digging that hole deeper.
I think getting that immediate cash assistance is important.
FEMA is giving immediate cash assistance to people.
Almost be greedy.
I think there’s an inclination to figure out, it’s very, I don’t know, American in a way, like, “I’m going to tough this out,” or, “I’m going to figure it out on my own.”
I think people should avail themselves of every resource possible because it’s going to be a longer, harder road.
Then really fight for themselves.
The other thing that I think is very concerning is the stories of gouging.
Yeah.
And scams.
And scams.
Unfortunately, disasters always bring out both the best and worst in people.
It’s a very extreme situation, and everyone’s under so much stress.
I think we all have to find ways to give ourselves and each other grace because everyone’s on edge and upset and mad.
Everyone’s mad at the situation and mad at whoever they think caused it or didn’t do a better job.
We have to try to acknowledge that whatever that is, it’s happened.
So how do we, as you said, build against it?
I think people might be inclined to run up a big bill on their credit card because it’s an easy source of cash.
But we know how interest works.
That’ll get more expensive.
So how can you just get folks some dollars that they can get a hotel room or get a new car so they can get to work, or find a new job?
I think a lot of people are very concerned about, especially folks on the lower end of the economic spectrum, losing work.
If you cleaned houses in Altadena, you might not have any customers anymore.
If you were working on a construction site in the Palisades, you might not have a job.
Maybe you live there and you also don’t have a place to live.
I think there’s this unfortunate perception that California is filled with rich people and the Palisades is filled with rich people.
The Palisades is filled with rich people, but not exclusively.
There are apartment buildings and small homes and people who lived in these homes for 50 years.
It really affects everyone.
We talk a lot about how people don’t have $500 to fix a flat tire or whatever, that’s the famous fintech story.
Magnify that by 100 and you have losing a house.
Yes.
Something else about the Palisades, it’s an older community too.
It’s just even hard to imagine, you’re in your 80s and your 90s.
Maybe you do still have money, but you don’t have time, really.
Yeah.
People maybe didn’t lose their home, but they don’t have utilities or it’s not occupiable right now.
Right.
It’s not as simple as you have a house or you don’t, or you can go back to your house or you can’t.
Even if your home survived and you’re surrounded by homes that didn’t survive, you can’t go back anytime soon.
When you do, it’ll be a construction zone.
Maybe you don’t want to.
It’s just so immensely disruptive to everything.
Yeah.
It’s hard to take in.
I did want to take a moment to say thank you to everyone who’s been reaching out.
It was a little hard to follow up at times.
I lost power for a little bit, but thank you.
It meant a lot.
I’m sure you were getting that too, Matthew.
Yeah.
I thought that was great, and I appreciate that most people let me just ignore them for a while, which is hard to do because they’re nervous.
We just fled.
We went to a hotel in Anaheim.
We went away from the air quality.
Anaheim has a lot of hotels for Disneyland.
We just, no one could do anything, right?
We just kind of all sat around and stared at screens and read fire updates and whatever.
It’s very hard to get back into the swing of things.
But also, people say, “Well, it’s weird because the restaurants are open in Old Pasadena, and people are going back to work.”
I’m like, well, not to not acknowledge it, but the economy needs to move forward.
Do the people at that restaurant, did they lose their apartment and they need income?
Stopping the economy doesn’t help either.
It’s a very weird, disconcerting, disconnected experience.
Today the sky is blue, and if you look out my backyard, I lost a bunch of branches but nothing major, and I had ash on my property and all that stuff, but I’ve cleaned up.
It looks fine.
We’re not fine.
The city isn’t fine.
But there are these snippets of fine, and it’s a very weird mental connection to be like, well, I still should go buy food or buy groceries or get my car fixed because those people depend on me spending my money to keep the whole thing going, even if maybe they’re staying in a hotel or a shelter right now, or sleeping on a friend’s couch.
Yeah.
It is surrealism to me.
Even, I had to take my dog to the vet.
Something came up.
Even that felt weird.
But then I’m like, okay, well, it still needs to get done, and it can get done, so it’s going to get done.
Hard transition, but I do want to talk about innovation and cards because you run a consultancy and specialize in fintech.
You’ve founded companies.
You founded a company that put all your cards in one place to decide which one to use to maximize rewards, Wallaby.
We do go back quite a ways because I believe we connected when the site was called Bank Innovation.
I’d be remiss to not also quiz you about interesting things going on in fintech.
I’m curious about several things, but one area is, what’s interesting in card perks these days?
Well, one thing I’ve been thinking about a lot is the transition of the economy to subscriptions everywhere.
Yeah.
Premium cards are a subscription of their own.
You pay an annual fee.
I think if you go back 20 years, there were very few people paying annual fees on credit cards.
It was sub-20% of the offers.
It was really Amex Platinum and maybe business traveler types.
Now they’re much more common, and the cards are becoming a lifestyle platform.
There’s this whole funny way of stacking it all together.
So bear with me.
This is real card nerd.
Super card nerd.
That’s a warning.
If you have an Amex Platinum, you can get Walmart+ for free, which is normally $13 a month.
You just charge it to your Amex Platinum, and then they rebate you the money.
If you have Walmart+, you get a bunch of other stuff.
You get a virtual telehealth vet service.
You get 25% off at Burger King.
You get, I think, I might get this one wrong, I think you get Paramount+, and maybe it’s Peacock.
I can’t keep them straight.
There’s this stacking of these benefits inside each other going on.
You can look at an Amex Platinum and be like, “Why would I pay $700 for a card?”
You’re like, well, if I’m going to do all these things, it’s actually a pretty good deal.
I think that’s really interesting because the card has moved beyond, this is a way to pay and maybe it has some perks that make sense, like a card-linked offer.
Use your card at Walmart and get 10% off.
That sounds very bank-like.
It’s related to the transaction.
But this other stuff, you could use your Amex Platinum for nothing except for these deals and save money.
I think that’s really interesting, the way the banks have tried to shift from just a part of your life into more of your life.
Now you’re like, well, if I cancel my Amex Platinum, and I’m picking on Amex just because, but Chase has deals like this and everyone else does too, you’d be losing all these other benefits.
I wonder, I mean, I have to think it’s got to still be a smaller slice of the population paying attention to all of that, right?
Or do you think it’s wider?
I think it is, but I think it’s been growing.
Back when we first met and I started Wallaby, at that point, I would imagine if you asked who knows about ThePointsGuy.com or reads it, you would have heard very few people.
I think there were maybe a million monthly visitors on that site.
I sold Wallaby to Bankrate, which you have worked at.
I have worked at.
Bankrate owned The Points Guy at the time that I sold Wallaby, which was a secret.
I actually was sworn to secrecy when I learned that by Bankrate.
Oh.
I left Bankrate after the Red Ventures acquisition years ago now, but it was doing, I don’t know, 10 or 20 million monthly unique visitors.
There’s been this growth of life hacking, travel hacking, this idea of, I’m going to get one over on the system.
People kind of hate banks.
I think that’s just a general perception.
So this idea that you’re taking advantage of Chase when you use your miles, I don’t think that’s true because Chase is very smart and they wouldn’t make money-losing products.
But people feel smart when they do it.
The Points Guy and other sites like that really feed into that.
So I think that has expanded the universe.
If you were to chart the number of people in Reddit for credit cards and Reddit for card churning, it’s through the roof.
I think there are still a bunch of people who don’t care, don’t get me wrong, using their debit card to buy stuff and don’t care.
But I think it has grown beyond.
We used to think of it as management consultants and business travelers were the only people who cared.
Now I think it’s very much a cultural phenomenon.
I agree with that.
It’s definitely like, I use this for my lifestyle.
Bilt being another example of, wow, did that win over a bunch of people.
The perks, you can sort of see, I almost view it, I don’t know if it’s the right comparison, but it’s almost like a glossy magazine.
This is your glamour card, if you fit this.
That’s what I’ve come to believe.
I do think it’s very much become, in certain circles, and maybe it’s the mass affluent more than anything else, but it’s a status symbol, right?
There was a joke when Chase Sapphire came on the scene, which was a huge turning point.
It was almost like, you get a bunch of Millennials and they go out to dinner, how many of them put down Chase Sapphires at the same time to pay the bill?
I would be one.
As would I.
It says I’m smart, I’m cool, I care about travel and dining.
There’s also, I think, this broader cultural thing about experiences over things.
Yes.
I don’t know.
I can experience things as kind of how I feel.
I guess I’m kind of materialistic.
I like to collect stuff a little bit.
But it’s like, oh, you’re cool if you go to concerts, if you go to shows, if you go out to dine.
I grew up very solidly middle class.
We didn’t go out to eat, and if we did, it was at McDonald’s on a road trip.
The whole idea of eating out frequently is really different now, I think.
The cards play into that.
You don’t have to have a Chase Sapphire, but if you don’t, people might wonder why you don’t and, like, do you know you’re missing out?
That’s really different.
Airport lounges everywhere.
I think it’s way more prevalent.
It’s this aspirational, experiential thing.
It’s totally fascinating to me because banks are normally considered, oh, it’s very boring.
Money goes in and money goes out, and sometimes interest is charged or earned or whatever.
But they’ve really cemented this by being part of the cultural conversation in a way I don’t think, if you went back 30, 40 years, everyone would have thought banks would be like that.
Yes, I agree.
I also agree with that.
You’re making me think because my last guest was from Bank of New Hampshire, and they happen to be issuing corn debit cards.
Of course, that’s because it will biodegrade better.
But do you even think the look and feel of the cards is part of the appeal, let alone rewards?
Yeah, absolutely.
You know what?
Metal cards are sort of stupid, and I love them.
They’re so expensive.
They are definitely stupid.
It’s funny.
The last company I started before the consultancy was a wine rewards credit card.
It was metal.
It was premium.
I spent, I love card design.
I’ve been doing card design for almost 20 years.
You can make really nice cards, and it really matters.
When I started my career, I worked at Green Dot, and we made reloadable prepaid cards, the predecessor to the neobank.
I was part of the team that helped launch the original Walmart prepaid Visa.
This was back when Walmart’s logo was the smiley face, and they were like, “Can you put the smiley face on the card as big as possible?”
We were like, “Hey, that’s cool, but how about no?”
Because we had this internal rule, and it’s called the date test.
Green Dot’s a lower-end brand, and we don’t want our customers to be ashamed of it.
We always said, if you’re paying for dinner on a Green Dot card, you have to be not embarrassed by our card design.
We got them to do this beautiful set of the Walmart stars in silver, and it was a very nice card.
It worked, right?
Again, the card says something about you.
People love metal cards, even though half the time they just tap their phone now.
It’s very silly.
That is very silly.
But I love that date test thing because now you’re making me think.
I think it was my dental hygienist who was talking about, she wasn’t mocking this guy, but maybe a little, he was at dinner and he had put down the coupon for the two-for-one special kind of thing.
He wasn’t embarrassed.
He’s getting a deal.
Good for him.
But yeah, you do have to think about these psychological elements too.
Absolutely.
That used to be part of the argument in favor of card-linked offers when they first came out.
No one knows you’re getting a deal.
If you’re getting 20% off, you can be like, “Hey, you know, date of mine, let’s go to the steakhouse. I’m just going to pay.”
You don’t know I’m saving money.
I’m a smart consumer.
It doesn’t really matter to your date, but if you go to the steakhouse and you bring out a coupon, you might get looked at like it’s not very classy.
It’s kind of a funny thing because we all love to save money, so it should be more acceptable.
But I think there is this really interesting factor of how card payments and digitization of things have enabled experiences.
Not forgetting your coupon because you just clicked it on your app and it automatically saved, and things.
But the metal card, I have a ton of metal cards.
Every client I talk to, one of the very first questions when we’re building card programs is, “Should I get a metal card?”
I have to be like, “Well, how much money do you want to spend?”
They cost six times more per card.
Would you like to do that?
Take Apple.
The Apple Card costs $30 to produce.
It goes in a beautiful box, and then you never use it.
The Apple Card is designed only to be used on Apple Pay, otherwise you don’t even earn as much cash back.
But they’re Apple and they wanted it to look cool, so it does.
Right.
Because it has to align with the brand.
I got shoes not too long ago, and I was like, hey, I just love the images they’re using because it’s more about the woman versus the man.
I often find when it’s like a woman’s thing, they’re showcasing how a man’s like, “Oh, what a beautiful woman.”
But I love it when it’s like, hey, now I’m this boss.
That’s the imagery that works for me.
But they sent a shower cap, a cute shower cap, along, and I was like, oh no, I am a sucker.
I am a sucker.
Maybe not for metal cards, but my own version of it.
Yeah.
I think there’s a lot.
Humans, I don’t know, I’m not an anthropologist, but we’re all very status-driven at some level.
It’s probably innately built into our nature.
All these little signals are our little status things around fancy cards or getting into an airport lounge or access to events.
A lot of cards do that.
If you have an Amex, there are a bunch of venues where there’s a separate entrance line.
At the Hollywood Bowl, they have one of these.
So if you didn’t realize that, there’s a tip for you.
Any Amex network-issued card, there’s a little line in the back.
You just tap it, and they verify it’s valid.
It doesn’t cost you anything to go in.
At SoFi Stadium, SoFi cardholders have a special entrance, not surprisingly.
Again, it’s this idea of, “Hey, you’re getting something special because you bank with us. Keep banking with us because we get you access.”
Okay, so there’s one segment on the show.
I’m about to do it, but it’s going to take us in, and we’re running on time, but it’s going to take us into open banking.
It’s “That’s What You Said,” but in this case, this is what you wrote.
It was in reference to open banking.
You wrote, “An open banking standard itself doesn’t make someone leave Chase. It takes a better banking product to do so.”
Let’s dive into that.
Also, I know the CFPB is under attack right now, and what will happen to 1033, nobody seems to know.
But let’s unpack that sentence a bit, what you mean exactly.
Yeah, thank you.
We’ve been talking about open banking forever, 10-plus years, and the data around it.
Talk about suspense.
Yeah, talk about suspense.
A lot of great fintech products depend on it.
My product, Wallaby, depended on open banking data.
How could we tell you how to optimize your spending if we didn’t know what your spending was?
We were not a bank.
We needed to ingest that data programmatically.
The banks have always traditionally had this opinion of, if we let people have access to our data, they’ll steal our customers.
Then a few months ago, during this rulemaking for 1033, PNC came out and they were kind of like, “We love it because we’re going to steal everyone’s customers.”
The community banks are going to die because we can help people move accounts more easily.
I agree that open banking makes moving accounts easier.
You have these tools like Knot and other card switchers, or Atomic and payroll switchers, who use these APIs to make the very painful process of changing your direct deposits and changing your bill pay and changing your automatic subscriptions to new cards easier.
That is a lot of work.
But you have to decide you even want to do that.
You can somewhat tell how hard it is because of how much money banks still dangle in front of people.
It’s not a free toaster anymore, as the joke goes.
But I get these offers, Chase is like, “We’ll give you $500 if you move your bank account.”
$500 is a lot of money.
I’m like, I don’t know if that’s worth moving my bank account for $500.
That’s how painful it is.
If you have a truly better product, you have a great mobile app and you have all this great access, or to tie it back to our original topic, if a local bank here has a solid product and shows that they’re going to stand up for the community in a time of need, they might actually win people.
Open banking might help them win those folks, if you focus on the community.
But just it existing and the data moving around doesn’t actually do anything because consumers are fundamentally sort of lazy about banking.
It’s a lot of work to make these shifts, and I just don’t think they’re going to want to.
Yeah.
Because I think the evidence is, there’s so much evidence, stat after stat.
People just stay with their bank, and then they add on other accounts as they wish.
I think one profound thing that we all saw was that, in Wells Fargo opening the phony accounts, those people didn’t necessarily drop that bank.
Yeah.
Even when the bank is committing fraud and it’s affecting you directly, you might not even move your money because of the perceived work.
Sometimes it is a lot of work.
It’s very rare for me to set up a new account because I’m like, this is tedious, tedious.
It’s painful.
I’ve been using the same checking account for 20-plus years.
I know I’m supposed to be a cool fintech person.
I do have like 30 credit cards, so that’s a different story.
I was going to say, how many credit cards do you have?
I actually don’t know.
Famously, I think it’s 30.
But the last time I had to change bank accounts was when I moved to Los Angeles in an era before we had truly national banking networks.
I had grown up banking in a community bank with two branches.
So I obviously had to change.
I didn’t want to use foreign ATMs or mail my checks in or whatever, it was before remote deposit.
I went with a big bank that I could get ATMs at a lot of places and just stuck.
Is it the best experience?
No.
Is it fine?
Yes.
Therefore, I’m just going to stick with it.
I can’t imagine how hard it would be to move everything.
It would take months.
Unless they got really terrible, then I think it would be fine.
I think that’s also interesting for the fintechs who are capturing customers early on.
You think about Chime or Current, they’re capturing younger customers.
How do they expand their product categories so that they may keep those folks?
Because if you only have that one product, it is easier to move somewhere else.
Right.
If you just have checking versus a loan or something else.
Right.
That will be the story to watch because I think it really remains to be seen.
I have one last question for you, but before that, I’ll open it up to you because I know you have your own newsletter.
How should people follow you, interact with you, or any other final thoughts on fintech or fires?
Yeah.
My newsletter is Cards for the Win.
It’s CardsFTW.com.
There’s a free subscription, so I encourage people, if you want to read really nerdy credit card stuff every week, I’m your guy.
Then if you want to work with me, I’m on LinkedIn or we’re at Totavi.com.
We love helping companies of all sizes build fintech products.
We’re very hands-on, digging in and working with software developers.
Yeah.
Well, Matthew, thanks so much for being on the show.
But before we end this conversation, what is the photo on your phone’s lock screen?
Oh.
It’s this painting.
Well, it’s actually a linocut.
I know there’s a reflection on it, but it’s a vintage Visa, a vintage Amex, and a vintage Mastercard.
I actually own these cards.
They’re in my card collection, and I commissioned this linocut when I made this office design.
I have that on my phone screen.
Okay, there’s the founder in you.
Yeah.
That makes a lot of sense.
That’s cool.
That’s really cool.
Thank you.
Well, thanks so much for the time.
Thanks for being vulnerable with me for this conversation.
Despite what is happening, it is truly a pleasure to be in conversation with you.
So, thank you.
It’s my pleasure.
Okay, so this episode means a lot to me because of the stakes.
But one thing I learned today was super unexpected, and it’s about the kind of payment cards that would make someone embarrassed to use on a date.
I’m just going to go ahead and say, for me, I would be embarrassed to pay with a crypto debit card, for example.
Two weeks from now, I’m in conversation with Ryan Falvey, a co-founder and managing director at Restive Ventures, which invests in early-stage fintech companies.
We’re exploring fintech trends in the year of a very different political environment.
See you then.
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