Payments On Fire

Financial Inclusion

Episode 157 – Experts Deep Dive on Financial Health and Inclusion

As part of Glenbrook’s ongoing efforts to highlight new approaches to financial inclusion in the US, Erin McCune and Justin Pituch recently spoke with a panel of expert practitioners in the financial health space: Kimberley Gartner, Arjan Schutte, and Ryan Falvey.

Topics discussed include:

  • History of the financial health space
  • Current trends in financial health
  • Key innovations helping financially vulnerable consumers
  • Advice for financial health practitioners in the payments world

Meet the Panelists

Previously, we’ve written about how financial wellbeing is measured in the US, and what fintech companies are doing to improve outcomes for low income consumers. In this podcast, we bring together a trio of experts to share their perspectives on the state of the financial health space. All three worked at the Financial Health Network early in their careers, and have since moved on to exciting new ventures. Kimberley is Chief Growth Officer at Canary, a company that helps businesses establish emergency relief funds for their employees. Arjan and Ryan both work in the venture capital space; Arjan leads Core Innovation Capital and Ryan heads up Financial Venture Studio.

What’s Changed?

All three panelists have been active in the world of financial health since the early 2000s, and naturally we wanted to know what’s changed since those early days. Ryan and Arjan both worked at ShoreBank, a Chicago-based community development bank. The bank spun out the Center for Financial Services Innovation, which would eventually become the Financial Health Network. In an era before smartphones, API calls, and open banking, there was a greater focus on education and community investment. But education can only do so much when harmful behaviors are incentivized by financial services providers. And community development banks, with their deep ties to specific neighborhoods, are inherently unable to scale. ShoreBank folded in 2010.

Where Are We Going?

Since then, new approaches have transformed financial health. Arjan noted that the scope of financial health has expanded to include more Americans who may not appear financially vulnerable on the surface, but are actually living paycheck to paycheck with no emergency funds. Ryan pointed out that fintech firms are disrupting traditional financial services paradigms by placing greater emphasis on the value of information than on capital. In a way, this is creating a more democratic environment in financial services by changing incentives for providers in a way that deemphasizes attracting wealthy consumers. Additionally, Kimberley pointed out that corporations are increasingly recognizing the needs of their employees and stepping up to help them through hard times.

Other trends on our radar may only be fleeting: for example, despite some interest from lawmakers in DC and California, our panelists aren’t particularly keen on postal banking. In an age of increasing digitization, turning post offices into bank branches doesn’t make a whole lot of sense. Your phone is the new bank branch, and the vast majority of Americans have smartphones in 2021.

What Do Payments Professionals Need to Know?

This is all interesting history and context, but we wanted to make sure our panelists left us with tangible next steps for our payments professional listeners. Kimberley highlights the value of innovation in faster payments; financial health improves when consumers have access to funds right when they need them. She also notes that payments professionals should understand the everyday financial lives of American consumers and recommends reading Jonathan Morduch and Rachel Schneider’s The Financial Diaries. Ryan advocates for keeping an open mind and disrupting entrenched practices. And Arjan wants us to create financial products that aren’t just frictionless, but aligned with our better selves.

We’re hopeful that folks in the financial health space are pushing the industry in the right direction, and we’re excited to see what Kimberley, Arjan, Ryan, and others like them bring to the market next.

 

Erin McCune:
Welcome. We appreciate you taking the time today to explore this important topic. My name is Erin McCune, and I’m a partner at Glenbrook. My colleague, Justin Pituch and I are thrilled to speak with Kimberly Gartner, Arjan Schutte and Ryan Falvey about efforts to make financial services in the United States, more accessible and more equitable. This is a reunion of sorts, as the three of them worked together at CFSI, now known as the Financial Health Network, earlier in their careers. And we’re thrilled to host their reunion.

Erin McCune:
This discussion is just one element of Glenbrook’s ongoing examination and exploration of payment and financial solutions for traditionally underserved consumers. As our team reflected on inequality in the United States, we recognized somewhat uncomfortably that although we do a significant amount of work in the developing world to foster financial inclusion, Glenbrook has had very little focus on domestic solutions for underserved and unbanked consumers in the United States. This discussion today is part of our effort to remedy that. Justin is going to lead much of the discussion, but before we get underway, I’m going to ask each of our panelists to introduce themselves and share a little bit of how they came to focus on this segment of the consumer population for their financial services career. And I’m going to start with Kimberly Gartner.

Kimberly Gartner:
Hi there, I’m Kimberly Gartner and I am a co-founder and chief growth officer at Canary. I’ve been working in financial health for the last 20 years, although we haven’t always called it that. We’ve talked about responsible credit and an underbanked consumers, and more recently financial health. I co-founded Canary with three of the financial health network alums, because we’ve really seen the importance of financial services in people’s lives, and we recognize people just don’t always have the money they need. So we’re focused on that innovation and payments. So how can we help get people the money they need at the time they need it. So Canary as an emergency cash platform grants circle, that provides emergency cash grants to people to help them with dignity, receive the money they need at the time they need it.

Erin McCune:
Thanks, Kimberly. Ryan.

Ryan Falvey:
Hi, and thanks for having me on today. I appreciate it. So my name is Ryan Falvey, although my career, going back and forth between financial services and technology and financial inclusion issues. I originally started after graduate school at an organization called ShoreBank International back in 2007. I think actually how I crossed paths with Arjan early on is, it was owned by ShoreBank, which was a bank spun out CFSI later too, and spent a lot of time in emerging markets looking at how we can improve mobile banking and mobile financial services. I’ve worked probably at 50 different countries. And then I moved back to the U.S. and I had a role at Silicon Valley Bank, on their payments team there, and was shocked to see that the U.S. had almost as much of a problem in how this ecosystem worked to support most consumers, that many emerging markets had.

Ryan Falvey:
I was always struck that when you’d launch a new mobile banking platform in an emerging market, the marketing challenge is like, why banking? You’d have to explain what the utility of banking, but in the U.S. that mean so much trust had been destroyed over the last, I don’t know, 100 years, that both consumers need to be convinced that they should even trust the bank. And I think that this really created huge opportunities for new insurance to come into this space and really shake things up. And so, I was at CFSI for a number of years, until it was called the Financial Solutions Lab, where I started my investing career and invested in a number of really interesting, exciting companies. And then I started this business, the Financial Venture Studio early 2018. And while we’re not an impact focused investor, we certainly spend a lot of time on consumer and small business and other parts of the market that continue to be deeply underserved and under-invested in.

Erin McCune:
Thank you. Arjan.

Arjan Schutte:
Thanks for having me. And I’m glad you’re doing this. I remember having conversations with you Erin years ago when we’d meet up on the conference floors to talk about inclusion. And so I’m glad that you guys are becoming more curious and more engaged in this part of the world. So, I discovered this by virtue of reading a book that someone gave me in 2002 about a guy named Muhammad Yunus, who was making, $50 loans to the poorest people on the planet with 1% default rates. And I thought that was just a mind-blowingly exciting adventure that I wanted to replicate in some way. I discovered that micro-finance doesn’t really work so well in the United States for a variety of reasons. And so then I was shopping around for other folks who were doing this, and that found my way to a bunch of hippie bankers in the south side of Chicago that Ryan referenced and they were spinning up this thing, CFSI now the Financial Health Network.

Arjan Schutte:
And I met up with Jennifer and that was really my learning curve in the financial services world. I’ve been in the education space prior to that. Yeah, that’s how I came to this. Then Core spun off of CFSI about a decade ago, a little over a decade ago, and we’re in our third fund and we are very much mission driven and believe that we can make venture level returns. We are making venture level returns, investing in good for you financial services, with a focus on low moderate income people and really trying to make the dollar go further for them and protect them from bumps in the road and help them create more financial security, financial health.

Justin Pituch:
Thank you for those introductions everyone. We want to get started with a general question about how you apply the principles of financial health in your career. And maybe we can start there with Kimberly.

Kimberly Gartner:
Sure. Some of the important parts of financial health are about financial stability, having financial stability and being able to access opportunity. And so when we think about what happens in people’s lives, there’s moments in people’s lives where they just come up short. The car breaks down, there’s a medical issue, the pandemic we know really focused attention on this, but the issues that were there, 60% of Americans, they have a financial shock each year, and more than half of them find it difficult to cope a year later. Those issues were there in 2019, there’ll be there in 2023.

Kimberly Gartner:
And so we really think about how can we help people at those moments of need? How can we help prevent that downward spiral, is really critical. And so people have financial challenges and financial needs and Canary exists to help people get cash at those moments, cash grants through employers and others, to be able to meet their needs. We also know Americans are incredibly generous. So we have American’s financial needs. We have the challenges of costs of transportation and housing, and even food going up faster than wages on an inflation adjusted basis. And we’ve got this tremendous generosity. Americans give away huge amounts of money every year. So we focus on how can we help take in that generosity and perceive some of those cash contributions and help give financial grants to people at moments of need.

Justin Pituch:
Arjan or Ryan, do you want to add onto that in terms of your own careers or?

Arjan Schutte:
Sure. For me, it really started around a need. I was so shocked how many people are financially unhealthy or in our earlier mission and lexicon on an underbanked. Honestly, it still blows my mind that in the richest country on the planet, it’s not just the very poor, but it is really a mass poor and easily double digit percentages of our population who under sample banks and over sample very expensive alternatives. I think there’s all kinds of opportunity for payments innovation. We’ve seen a ton. There’s so much more to be done. And I think for people to just appreciate how big of a segment that is and not consider that just other folks, has been a real, I think, driver for what we’ve done. And a lot of the founders that we back are similar stories. There are people who kind of discover the fact that they’re super lucky. We’re all close, whether it’s our brother or sister or people who work for us or even for whom we work, who are much more financially fragile than we think until something happens.

Ryan Falvey:
Yeah. I think those are both great, great answers. We don’t have an explicit lens that look through or try to hold our companies or investments to metrics around financial health. I think what’s interesting about thinking about products through the lens of financial health this would be under under-banked consumers is that it focuses your mind on outcomes. And so to Arjan’s point, if you’re looking at a company that might help people save, or maybe speeds up payments in a way that reduces the amount of fees that they’re paying or improves their liquidity, it’s much easier to look at that and say, “Okay, I can see how that’s having a positive outcome on the underlying consumers,” that helps you to focus your thinking, I think, and focus how you can look at businesses and products in a way that’s probably more constructive than some of the earlier mental models we were using to think about the challenges facing many Americans.

Erin McCune:
Let me dig into that a little bit. Each of you in your answers are choosing your words carefully and you have said, “Oh, we used to say under-banked, we used to say underserved. And now we’re, we’re gravitating toward financial health or good solutions.” Can you help characterize for those of us that are outside or new to this segment of the market, how this notion and how the approaches have evolved over time. And what do you think is significant about how things are shifting and where they are today?

Ryan Falvey:
So, if we we’re saying the language under-banked, well, solution’s pretty obvious. Get more people banked. And then that leads you problem that a lot of those products suck and actually harmful to consumers. And so they’re under-banked or they’re miss-banked, you look for some other number that you’ve identified to it. The reality is, overbanking yeah, they’re just being ripped off, or just completely neglected.

Ryan Falvey:
And so if you’re saying like, “Hey, I need to think about how can I build a product or think about a product that’s going to have an outcome for a consumer or a small business that’s helpful to them?” The financial health lens is actually more useful than doing that, than embedding some broader policy mandate into the discussion. And so I think one of the reasons we’re all choosing our words probably careful is, we all view this quite differently. Probably the strength of that way of thinking about it is it creates a lot of flexibility and it’s easy to embed into a lot of different contexts. The weaknesses that’s a little more vague, and so it takes a lot more explaining.

Erin McCune:
Arjan, I see you jumping in there. Go.

Arjan Schutte:
For me, honestly I think it’s been tagging along with Jennifer Tescher’s lexicon. I wasn’t a fan of the an underbanked lingo. She really promoted it and I was clearly wrong because it really struck a nerve. And I think for me, like the first aha was like, “Gosh, how many people don’t use a bank?” Part of my learning curve was like, well, maybe a bank isn’t the panacea to all people and B, it’s not just people who are on an underbanked that are financially vulnerable and warrant a lot of time and attention. And in fact I think on an underbanked, Lexicon A, is not aspirational, no one who is that aspires to be that, or feels addressed if you talk about them that way, it’s a bit of an industry jargon versus financial health is more aspirational. We should all aspire to greater financial health.

Arjan Schutte:
In my own journey, the big aha… And I was also poo poo in financial health, honestly, and Jennifer, was like, “No, it really is about.” And I think she was right again, because every startup that comes to my door is a financial health startup, everyone is crazy. So I’m never betting against Jennifer and her memes anymore. But for me, the aha was really like, “Gosh, it’s not just poor people who are poorly served.” And in 2015, the Atlantic ran that story. And if you remember the cover, it was this guy with a paper bag over his head.

Erin McCune:
Yeah.

Arjan Schutte:
And the theme was basically, we’re all asset rich and liquidity poor and people who you see with a BMW parked outside of a McMansion, can be basically on the verge of financial ruin in a heartbeat.

Erin McCune:
Right. Literally living paycheck to paycheck, it’s a larger paycheck, but they’re living close to the edge of what they can afford.

Arjan Schutte:
Yeah. So, we basically expanded our journey to think about a broader set of consumers. I agree with Ryan, it’s a little dilutive in our case, in Corx’s case, we’ve really tried to double down with the observation that cheaper, better financial services are always part of the problem. What most people need much more is just more income. We can come to that later.

Justin Pituch:
So, that’s a bit pessimistic Arjan, but I think that there is a great deal of optimism out in the market. There’s growing attention to this issue and there are better and better solutions becoming available to more and more consumers. So I think that maybe it would make sense to talk about what the important forces that are affecting financial in the U.S. are today and whether or not those make you more optimistic about the future of financial health, or if they leave you feeling the same way that you felt 10 years ago.

Arjan Schutte:
I don’t feel pessimistic, but I appreciate you flagging that, maybe I am. I think the fact that every financial services company just about that, I can think of whether large or small focus on financial health is a real win and reason for optimism. And I think technology in general is a force for good. The March of software is not positive for society. Although I will point out that a lion’s share of the financial efficiencies that have been gained have not accrued to the end user, especially lower income end-user, so lower cogs, more commercial efficiencies, but that March will continue and the consumer will end up with it. I think there’s a ton of reason for optimism in examples like the times of the world who are seeing insanely high evaluations and getting a lot of time and attention and awareness for basically serving on an underbanked consumer. And so I think big aspirational models like that bring a ton of entrepreneurial energy and frankly have a lot of the large incumbents take another look at their efforts to double down and serve different consumers than they’ve served traditionally.

Justin Pituch:
Thanks, Arjan. Ryan, you’re really close to this space. So do you want to talk a little bit about some of the most interesting technology trends that you’re seeing in terms of impact specific technology, but technology that serves this particular consumer segment?

Ryan Falvey:
Yeah. To Arjan’s point, I think I’m pretty optimistic about it. I think large part, you can be optimistic because you do have a significance. You have new entrants coming in and they’ve gone from a novelty, I think from the incumbents to more of an existential threat, just over the last two years. Even looking to the private market companies like Chime, one of our portfolio companies, Dave announced that they’re going to go public yesterday and they’re helping consumers avoid overdraft fees. But then you look at two of the biggest financial service companies right now are Square and PayPal, which are very clearly, many of their users are as we started out serving underserved groups and I think threatening some of the core businesses of the incumbents. Where we’re really looking at and excited about is this desegregation of information from Capital.

Ryan Falvey:
And so if you think about what financial services firms have traditionally done, is they’ve managed information, they manage Capital and they manage the regulators associated with that trade. And increasingly we’re seeing a lot of startups to be able to dis-aggregate that information management from the Capital management. And that’s going to lead to good outcomes generally for people who have less capital. If you’re trying to manage Capital, you care about rich people. You don’t really care about anyone that’s not rich because money is not evenly distributed, but information is a lot more evenly distributed. So if you’re looking at, if you’re in a business of trying to manage information and run it, think about how you can make a little bit of money off of every single interaction. That’s going to lead to products that are just going to be a lot more helpful to more people. And I think that that broad trend, the cause, that’s a technology trend at the core of a lot of these new innovations and new products we’re seeing.

Justin Pituch:
Cool. I think that that speaks a lot to what’s happening in the FinTech space. And we’ve talked to a bit about what’s happening with incumbents in terms of financial institutions. Kimberly, it would be great to hear from you in terms of the attention that we’re seeing on financial inclusion from Corporate America. So, what are corporations doing to promote financial inclusion, and what’s motivation?

Kimberly Gartner:
Yeah. A couple things, one, I think we need to differentiate from financial inclusion and from financial health. And so I think we can go down that perspective. When I think about financial health, I’ll amplify, what Ryan and Arjan were saying. Jennifer Tasha and the financial health network have done a tremendous job of focusing financial health. That language, that commitment, the focus on measurement and outcomes. And we’re seeing so many companies adopting that in terms of how they think about the development of their products and services. And I do think it’s noteworthy that so many FinTechs are positioning themselves as financial health companies. There’s a real understanding of the value in helping Americans improve their financial lives, and how that’s also good for business. I think it’s also the right time for Glenbrook to do more domestically. When we started the consulting practice at CFSI back in the day, it was all about helping understand that there’s an under-banked consumers in the U.S. and companies can serve them profitably and well.

Kimberly Gartner:
And I recall the board is saying at the time, “Some other payments group 10 years or so from now is going to take this up.” So I actually think it’s the success of that work that you are picking it up. And we know that an issue isn’t solved in 10 years. So the fact that there’s a real need for Glenbrook to be focusing on this, I think is really critical. And I would encourage you and companies to really think about financial health and the outcomes for people they’re serving, as you continue to do your payments work and the new products and services development. I think to that end, it’s really understanding people’s financial lives. So I’d also recommend Rachel Schneider’s, The Financial Diaries book. And that’s really part of Canary’s founding is, looking at that financial diaries and what we understand about people’s lives, how can we help improve people’s lives in the U.S. and around the world?

Kimberly Gartner:
And so when we think about companies, they increasingly have a focus on financial health for their products and services, increasingly they’re looking at their employees as well. So companies have been focused on wellness for years, and they’ve had gym memberships and increasingly headspace. It seems like every company I talked to is just launched a new headspace program for mental health and wellness. Increasingly companies are saying, “We need to improve the financial health of our employees,” and one of the strategies they do for that is to help provide emergency cash grants at times of need. So I think it’s a combination of looking internally and externally, and I’ll just share one more anecdote. We’ve had a couple of financial services companies we started working with recently, and they really been motivated from a corporate social responsibility perspective. We should offer this benefit. We’re a financial services company. We’re a bank, or we’re a credit union, or we’re a payments company.

Kimberly Gartner:
We’re going to have really low usage. People in these payments intuitions have been surprised by the number of people in their company who apply for emergency hardships. They apply for cash grants. And when they get the grants, they tell us they get breathing room. They feel supported by their employers. They’re avoiding eviction, they’re avoiding late fees. So, and the other thing they tell us that happened before they get the grants is, they had to go without food. The food insecurity in the country, and for people in so many of these countries, I think continues to be really… The pandemic helped focus attention on there. But I guess my point is saying that so many people in the U.S. have financial challenges. And so whether you’re working at a bank or whether you’re working in a healthcare system, these needs apply. So I think it’s really great as companies are looking externally about products and services, to also look internally at their employees as well.

Erin McCune:
Kimberly, is there a discomfort on the part of businesses that by offering these solutions, they may acknowledge that perhaps they’re not compensating their employees well enough? Am I touching a third rail here? I just want us to talk about some of the hard things. And I think companies may be ambivalent or anxious about that. And I want to talk about it.

Kimberly Gartner:
No, I think that’s a really important point. And we hear that a lot, we talk about that a lot. We worry about that. And so I think there probably are some industries that need to look at their economic models. We know that the wages for executives and the wages for workers, there’s a real gap there, and there’s a real issue. And so there are some systemic issues as well, when we look in the healthcare space, how reimbursements are provided, what the business models look like, that really impact what people can pay their workers.

Kimberly Gartner:
So, we believe financial health solutions operate best in the context of a quality job, a good job with good benefits, reasonable hours, the opportunity potentially to earn overtime or bonuses. And still people have challenges in their financial lives. Your spouse gets laid off, you get cancer, you have a hurricane hit. There are things happen in people’s financial lives [crosstalk 00:22:37] said, these aren’t just poor people or people who aren’t managing their money well, these can be people making six figures. And so there is a real, I think structural issue in the country we need to be aware of and to address, and there’s real solutions to help in the short term and the long-term.

Erin McCune:
Thank you.

Justin Pituch:
Well, we’ve talked about FinTechs, we’ve talked about banks, we’ve talked about corporations. The one thing that’s the elephant in the room at this point in the conversation is [crosstalk 00:23:06]. Yeah, exactly. And that’s also a place where you’ve seen a growing amount of interest, or we’re seeing people propose postal banking again, which has been dead as a concept in the U.S. for the past 50 years. And we’re seeing the proposal of public banking system in California as well, and California setting up its own mini CFPB. Is that also a place that we’re optimistic that regulation can help improve financial health in America, or is that something where it’s a little bit more of a mixed bag?

Arjan Schutte:
Mixed bag. I think the idea of postal bank is a terrible, and I think the idea of the government in the distribution role for financial services, I’m not a fan of, and I say that as a Democrat, by the way. So I’m not pathologically opposed to everything government at all, but I think all of those are relatively short worked ideas. There’s a ton of opportunity and a ton of need, of course, for regulation, financial services is complex. And in many cases more complex than I think is reasonable for someone to understand. I think California’s CFPB equivalent was really born from a craning of CFPB hands-off role. I imagine that with a properly staffed and supported CFPB, that’s less important. And I think it’s better to leave that at a federal level rather than have states go back to more power, to more states, in a world that is increasingly in need of national solutions.

Arjan Schutte:
I was also disappointed by the repeal of the true lender rule yesterday. Was that yesterday or two days ago? Whenever? Which makes it harder for FinTechs to allow to be innovative around lending. And I understand the reasons for it, but I think there are so many old school assumptions about how to protect consumers that I don’t necessarily think is that constructive.

Ryan Falvey:
I agree with everything Arjan just said. Right. I think that one of the things is you have to recognize when you look at some of these solutions, is that for the most part, most of the problems that face consumers are born out of the traditional banking system and the regulators are much closer to that system and policymakers, then they aren’t. And so I think the more we look at these distribution solutions, like the postal banking is one of the most idiotic ideas ever come across. I think the more that they can do to make it easier for new interests to learn the rules and the systems and learn about what they should be doing, what they should not be doing. You could scrap the true lender rule. That’s fine. But being able to communicate well, if you are a new entrant, how could you let? What are the different paths in, on doing that? Because, look at how the PVP program was a disaster, but it was also a good thing because if you look at the actual really small businesses that got these loans, they were enabled by FinTech companies.

Ryan Falvey:
And so there’s certainly going to be fraud and there’s ways these could have been done better. If that ecosystem did not exist, we all know how those loans would have been distributed. It would have distributed the best customers and the biggest bank so there’d been nothing left for those who didn’t have accounts there.

Kimberly Gartner:
Yeah. I think we need to double down on what Ryan was saying about the racist institutions and what that means. We know that systemic inequalities are a significant issue around financial inclusion and financial health. We know unemployment is incredibly high level and the income loss is disproportionately affecting people of color and women. We know that whites household wealth is seven to 10 times that of black and Latino households. When you think about being able to have three months of savings, 47% of whites do. 73% of black, 70% of Latinos do not have savings to cover three months. Do not have savings to come in three months. So there’s real racial differences in our wealth, in our savings. And so I think we really need to grapple with that as we think about financial inclusion and financial health.

Erin McCune:
How do you see solutions responding to that? Nevermind the postal bank. We’re not going there, but what do we see in the market that is focusing on specific constituents, specific groups of people in order to address those issues of inequality?

Kimberly Gartner:
I think we really need to focus more on that and we need to think about it. We like to think that helping get cash grants to people helps all people. And that there’s likely a greater proportion of people who are black and Latino who are accessing our grants. I don’t know that data in front of me right now to speak to it, but it’s broader than that. It’s really looking at those impacts. And I know disparate impact and disparate outcomes are really challenging things for financial institutions to grapple with. And so being able to look at the systemic inequalities, look at the products and services, really be clear about what’s helping people in disproportionate ways and be able to focus attention on that. I also know when we think about what is getting funding to be able to help solutions. We know people of color, we know women have a harder time raising equity for new solutions. So how can we help drive investment to help put focus for populations, for services, for solutions that meet the issues we care about?

Ryan Falvey:
Yeah. I think there’s limits obviously to technology lead. You’re talking about significant systemic issues here that I think go beyond simply new FinTech solutions and stuff. All that being said, I do think you do see some new ideas coming out of this space. There’s been a lot of innovation on home ownership, which I think has helped open up the door to more borrowers and particularly borrowers from communities of color or don’t have the down payment necessarily to make these payments. We actually have a company in our portfolio it’s really early called Fairplay that looks to eliminate algorithmic bias and lending decisions and marketing decisions around it. And then can you re target consumers that might’ve been discriminated against for new loans because many lenders actually don’t really understand what’s in their own algorithms and the way that they comply with some of the fair credit rules is laughably ineffective right now. And so you do see some of that happening, but some of these issues, I think probably require more than a couple of million dollars or more investment in the startup.

Erin McCune:
Arjan, before we move on to the last question, do you want to dive in here on inequality?

Arjan Schutte:
Yeah. For sure. And it’s hard to argue with Ryan’s point, but it’s also hard to stress how much more we FinTech can do. I think it’s a matter of being deliberate and being focused and being creative. And I think tech and FinTech can actually outperform dramatically versus some of the other categories that have historically served African-American people. So whether that’d be black owned banks or CDFIs, which are very mission-driven and after 50 years of existence have virtually no scale or AFS, the alternative financial services industry, which does have scale, but is extremely expensive. Payments to professionals can bring a lot of efficiencies and lower cost basis there very easily. And then the traditional banking world, which of course has evidenced a lot of racism and probably still does more than it certainly admits. I think there’s opportunities to do more. “What gets measured gets managed.” As Peter Drucker used to say.

Arjan Schutte:
So, I’ve made it a point for every board that I’m on to talk to them about what more can we do and let’s measure it and let’s have this not be a matter of public effort and PR and a press release about patting ourselves on the back about what God’s work we’re doing. All of it is inadequate and we can all do way more. And the ability of software to scale is just tremendous. So I’d encourage everyone to be creative and to make it an OKR, and manage down from the board and CEO level and recommend it up to your board and CEO level to make it a priority.

Erin McCune:
Those are great parting remarks. I’m going to ask Ryan and Kimberly to chime in. Do you have any call to action for the payments professionals that listened to the Glenbrook podcast to point them in the right direction here? Kimberly, I’ll start with you.

Kimberly Gartner:
Sure. I have a lot of hope that the Glenbrook payments listeners are building better infrastructure, faster infrastructure to address so many of the payments challenges. We know payments aren’t easy and we know they’re not fast. So continue that innovation. And as you do, so let’s think about that in the first structure to help people get the money they need when they need it. Let’s really think about people’s financial lives and drive towards those outcomes. So we know when people get money to time they need it, they get breathing room, they’re able to pay their bills on time. They’re able to make it to work on time. They’re avoiding eviction. These are really significant, powerful outcomes for people that payments professionals can help drive towards.

Erin McCune:
Thank you. Ryan.

Ryan Falvey:
I think the payments industry is probably done more than many other parts of the financial service ecosystem to actually dramatically improve the consumer experience. Payments have gotten faster, there’s been a lot of innovation in ways of making our very confusing system work more efficiently. One of the best pieces I got advice early was, just suspend disbelief sometimes you’re talking like a founder, you just got to just assume what they’re saying is true and just go with it because otherwise, if you’re too caught into what’s happening now and like, “Oh, that’ll never work,” you miss it. You can’t really see what’s happening. And I think anyone who’s working in this industry, it’s easy to see a lot of these startups, even there’re multi-billion dollar companies and say, “Ah, whatever.” It’s not really fundamentally changing anything, but I think it really is.

Ryan Falvey:
And so, the more that in your own career that you can be open to new ideas and suspend disbelief and think about what’s possible, I think that there’s a lot more that can happen. The end goal in payment should be a system that’s essentially frictionless and instantaneous, and I think everyone can see that. And so the more that we can all do individually to try to get there, I think is going to make the system a lot better and a lot more inclusive and better for consumers.

Erin McCune:
Personalized for everyone, accessible for everyone. That’s what we need to do.

Arjan Schutte:
And aligned with our better selves. Because just frictionlessness, won’t solve this. We need to create ways to help people align with their better selves, because, we’re in a consumption culture and I think more income, less friction, better payment systems, more inclusion people spend more. And I feel like if we can advance ways and systems and behavioral systems to help us align with our better selves, that’s a really important part of the outcomes you’re looking for and we’re looking for.

Erin McCune:
On that note, thank you to each of you. It was fun to host your reunion. We, look forward-

Ryan Falvey:
I don’t think the three of us worked by the way. Not all worked together. We’ve had interlacing tangential, but I don’t think there was that-

Erin McCune:
You were all at the same places, but not at the same time.

Ryan Falvey:
Not at the same time. No. Kimberly and I did.

Erin McCune:
Okay. It’s not quite a reunion.

Ryan Falvey:
I overlapped with Kimberly.

Kimberly Gartner:
I learned a lot from him. He was a year or two ahead of me and we worked very closely together for years.

Ryan Falvey:
I’ve just been drafting behind.

Erin McCune:
This has been a great conversation. For our listeners, we will post show notes. We will include links to The Financial Diaries book that Kimberly mentioned. We’ll include links to each of our panelists bios and their companies so you can learn more about what they’re up to. And I encourage you to explore some of Glenbrook’s prior podcasts and payments views posts on this segment of the market. We have been digging deeper and deeper and we’ll continue to explore this space and highlight solutions that we think are really making a difference and can inspire all of us in order to offer more equitable solutions that promote much broader financial health here in the United States, as well as other places in the world. Thank you for your time and attention.

Ryan Falvey:
Thanks.

Kimberly Gartner:
Thanks.

Arjan Schutte:
Thanks guys. Thanks Glenbrook for doing this.

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