Saving  people  moneySarah  Tavel

Saving  people  money  has  been  the  driving  force  behind  many  of  the  biggest  consumer  wins of  the  internet  era.  

Observation

For  example…

Managing  what  you  have

Getting  more  for  less

Startups  are  able  to  provide  “better,  cheaper” by  recasting  cost  structures  of  incumbents.

eCommerce

“Full  stack”  tech

Sharing  Economy

Peer  to  Peer  Marketplaces

Why  does  saving  money  lead  to  such  massive  companies?

It’s  the  painkiller of  the  mass  market.  

Real  annual  wages  have  been  mostly  stagnant  since  2000.90%  of  Americans  make  <$90k  annually.

Source:  Economic  Policy  Institute

Millennials  are  now  facing  a  new  set  of  pains in  need  of  a  painkiller.  

What  we  usually  talk  about  with  Millennials:

Largest  generation:  Born  between  ~1981-­‐2004

• Digital  natives  -­‐ trust  and  expect  more  from  tech

• Generation  of  “early  adopters”

• Check  their  phone  45x  a  day  -­‐more  than  they  engage  with  people

• Spend  30hrs+/month  on  social  media

Source:  SDL,  Millennial  Disruption  Index

Here’s  another  dimension…

Millennials  are  being  hit  hard  by  education  costs.

Source:  Bureau  of  Labor  Statistics,  National  Postsecondary  Student  Aid  Study,  Edvisors.com

Their  debt  profile  will  differ  dramatically  from  prior  generations.

2003 2015Avg.  Debt  Balance  by  Age  of  Borrower

They’re  going  to  struggle  with  this  debt  load.Avg.  Hourly  Wages  of  College  Grads,  1989-­‐2014

This  will  cast  a  shadow  on  their  financial  health  for  decades.

Source:  WSJ,  Federal  Reserve  Bank  of  New  York  Consumer  Credit  Panel/Equifax  

Meanwhile,  regulatory  changes  have  diminished  access  to  capital.

Source:  The  SCE  Credit  Access  Survey,  Federal  Reserve  Bank  of  New  York

020406080

100

<680 681  -­‐ 759 760  +

Applied  and  Accepted Applied  and  Rejected Discouraged

Borrowers’  Credit  Experiences,  By  Credit  Score

Millennials  aren’t  getting  credit  cards.

Source:  Bankrate August  2014  Financial  Security  Index,  NY  Times

Lowest  level  for  Americans  <35  yrs old  since  Fed  started  collecting  data.

Mortgages  aren’t  any  different.Mortgage  Originations  by  Credit  Score

Source:  Federal  Reserve  Bank  of  New  York  Consumer  Credit  Panel/Equifax

Home  ownership  is  at  its  lowest  level  since  the  Census  started  tracking  it.    

Source:  US  Census  Bureau,  Zillow  

People  are  on  their  own  more  than  ever.“Gig  economy”  growing  as  %  of  labor  force.

High  deductible  plans  are  becoming  the  norm.  

Source:  Henry  J.  Kaiser  Family  Foundation/Health  Research  &  Educational  Trust  Report

Taken  together,  you  have  a  generation  juggling  a  new  financial  reality.

• Entering  adulthood  with  a  complex  personal  financial  picture.

• Expenses  going  up  (loan  servicing,  rent,  health)  while  income  is  stagnant.

• Reduced  access  to  and  adoption  of  traditional  forms  of  credit  (credit  card,  mortgage)

Americans,  particularly  Millennials,  need  new  ways  to  save  money.

Getting  more  for  less

Managing  your  financial  health

Medical?Housing?Education?

Financial  Advice?Access  to  credit?Resilience?

It’s  time.  Fintech  is  ripe  for  disruption:

Recent  startup  wins  (Square,  LendingClub,  SoFi,  Stripe)  creating  generation  of  founders  who  understand  how  to  navigate  the  space.

Regulatory  changes  as  result  of  Financial  Crisis  restricting  ability  of  incumbents  to  innovate.

Classic  consumer  internet  opportunities  (“the  next  great  photo  app!”)  have  largely  dried  up,  so  talented  consumer-­‐oriented  founders  looking  elsewhere.

Millennials  are  ready  for  change.Brand  love

of  the  leading  Banks  are  among  the  ten  least  loved  brands  by  millennials.All  4

Source:  Millennial  Disruption  Index

Millennials  are  ready  for  change.

73%  of  millennials would  be  more  excited  about  a  new  offering  in  financial  services  from  Google,  Amazon,  Apple,  PayPal,  or  Square than  from  their  nationwide  bank.

Source:  Millennial  Disruption  Index

Opportunities

Manage  better

• Become  the  new  primary  financial  relationship by  applying  the  automation consumers  have  come  to  expect  from  technology  to  managing  their  finances.

• “Robo-­‐advisors”  was  first  wave.  But  what  about  managing  our  savings?  Spending?  Overall  management?

• Companies  in  this  space:

Increase  financial  resilience:  Borrow  better

• Reimagining  loan  products  to  increase  access  to  capital  and/or  reduce  cost  of  capital:– New  short-­‐term  credit  instruments– Rethinking  home  ownership

• Must  have  differentiated  user  acquisition  story  and/or  unique  data  advantage.

• Companies  in  this  space:

Increase  financial  resilience:  Insure  better• Protection from  the  unexpected

– New  insurance  products  for  underserved  needs  or  segments  (e.g.,  freelancers)

– Recast  cost  structure  of  incumbents  (by  going  direct  to  consumer,  peer  to  peer,  etc.)  to  provide  existing  products  with  better  experience,  cheaper.

• Companies  in  this  space:

And  of  course….  Spend  better

• Slow  growth  of  healthcare,  housing,  and  education  costs• Telemedicine,  price  transparency• Work-­‐based  education  programs,  disrupt  the  

4-­‐year  college  experience• Co-­‐living  

• “Renting”  economy  disrupts  new  verticals

• Companies  in  this  space:

“  Silicon  Valley  is  coming. There  are  hundreds  of  startups  with  a  lot  of  brains  and  money  working  on  various  alternatives  to  traditional  banking…  Silicon  Valley  is  good  at  getting  rid  of  pain  points.  Banks  are  good  at  creating  them ”

-­‐ Jamie  DimonCEO,  JPMorgan  Chase

Thank  you.