Avocado Money

I like following the fintech space closely. Chime and Empower, two front-runners of the “millennial focused banks” trend made big announcements recently. Along with a several other well capitalized players, most of these startups are trying to making banking cool and great again (Sorry, I had to make this reference. SCOTUS nomination is top of mind this AM).

While those announcements are promising signs of progress being made directed towards a generation (yes, “millennials” is a generation, not a state of mind or age group. We grow older too sadly!) I’m a part of, I continue to think that the highly regulated market of consumer banking (and several other adjacent categories in fintech) has been a very tough nut to crack for Silicon Valley.

There are lots of similarities between consumer fintech & DTC retail. In online DTC retail, startups starts off by unbundling a CPG (ie. one product line, great messaging, beautiful aesthetics etc.) and try to do everything that a legacy CPG wouldn’t do (digital marketing, no stores, heavy focus on social etc.). They keep keep at it until they get to a point where they have to inevitably start doing what CPGs do (start selling in big box retailers, set up physical stories etc.) and start re-bundling (multiple product lines etc.). Business is about making boring numbers work, after all.

We are seeing this phenomenon in fintech too (I recommend clicking through these tweets to read the threads).

In consumer banking specifically, some start with investing products. Some start with checking and savings accounts. Gradually, most are progressing towards a common steady state. I don’t think that’s a bad thing. It isn’t a surprising either.

One major difference between DTC retail and fintech is that fintech is heavily regulated. This makes it much more difficult for the new players to work like the old players in a more relatable, hipster, consumer friendly fashion.

This is very sad :

 “Mobile payment users were also more likely to make withdrawals from their retirement savings accounts and engage in high-cost borrowing activity.”

“41% of Americans who earn over $200,000 a year have cried because they didn’t have enough money.”

“[Young adults] who use [mobile apps] to track their spending are 25% more likely to overdraw their checking account.

We have a long way to go in terms of technology helping us control our worst avocado, coffee and kombucha impulses when it comes to money.

I think we absolutely need a suite of products that counteract the human tendency to fall prey to temporal discounting (ie. tendency of disregarding term consequences of our actions and decisions). This is an unexplored design space. And, thats for a big reason :

For those of you interested in diving a bit deeper to unpack the potential, challenges, categories and players in fintech, I highly recommend the following :

Fintech Frenzy: Hype or Reality? A Closer Look at 6 Key SectorsApp-Only Banks Rise in Europe and Aim at Traditional LendersFintech Apps in 2017: What Changed, What Didn’t

Until then, lets stick to Square cash boosts, Robinhood investing, Wealthfront passive investing and Uber credit cards! Please avoid upcoming shitcoins on Coinbase though! Buy Bitcoin!