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Scores of fun at Finovate and Money2020

Posted on  30 September 13  by 

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by Derek Stubbs and Kara McGuire

It’s not about the “gee-whiz factor.” As money and spending strategists, clients call on us to tell them what’s new in banking, insurance, wealth management and payments. The conversations often center on technology — how to develop the latest and greatest tool to wow consumers. Sure, tech is table stakes in most categories these days, financial services included. But tech for tech’s sake, to supply that gee-whiz factor, is not a consumer desire.

The jam-packed Hammerstein Ballroom at FinovateFall 2013 in New York City.

The jam-packed Hammerstein Ballroom at FinovateFall 2013 in New York City.

As we attended the tech-focused, four-times-a-year global financial innovation conference Finovate in NYC, we perused 69 exhibiting companies to keep you and us informed on where the financial industry is and might be headed, and where consumers may find the solution to their next problem. (If you want to see them yourself, you can watch all 69 presenting companies give their seven-minute-long presentations by visiting the Finovate website).

We saw plenty to keep us busy, baffled and intrigued, and expect the same when we attend the Money2020 conference in Las Vegas for the second year in a row.

To whet your appetite, we thought we’d share with you some of what we saw in New York, and which themes we will be looking for when we arrive in Vegas.

Key themes at Finovate
• Scores, scores, scores and more scores!
• Small business support — for both the entrepreneur and for the banks that serve them
• Demystification, simplification and fun for everyone

Scores are the new black
We saw a lot of algorithms this year. In the world of personal finance, there was FlexScore, which bills itself as the first ever financial scoring mechanism with a “free, easy-to-use” Web interface. The next iteration of Dashboard Universe, which we wrote about in 2007, benchmarks the user against others, using attributes such as lifestage and financial goals. The algorithm isn’t there just to benchmark consumers, though; it also serves as a crucial tool in helping them decide what to do.

Consumers aren’t the only ones meant to benefit from such scores. Insaaf Mohideen and Ahmad Ibrahim, the brains behind Unleash, have created the “U Score,” a sort of “FICO for small business health.” BizEquity, another of the small-business applications we saw, aims to democratize “the most important piece of information for every small business in America”: What is that business worth?

Taking the world of algorithms and scoring back to the consumer, we were also intrigued by Float Money and Think Finance’s Elastic. Float provides interest- and fee-free lines of credit to consumers, which it can do because it earns its money through advertising and marketing revenue. Elastic, meanwhile, is truly cutting-edge, offering a low-cost alternative to payday lending through employer benefits administrators. Like Float, Think Finance’s Elastic reports to credit agencies, helping liquidity-strapped consumers build or repair their credit score, all the while improving worker productivity, given that financial difficulty is a key cause of worker distraction.

Fun is the new fun
Yes, there were plenty of scores and algorithms and high tech wizardry, but, as we’ve been telling you, the whiz bang is not the point. The point is utility. And when it comes to utility in consumer finance, the biggest barrier is to actually even trying to use it. That’s where fun comes in.

We were happy to see one of our longtime favorites, Motif Investing, kick off the first day of the conference. For the uninitiated, Motif is an online broker that doesn’t want its customers to buy individual stocks. Instead, the company wants you to buy buckets of stocks organized by themes, or motifs. Cofounder and CEO Hardeep Walia told us that fun is one of the aspects that they have prioritized in their laddering, presentation and sharing of information. “The killer app,” Mr. Walia told us, “is the social link.” Motif was voted Best in Show. Another scoring algorithm, TipRanks, takes guesswork out of who is and is not worth listening to when it comes to stock advice … in real time. Exceedingly easy to use and to set up, the TipRanks app sits on your browser’s toolbar and can quickly give you an easy-to-read score, compare success rates on similar stock calls from other advisors and even suggest other places to look. A natural companion to Motif Investing, TipRanks wasn’t the only group touting fun, ease of use and simplicity. Yodlee introduced Tandem, a highly usable, very smart product that helps take the complexity out of finances that are shared among spouses, family members and friends. (We loved watching VP of applications Katy Gibson’s presentation about her complex personal shared-finance relationships.)

If you’re still hungry for the cutting edge, why not fly out to Vegas and join us at Money2020? During the inaugural Money2020 payments conference last year, there was a lot of industry navel-gazing and focus on nifty apps. What was missing? Time spent thinking about what consumers need and want, and how the industry can evolve to meet consumers where they are. People don’t always want another app for that. They crave opportunities for connection — online and offline. They want personalization and serendipity. They seek help — through product design that focuses on the positive, not the punitive. They like fun. Yes, fun is the new fun.

More than 1,500 companies are attending Money2020, which has five separate conference tracks delivering content over four days. This year, one of those tracks focuses on the “empowered consumer.” We hope this means the consumer won’t be marginalized this year. Without the consumer perspective, there’s sizable risk that the latest iteration of the mobile wallet won’t be any more compelling than the physical ones we carry around in our back pocket or purse. After all, it’s not that hard to use plastic to pay; what else will that mobile wallet do for us?

We’ll also be on the lookout for:
• Signs that we’re anywhere closer to mobile payment ubiquity. We’ll let you know if we see representatives from Google, PayPal and the Merchant Customer Exchange hugging it out.
• Conference sessions that don’t sound like a sales pitch by startups seeking venture capital.
• Conference sessions that do more than just use the word “consumer,” and truly focus on consumer needs, wants and desires.
• Loyalty program tools that will make the value of such programs crystal clear and the benefits automatic.
• Tools for financial planning that reflect the realities of real people and their complicated lives.

 

photo credit: CEB Iconoculture images

Tech time-out

Posted on  25 September 13  by 

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by Nissa Hanna

Don’t be surprised if the next dinner party you attend kicks off with a request that’s more commonly associated with the dimming of theater lights: “Please turn off your mobile phone.” Or, if your leery host is less convinced of revelers’ ability to abstain from the screen, the phone might be confiscated altogether. How will you settle disputes about Tony Danza’s TV cameos, or how many pounds are in a stone? Fêters could find themselves producing more post-party follow-up emails (“See! I told you he played Erica Kane’s wedding planner!”)

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The phone-ostracizing phenomenon is starting to influence the etiquette of some social gatherings, but consumers are testing their disconnecting comfort levels in the privacy of their homes. Concerned and wistful dwellers are beginning to push back on constant connectivity and dependency by establishing device-free areas and intervals. We’re finding that these tech time-outs come in many forms. Some families are totally disconnecting their homes or vacation retreats by banning digital gadgets — or, for the very committed, anything with an electronic screen. Others are designating specific rooms (the bedroom is a popular spot) or spaces (like a reading nook) as sans-tech sanctuaries. And some are initiating phone- and computer-free periods, which can stretch from after work until the kids’ bedtime or span a full Sunday.

So are these just tech teetotalers who are trying to cut the cord? Not quite. We see this shifting behavior as a natural response to technology’s rapid advance into consumer’s lives. It’s less about powering down and more about finding equilibrium between screen time and face time. Some consumers are creating that balance by setting parameters — because when the screen calls, it can be hard not to answer.

photo credit: Abigail Elder, Flickr.com

The Relatively Rich are different than 84% of you and me

Posted on  17 September 13  by 

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by Hans Eisenbeis

Blog_RelativelyRichDuring the “long boom” of the late ’90s, wealth became a kind of entitlement to many Americans. Even if we didn’t actually earn a lot of money, our homes seemed to appreciate exponentially, and credit card offers filled the mailbox every day. Experts have a name for the psychological trick this played on us: The Wealth Effect. We felt affluent, even though that affluence was mostly on paper. Thing is, when we feel wealthy, we often spend money as if we are wealthy. Well, the past six years have shown us all what a delusion that was. The housing- and credit-led bubble bursts of 2007 sent the global economy into a tailspin. That’s all history, of course, as the US economy shows signs of slow healing.

But what you may not remember is that this same period of time, roughly 1997 to 2007, corresponds to a marketing trend. Remember “mass affluents”? Perhaps you still talk about this ephemeral — and by definition massive as well as wealthy — group of free-spending consumers. And to be sure, they still exist. Definitions vary, but generally speaking this group consists of households with incomes of $100K-$250K per year, and/or investible assets of $100K to $1 million. These are people with real spending power. People who, within reason, can buy anything they need when they need it without borrowing.

The difference is that today, it’s much harder to pretend to be affluent. Today’s mass affluents, a smaller group with less gray area, are the real deal. And to help distinguish the contenders from the pretenders, we’ve coined a new term: The Relatively Rich. They’re 16% of the population, and they’re responsible for nearly half of all consumer spending. Get to know today’s real mass affluents with our new research brief, Lifestyles of the Relatively Rich.

photo credit: Mike Lewis, Flickr.com