 afternoon. Can everyone hear me? Here's so. So thanks for joining us. I will mention right now that this is being telecast, and so you have a lot of pressure on you to be a very engaged audience and ask great questions and clap and laugh at all of our jokes and stuff like that, which is going to be fabulous. Thank you for coming to the scaling, the progression of financial inclusion with large institutional facilitative support. I don't really know what that means either, but I think we're going to find out over the next hour. So really what we're talking about today is the fact that millions of Americans lack access to well-designed financial products and services to meet their short-term needs and build their long-term financial stability. The range of financial needs is extensive and includes transactional products that allow us to access and spend our money like checking accounts or prepaid cards, lending products like short-term access to credit or access to small business capital, credit building and debt reduction services and savings products that help families build assets. Mainstream financial institutions such as banks and credit unions and fringe financial institutions like check cashers and payday lenders can often seem that they are offering products that are built on arcane notions of how people really receive and manage their money today. In addition, consumers, particularly those with low and moderate incomes, are challenged by a broader system that places barriers to modernization. For example, the employer who doesn't offer direct deposit, the local grocer who doesn't accept debit or credit cards or even the government-run public housing authority that insists on paper money orders for people to pay their rent. At the same time, we're seeing rapid technological advances that now allow us to make payments with our phones, send money via email or establish virtual peer lending networks to name but a few. So our panel today is going to discuss the shifting trends in the financial services industry that may better respond to consumer need, the role of research, innovation and technology in driving those trends and the impact of broader financial systems that can both help and hinder progress. So I'm going to go ahead and introduce our panel. First, we have Neil Sample, who is the Enterprise Growth CIO and Chief Marketing Technologist for American Express. Aryan Shute is the managing partner of Core Innovation Capital, a venture fund targeting financial services for the unbanked and underbanked in the United States. And then we have Ryan Falvey, who is a director of the Innovation Labs team at the Center for Financial Service Innovation. He oversees the Financial Solutions Lab, which has recently launched $30 million five-year effort to catalyze and support entrepreneurs. But before I turn it over to our illustrious panel, we're actually going to spend a few minutes studying some context by watching a short clip from the documentary film Spent Looking for Change, which was produced by the Oscar-winning filmmaker Davis Guggenheim, who you may have heard of. He produced Star and directed An Inconvenient Truth, amongst others, and was sponsored by American Express. I owe you money. You're going to pay the whole balance? Yeah, which is $360. Yeah. How much would you say you spend in expenses every month? The monthly expenses are primarily business expenses. Miscellaneous stuff for the kids, be it field trips, lunch money. Gas money. 60, 80, maybe 100 bucks a week in gas. Electricity, have insurance. Dental insurance, health insurance. Medicine for the kids. And as one bill gets paid off. In the next month, there's more money. For four people to go to the movies, it's over 100 bucks. 150 for phones. A lot of little expenses and then big expenses. Would I be able to do like a swap of machines to go towards this? Every month we spend anywhere from $2,800 to $3,500. Sometimes I'm left with hardly anything. Sometimes it's nail-biting. It's a roller coaster. I have all this massive debt behind me and it feels so overwhelming. We all want to get the most out of life. A great family, an education, a business, a home. It's a three bedroom slash four. But for a growing number of Americans, the price of getting ahead is higher because of a financial system that leaves millions underserved. You just have to kind of tuck your chin to your chest and keep going forward. Don't give up, even when you want to. There's not ever the option to not make it work. I have to. Let's race. I grew up dirt poor. We were on welfare. We were on food stamps. I remember the first day of school. Everybody's always got their best gear on. Everybody's ready for the first day of school. And my best gear came from Goodwill. I often look back at my life. From an early age, there was a lot of wanting and disappointment. Despite his tough past, Justin's built a small production company and wants to start a life with his girlfriend, Brittany. Now that I'm going to do it and I'm making it, I want to carry my whole family on my back so nobody ever has to want or worry. I love Brittany. I'm going to buy a ring and I'm going to make him a wife. I'm going to do the things that will take us there. He makes a good living shooting videos for corporate clients. I see a lot of potential where we're at and where we're going. But while business is good, Justin's at a disadvantage. I get checks from clients and I leave the luster and grandeur of downtown when I go uptown right into the check cashing place. Justin is one of 70 million Americans who lack access to the traditional financial system. And as that number grows, it includes more and more people who once lived in the mainstream. Very good. OK, now write that number down, because we're going to subtract. So we really? 200 and 149, my total answer is 87. You're cooking with Crisco. Take your minute to cook the meal, but you're doing a good job. You have to be your child's first teacher. I told you, you could do it. And I believed in you. Just have to apply yourself and work hard. My mom taught me, pay what you owe and save. So I saved savings accounts, 401Ks, credit cards with wonderful limits. Wanted to have something to leave for my daughter. We know we need an hour of math every night. And we know we need at least 30 minutes of reading every day. I want her to be able to find success in whatever her dreams are. I chose to put her in private school because I don't want to ever compromise on her education. I love you. Have a great day. Let me be good. Good luck on your test. Tiffany worked as a nurse to provide for her family and built a nest egg for her daughter's future. My 401K was almost 100,000. Life was good. I was living the American dream. You were right, there's a little too much water. There'll be crepes. Some of them will be crepes and some will be pancakes. Dude, I like it. When Melissa first met Alex, he had a career in the music industry and was doing what he loved most. I love this thing. After one of the shows, I went up and talked to Alex and kind of hit it off. No kind of batter, we just hit it off. We hit it off. About 10 weeks after our first date, he asked me to marry him. Just like everything else in our life, the family thing happened pretty quickly. With two kids and two incomes, Alex and Melissa had a healthy, happy home. Times were good, everyone was doing well. And then our reality changed overnight. Their son was diagnosed with autism. Shortly after, Alex was diagnosed with multiple sclerosis. It was terrifying. And then what happened was is I focused on the kids. Does it matter? Yes. Which one do you want to get? Go Burlington. Burlington. Go Burlington. Not today. Not today. What are we doing today, Jonah? Look at mommy. Stay home. Stay home. I can tell you to go and I can schedule it, but if you don't go, I can reschedule it. Mom, he has to test your eyes. I had just gotten a new job. I had steady income. But then my mom was diagnosed with cancer. That's my number one patient. How can I take care of somebody else when I have my mom suffering at home? Tiffany decided to leave her job so she could focus full time on her mother's health. I thought that I could come back to the workforce and just pick up where I left off. The picture of the financially unstable is a picture of you and me but for a couple of breaks. Between Alex's illness and Jonah's diagnosis, this became this huge expense that we had no contingency plan for, we had no savings for. Alex's illness affected his ability to work and he was forced to give up his job. So they did what many Americans do at their bank. If a bill came up and we needed to pay for the power or the cable, we knew we could go ahead and write a check and it would clear. When a customer withdraws more money than they have in their account, they can give their bank permission to cover that cost with an added fee. This is called overdraft protection. Banks were increasingly looking for profits from these classic consumer check accounts. Some customers didn't make money for banks so they found other ways to meet costs. What most banks were doing as a customary practice was this check reordering or it's also called high-low check sequencing. When Alex and Melissa paid their bills, their grocery and student loan checks cleared okay, but the price of power went up and that bill emptied their account. One overdraft fee, $35. But if all three debts posted on the same day, their bank had software that reordered their purchases. Power bill first, then loan, then groceries, three overdraft fees, $105. The fees became so much, payday would come and we'd be back to zero. Eventually what the bank will do is boot them out of the system and close the account because they feel like they're not gonna recoup their debt. If banks can't keep those customers, there's an alternative that will. Every year, over 30 million Americans use check cashers and for many of them, the service works. They are open later, they remember my name. They're offering a, we can get you what you need right now kind of solution. A huge amount of business gets done at check cashers because people can get their money right away and they need their money right away. But for too many of us, when we need it the most, good options aren't available. Tens of millions of hardworking Americans are trying to reach their potential and they're waiting, wanting, believing in a simple promise that if they strive forward, they won't be held back. Well, I think that's the end of our clip. Thanks for watching that with us. You know, in my excitement to get out here and speak with the panel and all of you, I actually neglected to introduce myself. So in case you're wondering, I'm Lee Phillips, I'm the director of the San Francisco Office of Financial Empowerment at the City and County of San Francisco. So on behalf of the City and County, welcome to our city, for those of you who are from out of town. And again, we have Neil, Arian and Ryan on our panel. So Neil, first questions for you. American Express is often seen as a brand that caters to higher end consumers. But with some of the new products that you put into the market recently, seems that you're taking a different approach. Can you explain why American Express has decided to go in this direction and what it means for the company? Sure, yeah, American Express as a 164 year old institution has pivoted many times throughout our career. I think we started as probably one of the most inclusive egalitarian brands out there. That, you know, we started in freight, in shipping, in transportation, moving goods. You know, from there, our entry into financial services really also started in a fairly egalitarian way and products like traveler's checks. It's been relatively recently. It wasn't until the 1980s that American Express was seen as an exclusive brand. Ultimately though, the core of our brand value proposition is really around service. And it's the service of the customer, whether they are financially well off or in many cases underserved, that we really focus on. So this transition from, or this pivot from an exclusive brand to becoming an inclusive brand is really a natural extension of our service promise. And we believe that that service promise can be delivered across the economic spectrum. Thank you. And so, Aron, we've known each other for some years and I know that you've been a quite vocal critic both in your role at Core Innovation Capital and at the Center for Financial Service Innovation in the fact that mainstream financial institutions have been failing to meet the needs of millions of consumers. I mean, we sometimes think of these as marginalized populations, but someone brought the point up yesterday on another panel of like, well, there's so many, you know, like it's not actually that marginalized, it's large numbers of people. Are you seeing any changes recently that are making you more hopeful or optimistic or how are you feeling about the financial services industry today? I'm feeling excited. Indeed, things are changing a lot and, you know, banks are really, by and large, there are exceptions not going to be interested in this customer and I don't see that changing particularly, but I don't think that's bad news, really. Since we've been working on basically financial inclusion for the underbanked in the US, I'm incredibly heartened by a number of things and a key one that's a really recent one is in the last couple years, there's been tremendous innovation tying into the infrastructure of banking and so there's a dozen or so startups that are starting to build APIs into the way banks work, which I think is going to have as dramatic of an impact on financial innovation as Amazon Cloud Services, for example, did on technology development, right? Dramatically lowering the barrier of entry to innovate and provide new financial services of all kinds and so these startups, companies like Spout or Knox or Standard Treasury or Plaid.io or Yodely, which is not a startup really, going public soon, are providing this kind of interconnectivity into banks and I think that is the way of the world, right? That banks will play a key role but more as an enterprise infrastructure type of player and even as a proxy to regulators where a lot of the startups here in your hometown and in other places are not in touch with the regulators and find it incredibly difficult to get access to kind of core banking functionality. That's really changing and I think that's the role that banks are going to be playing more and more as it comes to retail finance. Yeah, and I feel like this just came up in the film and there's been some really good research that came out recently from the Center for Financial Service Innovation called the US Financial Diaries Project and if you guys haven't read about that, I highly suggest you do. And for me as someone that works in public policy, one of the most interesting things that has come to light is that people don't access their money and their income in the way that we really traditionally think they do or in the way that we've designed systems to support. So for example, we may assume that people get paid every two weeks a regular amount of money and they're able to pay their bills once a month. That's pretty much how it works right now. But what this research has found and what's reflected in this film and we're seeing more of is that this is a much more volatile picture for consumers that people are weaving together income from a variety of sources, multiple jobs, public benefits, et cetera, and that things aren't as consistent. But yet on the other side, we have this financial system that seems to assume consistency on the part of consumers. So I'd love for all of you to weigh in on this, but Ryan, I'll start with you as one of the newest CFSI team members. How is projects like the Financial Diaries shining a light on the types of work that you're hoping to support over the next few years? Yeah, I think the work that we've done with the US Financial Diaries has been really illustrative for both us and looking at this market, but also increasingly for startups and thinking about how they can build products and services to address changing consumer behavior generally. And I actually think that's a lot of the reason you're seeing interest by larger financial institutions such as American Express and certainly our partnership with JPMorgan Chase is a desire on the part of these institutions not just to serve a customer segment to really get a better understanding of how there's a lot of, there's a lot kind of built into that changing behavior. You have a lot of jobs are becoming a little bit less stable for a certain extent. You get more frequently moving around, you're more mobile. All these things are not like, they're harder I think for the traditional banking system to deal with. And I think that certainly my job and what I'm doing is partly the result of an effort to try to understand how younger companies are trying to innovate and solve these problems. I think it's noteworthy that the US Financial Diaries Project had its history in South Africa or in Africa. And the power of the research in my mind and the utility of research in general in this field is that it provides much, much needed empathy. And there are so many people right here amongst us. And I think it's something that film tells so well, that these aren't the welfare moms who we all think the underbank to be, these are totally normal people, but for a hitch in the road or whatever the turn of phrase is in the film. And both industry as well as advocates by and large, I feel like have an absence of well-informed empathy. There's tremendous sympathy for this customer, but there's very little understanding of these people who turns out are all around us everywhere. And so that's why I think what that project is doing is really exciting and important. Yeah, I think one of the amazing outcomes is that it really provides a view into a community that's previously been invisible. That the standard financial systems, that if you look at banking, if you look at money transfers, if you look at loans, if you look at credit bureaus, they don't capture those behaviors. They don't know what's going on in the cash economy. They don't know and understand and can empathize with the stresses that these folks are going through on a daily basis. And so I think getting that insight, even though we compile more financial data than any other place on earth, it doesn't tell the story. And this is the first time to do it. You know, one of the findings you alluded to was the fact that most of the Americans in the study, they didn't have an income versus outflow problem. They had a cash flow problem. Is that the money wasn't as even as they needed it to be. And then they would enter into alternative financial systems. They would start paying fees and they would start paying interest, et cetera. And then they would fall behind. But until that point, they made enough to cover their bills. It just didn't come in at the right time. That was something you couldn't see from an impersonal institutional lens on just the financial flows. Yeah, that's very interesting. And again, from our perspective as public policy people, we're looking at some of these issues. Now it's shed new light on this for us about how we, for example, expect people to pay their rent in public or affordable housing and really trying to start some new projects to look at what is happening with people's flow of income, particularly for working families who we can know a little bit less about sometimes how can we as policy makers try and smooth some of those gaps. Are you seeing any new trends coming out right now that could help with this? Any of the companies that you guys are working with or investing in who are specifically looking at some of those issues that we were just discussing? Well, yeah, I've been doing this for like three months. So, you know. So you've seen many, so take it away. Yeah, tell us. I think the fact that this conversation is happening, at the level, I mean, again, going back to the fact that we do have the financial solutions lab, which is a partnership between CFSI and JPMorgan Chase to try to, you know, the goal of it is really to get more entrepreneurs building products and services that help address some of these problems and improve consumer financial health. The fact that, you know, American Express has been such a prominent voice in this conversation. I think that that shows, not, I mean, I think it's a recognition that there's a lot happening in this space and there's a lot of entrepreneurs, you know, Ariane referred to a number of really interesting kind of companies that are coming up. Those are all very small companies, you know, most of them weren't around two years ago. And there's another kind of wave when we saw it at the Village Capital pitch sessions yesterday where, you know, these companies are now creating consumer products in ways I don't think, you know, entrepreneurs would have been thinking about even a couple, you know, two years ago. And so I think you are seeing a push to really try to solve these problems and awareness amongst younger entrepreneurs that these are kind of solvable problems. I mean, along those lines, we're gonna see a wave of IPOs in the next year, starting with Lending Club, Yodely, a number of others. Right, there's gonna be a dozen or so of companies who are financial services companies, financial technology companies. This hasn't existed, right, in the last quite a few years. Those IPOs are going to only give way to a tremendous influx of new innovators. A lot of the generalist Sandhill firms here, venture capital firms are starting to invest in financial technology. That was not true five years ago. I remember when we pitched Core One four years ago, there was a slide on our deck with kind of a big aha for me, which is 2% of all venture capital is allocated to financial services companies. 8% of all venture capital returns is coming from financial services companies. That had been the case for the previous eight years. We don't have that slide anymore because it's quite a different landscape. So that's quite exciting. Now these are looking, these companies are financial technology companies writ large. They're not necessarily serving the underserved. But I think incumbent upon them are new economies of scale, new types of assessing risk, new distribution channels that'll have tremendous impact moving down the market. The only thing I would add is there's a tremendous focus now both in the technology community and the investment community and so on in this problem. What I think is also interesting is that historically, the things that have been culturally relevant, globally relevant elsewhere, as means to solve these financial problems are being imported into the US. So as an example, lending circles, which have been relevant for hundreds and in some cases a thousand years, we're just now getting here. We're bringing it in and technology is enabling it, investment is enabling it, but it's open to door to bring these solutions that have been globally relevant to the US for the very first time. And how do you feel, Neil, that the products like serve and Bluebird that you're putting into the market now are gonna help address some of the issues that the consumers in the spend documentary are facing? Yeah, so one of the things that gets called out in the documentary is the fact that 70 million Americans will use these alternative financial services, whether it's pawn brokers, payday lenders, title loan companies, et cetera. And it turns out those things are very, very expensive. That last year alone, it was an 89 billion, excuse me, dollar charge to them in the form of both fees and interest. And so while those folks tend to have high rates and tend to take the most from those who have the least, at the same time, they feel a desperate need. They're filling a gap. And so the opportunity for us is to use technology and it's to use brand and to use network and reach and distribution to change that. And so if we could take even half of that and turn $45 billion of those funds back over to the consumers that need them most, that's the kind of opportunity that we're presented with today, which can make an incredible difference in the folks like you see in the documentary. Absolutely. So. Amen. Amen. Amen, all right. So one of the things that we wanted to delve into today is this idea of innovation labs. And there seems that this is kind of a hot new trend or new wish. It does seem that way, doesn't it? Doesn't it seem that way? What's going on here? What is going on here, let's find out. So American Express has recently announced that you'll be funding an innovation lab and then JPMorgan Chase has provided $30 million in funding to CFSI to launch an innovation lab. I believe some other companies are doing similar things. So what market trends are you responding to or do you think Chase is responding to and what do you hope to learn over the next few years? Well, I think, you know. I'll answer. I think there's a couple of things. I mean, one, I think there is certainly an awareness amongst larger financial institutions that there's something happening here that's both indicative of broader shifts and kind of general behavior of most consumers, but also that there's a need to kind of refine services and approaches and models for what is increasingly a much more mobile and much more dynamic population in the US. Certainly there's probably some degree of regulatory political pressure, I think that would be naive to say that there's a case. But I can just speak from my own personal experience, the degree of interaction that I have on a day-to-day basis with colleagues at GAP Morgan Chase is certainly far beyond just a passing interest in the space. I mean, they are keenly interested in the types of trends that we're surfacing, what we're learning about the market, what we're hearing from other entrepreneurs, other investors, it is not to me that something that is just a fad-ish thing. I think that there's actually a real legitimate interest in what is happening in this market and what are people doing? I think two things to add to that. First of all, for American Express, it comes from a fundamental position of humility. There are a lot of really good ideas that happen outside our walls. And so our commitment to the dialogue, our commitment to financial inclusion means that we have to do everything we can to facilitate and foster those ideas. The second thing is with our financial innovation lab, we have made a subtle distinction and that's that we're really focused on academics and in a lot of cases researchers not restricting it to economists and sociologists or people in tech. But those are folks who oftentimes have really great ideas but may not have the investment. They may not have the capital, they may not be part of a startup or they may not have access to a consumer base to really test those ideas and to grow. And so our focus, our thrust has really been, how do we enable that community and their ideas to effectively compete with what's otherwise gonna be on a VC spreadsheet? And so that's where our focus has been. To me what's exciting about both these initiatives and kind of to frame this from a SOCAP perspective is that here too for my take is that most people who've thought about financial inclusion fit in one of two camps, the missionary camp and the mercenary camp. Where the missionary camp are, it's a rounding error of CRA of a bank's do good check in the box or a philanthropically driven initiative by and large which isn't able to scale at all. Or a mercenary approach which is, which might be considered a fairly aggressive approach or more predatory or expensive or a lazy or inefficient set of business models addressing these customers. But I'd say 99% of the underserved being addressed here too for is by one of those camps. And what's exciting to me about seeing these initiatives from AMEX and Chase is that this is emblematic of what we call a visionary angle. That you don't need to see this as a philanthropic regulatory check in the box, a rounding error that's inconsequential to the business or that you need to approach this customer in a way that ends up being incredibly inefficient or predatory, that you can in fact build a real business by building real value, offering real value to consumers who traditionally haven't had the benefit of that. And to me, that's really hopeful and exciting. And it seems as a connection between American Express and the prepaid products that you're putting into the market, JPMorgan Chase obviously has that Chase liquid card. Aryan, is this a trend that you would have predicted this move towards prepaid and those types of products to serve lower income consumers? Well, is that a kind of a, that's a tee up, yeah. I mean, we've been- It's my job. I honestly had, I had not at all expected AMEX to get into this. And even after AMEX started, I was highly skeptical and perceived this to be kind of a missionary side kick. And I did not appreciate the grandeur and charisma and vision of Dan Shulman and his motley crew to really make this as big as it is and the sustaining as it is. And I have no ties to AMEX, so my view is independent. But prepaid, yeah. I mean, we've been talking prepaid. It's, you know, since the very first days at CFSI as a key alternative to both banking for a customer who's getting overdrafted to death by and large or check cashing, you know, where, which is expensive. It is. And so Neil, can you tell us a little bit more about your plans? So what is the American Express to Innovation and what are you hoping to achieve over the next couple of years? Yeah, absolutely. So we have our financial innovation lab that we've created. We've actually released a call for proposals today where we expect the ideas to flow in. One thing about our lab that I wanted to call out is the fact that anything that is developed in the lab actually belongs to the researchers. So we were very, very careful about that to allow them the rights, the fruits of their labor. So if they want to go and actually commercialize it outside of American Express, that's absolutely their right. So in large part, we've created this forum in a way that's open and as unrestricted as possible so that we can absolutely get the best ideas so that nobody's worried about their participation, creating fetters on whatever their idea is. So the idea, again, is to take their proposal, bring it to a set of customers and really trial their ideas and then pass or fail, you know, allow them again as academics the freedom to publish their findings. You know, one of the things we know is that these types of experiments are very, very expensive and therefore difficult to perform. And even the failures are actually remarkably informative because those who follow don't end up making the same mistakes. So we don't have a lot of preconceived notions. We're not actually, we don't have our thumb on the scale on the scale and we haven't limited participation or the space of ideas around financial inclusion. And so we're hoping to really good things to come out. We've got other initiatives as well. So Spent the Documentary is really about fomenting that conversation, really about getting people talking about financial inclusion without any strings attached. That really we think the conversation, of course, has its own value and things will flow from it as well. We also have an American Express Ventures Fund that's a little closer to the smaller companies and startups and does strategic investments in them to help folks who are maybe a little ready, more ready from a commercial perspective or they're looking to distribute or market and they could use a little help with capital to get those ideas going. So we're taking a multi-pronged approach. One of the things that I found most interesting about the American Express approach was this focus on academic rigor, neutrality in research. You could have just hired a bunch of researchers and academics and paid them lots of money and kept all of the information for yourselves. So why did you decide to take this different approach and what are you hoping that brings to the industry and to the field more broadly? I think honestly hiring them all would be very expensive. Maybe all would be expensive. Or most of them. So you're actually being cheap is what you're saying. Frugal, financially inclusive. But there's another thing about becoming part of an institution and sitting outside that institution and it goes back to the champion and challenger model. As I said before, we do think we have a lot of really good ideas. We do run an R&D program. We do have our own in-house labs. But there are a number of folks out there who aren't ready or willing to go work at a large financial services institution. They are in fact by their very nature academics and yet have fantastic insights to offer. And so we thought this was the right model to create to actually empower those insights and potentially bring them to tens, hundreds of millions of consumers in a way that allows the academics to stay academics and to keep fresh and to keep their ideas flowing. That's great. So Ryan, you've recently joined CFSI and you're leading this big new initiative over the next five years. The Financial Solutions Lab is gonna focus on encouraging entrepreneurship in this space. How do you think the little guys are gonna really help inform the bigger players like American Express in the field and how do you see the connection between generating those new ideas that are out there and really supporting them and how that's gonna play out in the broader spectrum which has been very dominated by traditional brick and mortar banks for many years? Yeah, I don't know. Good answer. No idea. I guess that's the point. I think one advantage I have is I work for CFSI and this is a partnership between CFSI and Jeff Morgan but we for the most part have been kind of delegated with responsibility of figuring out where we wanna play and kind of what our ambitions in that space are. And so I think the initial cut that we're taking at that challenge is to go really deep into a space that we know. So we've spent the summer looking at all the research we've done, you mentioned the financial diaries we're actually doing a lot of other work right now as well and saying what are kind of the opportunities we're surfacing out in the market? And then recently, and one of the reasons we're here at Socap is talking to entrepreneurs and understanding those guys that are playing in that space, what are the challenges you're facing? And so my ambition with this is to create an environment within the lab that helps those entrepreneurs solve the problems that are expensive to solve, hardest regulatory, legal design issues, helping to work with larger players. It's actually quite difficult as Arianna alluded to for a startup to work with a larger financial institution so maybe we can help facilitate that in some way. And in doing so, help them to focus on their products and services. And so my ambition or our ambition with CFSI is to see more innovation, more consumer products and services. If one of those companies becomes the dominant player then that's phenomenal news. If they gobbled up the rich valuations by big companies like American Special Chief and Morgan I think that's probably phenomenal news too. But I think what we're really looking to is to try to get more innovation and more entrepreneurship in financial services. And Arianna, what do you think about some of these trends? So you did allude to this earlier that there's some really new ideas that are really gonna shake things up. Do you think the mainstream institutions are threatened by this? Are they excited by it? Are they embracing it like American Express? Like how are you seeing the interplay between some of these new companies and entrepreneurship and some of the more traditional players out there in the market? Yes, I do, both. There's gonna be totally new entrants that we've never heard of who are going to become big, big players and household brand names. And a lot of companies are gonna be acquired by big firms that are out there today. There will be, I suppose, equivalence of the Kodak moment of Kodak which invented the digital camera being put out of business by the digital camera. I don't know, I don't have my finger on who that next Kodak is, but it's inevitable. So, yeah. And from your perspective, Neil, what are you hoping to learn from these new players in the field? Whatever they're willing to teach, honestly. I think some of the benefits of having these smaller players is that they are nimble. They are able to innovate quickly. They are able to import these ideas from the entirety of the globe and they present amazing opportunities for us. By contrast, there will be stumbling blocks. There will be moments when they realize that it's a fantastic value proposition for a consumer but it runs afoul of some core regulation. And so I think what we'll hopefully see is again real push on both the financial community and the regulatory community to do the right thing for these consumers that we are living in a different reality than when many of our laws were written and that the opportunities that technology provides, the consumer formats, the modality of practicing your finances is now different than it certainly was 10 years ago. I challenge anyone who 10 years ago had an iPhone or an Android to raise their hands. I'm assuming it's still the empty set. And yet nowadays we look at many of these smaller companies in the financial inclusion space developing apps that allow for money movement or transmission in a way that couldn't have been done before. You know, an interesting point is, I think it was Accenture recently did a survey on preferences around financial services. And 73% of those surveyed said that they would prefer Google, Amazon and Apple over the top three banks as their primary financial provider. And I think that's a pretty interesting tale. I think it is interesting. I think it goes back to something Neil made earlier about being focused on service and customer service and coming up with products and services that really are meeting people's needs. So there was a lot there that you all just said. Well, one thing that I think you all mentioned was regulation and the regulatory environment that we're operating in. It does seem there's a bit of a, probably, a lag time between innovation and when the regulatory environment catches up to that. What thoughts do you have about that? And we have, I know, the newish Consumer Financial Protection Bureau has that project catalyst and other things that's trying to be more open and responsive to entrepreneurs and innovation in this space. But we're still seeing some disconnect. We also see some criticism from consumer advocates who are concerned about all of these new products and fancy things that are out there on the market. So what kind of regulatory changes do you think need to happen in the next couple of years to really put better products out in the market? Well, it is inherent that the regulators will be behind. That is always the case. That's just the way it is. But beyond that, it seems like it's really important to have more dialogue between the innovators here, let's call it on the West Coast, even though they're everywhere, and the regulators on the East Coast, and they're everywhere. And there is very little of that, right? And I think that's, there is a big bank lobby, there's a small bank lobby, right? There's an alternative financial services lobby, there is no fintech lobby, there's no real financial inclusion lobby. I think the parties here and others can play a powerful role to connect the dots. And I think that's step number one and that needs to go both ways, right? The regulators need to understand what's going on in the minds of folks who are inventing the next generation. And by and large, the innovators are clueless as to the very good reasons why regulations exist. And there is tremendous and very powerful and very positive legacy for why a lion's share of regulations exist. And even in this environment today, which I would say is sadly an activist regulatory environment, so there's plenty to malign as an innovator about the environment in which you're operating. There are things like Project Catalyst, which is tremendously unusual, right? I mean, this exists in other domains, but in financial services there has never been a regulator, which has an aspect of its charter to not just enforce, but to increase access. They could do a lot more with that than they have, I think, but I think it's exciting that it exists. And by and large, it seems like the CFPB has been a very data-driven and empirically based group. So. Yeah, I would agree. And we're looking forward to seeing kind of what comes of that as policymakers and consumer advocates ourselves. So I want to change tack a little bit here. When I actually, I first met Ryan a couple of months ago because we're both participating in a tech accelerator. And one of the things that really struck me has been a lot about this in the media recently, particularly here in the Bay Area, is the lack of diversity in technology, and you mentioned, Ryan, that a lot of the companies we're talking about are actually financial technology companies. We're not exactly a rainbow up here on the stage ourselves, and I'm the only one in address. So what do you guys have? It's early. It's early. It is early. That's true. The policy hasn't started yet. So you're thinking about entrepreneurship and innovation and research and bringing new voices. What do you guys thoughts about how we can all do better to make sure more voices are heard and included and more folks are accessing those opportunities, particularly when the clients that we're talking about serving are largely immigrant, minority, female-headed households, et cetera? That's an easy question. Thanks. I appreciate that. I think arguably the two most successful kind of fintech companies right now are probably Square and Stripe. As far as the size, the amount of capital they raise, the talent they're pulling in, both of which were started by founders who were obviously very talented but also knew their market really well. Like, they knew exactly what the demand of that customer was when they created it. And they've been very focused on that value proposition. I think it's very difficult to create products and services if you don't understand your customer. And I think to a certain extent, this is a space where people who come from, you know, more diverse backgrounds are going to do very well. It is very difficult for somebody who, you know, lived a somewhat privileged life and never thought about some of these issues to create a great alternative for consumers that are blocked out of the banking system. It's very difficult to come up with a great remittance product to Mexico if you can't speak Spanish. And so I think that, you know, as we see more innovation in this space, that I'm willing to bet we're going to see a lot more innovators that come from these backgrounds and are representative. I would love it if that were true. And it's not very apace to say that. And of course, we all want diversity. And I think it's important, but I'm not holding my breath. You know, at the end of the day, you know, we believe that there's a tremendous amount of innovation serving this segment that's going to come from software. And that means there's a lot of white guys who need to get a clue. And, you know, yes, of course, we all love that. But I don't think it's likely. And I don't think, you know... Despite my fairly obvious shortcomings on the diversity front, I'm actually sort of privileged with the ability to do what I do at American Express. So American Express is the only Fortune 50 company that's also a top 10 company for women to work at. My own team, Sarah Trash, heads our engagement marketing, our BI, data and analytics. And on the developer side, our head of development has the luxury of being both minority and a woman. And half her leadership team, her vice presidents actually, her senior leadership team are as well. So, you know, I think the problem is the advantage that we have is fairly unique in that the industry and both financial services and technology segments tend to be relatively not diverse. And when you cross those two, you end up with this panel. And so, you know, I think I challenge all of us to do better. Absolutely agreed. So I have one last question I'll throw out to the panel. And I think we are going to leave a couple minutes for questions from the audience as time is flying by. Ryan, I'd warn you that when you mentioned in our prep call that we need more than tech, that I was going to bring that up today on the panel. What do you guys think about this hyper focus that we seem to have on technology-based solutions? Is that keeping pace or outpacing our consumer's ability or willingness to use these solutions? And what kind of reflections do we have on the idea that technology is not going to solve every problem or maybe it is? So I had a conversation this morning with Arlinda that she was the CEO of Pay Perks. And she was saying, you know, in this space in FinTech, you know, great ideas are easy. Great ideas, no problem. But actually getting them done is so hard and such a slog that what you're really looking for is just persistence and just not ever just giving up, just charging ahead, being opportunistic about partnerships that you might be able to strike about playing off larger players against each other about just kind of squeeze through until you can kind of make it. So yeah, I don't think this is a tech issue. I think that a lot of this is like about just persistence but trying to figure it out. It's about, you know, just getting kind of faking it until they make it a little bit. And I think in FinTech especially, you kind of got to do that to a certain extent. So yeah, I think that that's kind of what I was intending. Other thoughts? I think technology is critical and it is the only way that you can do things that are exponentially different than what's been done before. On the other hand, I also definitely agree that technologists are messianic and believe that they are solving the world's ills and I don't particularly believe that everyone in Silicon Valley is changing the world nor is the financial inclusion movement at its best. I think it is ameliorating a difficult situation and I think that is okay. That is actually very powerful, right? Like there is tremendously powerful amelioration that doesn't solve for the issues of a vulnerable middle class and of limited mobility and of an income divide. Technology can have an incredibly powerful impact but it is quite limited in its ability to really change some of those things. Yeah, I think it goes back to the root of what is FinTech. That we can take the tech side of that equation and we can essentially decrease the cycle times down to iteration in minutes but going back to that regulatory question before, on the Fin side, if it takes months or years or even decades to adopt that change or to enable that change, that the tech almost doesn't matter in that type of environment but ultimately you ask what does matter? I do think tech is a valuable ingredient but at the same time, you know, we talk about large financial institutions support. Think about what the large financial institutions bring. They bring supply chain management. They bring distribution. They bring brand and trust. They bring capital. They bring support. They bring, to the lab's perspective, a safe way to try these things out without running a foul of the regulators. So I don't think it's enough on its own, absolutely. But it is a critical component that can be brought together with large institutions to really make a difference. Absolutely. So does anyone out there have any questions? Any questions from the audience you've been thinking about? Because I can keep going and asking more questions. I know it's because you're doing such a good job of being so, being so thorough. So going beyond this relationship between the large institutions and the consumers and then we've got the entrepreneurs, there's other folks in this, in this ecosystem as well. And a lot of the time, I get as someone who works for the government of increasing numbers of startups and entrepreneurs coming through our office and talking to us as government, what we can do to endorse what they're doing, to promote what they're doing. And also we've got a pretty large reach ourselves into the consumer market. So I'm wondering, what do you guys think that financial institutions and entrepreneurs alike can learn from the public and nonprofit sectors and how can we do a better job of working together? I think you're totally right. I think that any smart entrepreneur in this space looks very quickly for people to partner with and looks for problems to solve when they try to work within their community. And when we met, I was actually working on a fintech startup, which wasn't a very good one, obviously, because now I have a job. But you have the ability to plug someone into like a set of problems, a set of people that needs a solution. And I think to work more closely, I think there should be a broader recognition amongst kind of, whether that's the investor community, whether it's other large banks, whether it's people like me that sits somewhere in between, that those community stakeholders are a great place to find talent and referrals and great people, I guess. Two things. A, financial services, and certainly financial inclusion is not a stand for problem. And B, the second you walk outside your door, you're making a political act. And financial services is quite controversial, especially credit, right? And it has been historically and is worldwide. And so on the former, it's not a stand for problem. You know, you can't just build an app. It requires both a patience for and an ability to intersect with a much broader set of stakeholders, which includes governments and nonprofits. And if you're not into that, you're not going to succeed, ultimately, in this game. And on the latter, you know, the second you step outside, you're making a political act, there is no way to do credit for the underserved in a way that isn't going to be damned if you do and damned if you don't, right? There is no APR other than zero that won't, or maybe low single digits, you know, that won't be get the ire of someone very, very vocal. And so that is the way it is. And so that requires a dialogue with multiple stakeholders, notably consumer advocates, regulators. And that's just part of the reality in this space and something notably, you know, that AmEx is staying clear of, maybe for, you know, for good reason, right? This is a, this is a payments strategy. It may be because I'm a Stanford grad. I don't know. Double whammy. The only thing I would add honestly is, you know, it's the grassroots organizations, the NGOs, the not-profit and not-for-profits that are actually in touch with this base better than anyone else. You know, these are the kinds of things the diaries are showing us, is that their financial reality is not the same as that lens, that the large financial institutions have traditionally put on the data and that you really have to get in touch with their true need. You have to have that empathy with that customer. And I think that's the absolute best source of that information and can inform everything we do. Thank you. So we're getting big signs flashing up here. I'm sorry, telling us to conclude our panel. So I'd just like to thank Neil and Arian and Ryan for being with us this afternoon and all of you for listening. So thanks very much guys. Thank you.