1. Saving people money
Sarah Tavel

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

3. For example…
Managing what
you have
Getting more
for less

4. Startups are able to provide “better, cheaper” by
recasting cost structures of incumbents.
eCommerce
“Full stack” tech
Sharing Economy
Peer to Peer Marketplaces

5. Why does saving money lead to such
massive companies?
It’s the painkiller of the mass market.

6. Real annual wages have been mostly stagnant since 2000.
90% of Americans make <$90k annually.
Source: Economic Policy Institute

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

8. 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

9. Here’s another dimension…

10. Millennials are being hit hard by education costs.
Source: Bureau of Labor Statistics, National Postsecondary Student Aid Study, Edvisors.com

11. Their debt profile will differ dramatically from prior
generations.
2003 2015
Avg. Debt Balance by Age of Borrower

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

13. This will cast a shadow on their financial health for
decades.
Source: WSJ, Federal Reserve Bank of New York Consumer Credit Panel/Equifax

14. Meanwhile, regulatory changes have diminished
access to capital.
Source: The SCE Credit Access Survey, Federal Reserve Bank of New York
0
20
40
60
80
100
<680 681 -­‐ 759 760 +
Applied and Accepted Applied and Rejected Discouraged
Borrowers’ Credit Experiences, By Credit Score

15. 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.

16. Mortgages aren’t any different.
Mortgage Originations by Credit Score
Source: Federal Reserve Bank of New York Consumer Credit Panel/Equifax

17. Home ownership is at its lowest level since the
Census started tracking it.
Source: US Census Bureau, Zillow

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

19. High deductible plans are becoming the norm.
Source: Henry J. Kaiser Family Foundation/Health Research & Educational Trust Report

20. 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)

21. 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?

22. 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.

23. 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

24. 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

25. Opportunities

26. 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:

27. 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:

28. 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:

29. 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:

30. “ 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 Dimon
CEO, JPMorgan Chase

31. Thank you.