582 Hot Takes from Fintech Xchange Diving Right in with U.S. Bank and Fintech Nexus

Welcome to Breaking Banks, the number one global fintech radio show and podcast. I’m Brett King. And I’m Jason Henricks.

Every week since 2013, we explore the personalities, startups, innovators, and industry players driving disruption in financial services. From incumbents to unicorns, and from cutting edge technology to the people using it to help create a more innovative, inclusive, and healthy financial future. I’m J.P. Nichols, and this is Breaking Banks.

Today, we continue the series powered by U.S. Bank that we recorded at the University of Utah’s Fintech Exchange. And this episode is hot. And by hot, I mean we fulfilled the bucket list item of David Nass’ SVP Fintech Partnerships and Investments at U.S. Bank to be on Hot Dicks.

Jason Mikula, Alex Johnson, and Peter Renton join us to recap the major themes of the event while indulging in wings topped with limited edition hot sauces brought to you by U.S. Bank, including Fintech on Fire, the Regtech Reaper, and Stablecoin Scorch. We should have taken the handwritten note from Hot Sauce Harry that the extreme sauce is extremely hot. Our take lived up to the heat, though, as we talked for a full hour and concluded we need part two with Jennifer Tescher and Theo Laude to continue the discussion on hype versus reality on technology, improving financial outcomes.

Have a listen and grab yourself a wing. All right. So we just have to say this is the end of a marathon of recording, second only to when Brett had COVID early on at Money2020.

I had to take his place. But this is a first for a Hot Takes. Peter went straight to 11.

He went all spinal tap on us. He just went for the Fintech front fire for the Fintech exchange that Hot Sauce Harry, where we source our hot sauces from, actually put a handwritten note of warning on it. I can see that.

Yeah. He’s like, careful. This stuff is really hot.

So was it hot? It was an 11. It was an 11. And my eyes are watering.

So, hey, let’s do a wrap up of the Hot Takes. Not just of the day, but I think we’re going to hit 2024 and what we’re looking for, because, hey, it has been a long January already in Fintech and regulatory world. Jason, start with you.

What is your hottest take of 2025 so far? Well, for frame of reference, I did not do dry January this year. That’s a sign of us. So you made it till the first.

Oh, yeah. Most of those. No, I mean, my hottest take is I’m, you know, looking forward to finding out who ends up in these regulatory slots.

Right. As of the time of the recording this, apart from acting chair at the FDIC, Travis Hill, there’s been like very little indication of who’s going to fill these slots. And, you know, I would like to know.

Inquiring minds want to know. Also, I guess that wasn’t really a take. Out of stake.

Who’s allowing Chopra to remain at the CFPB and how long will he be there? I think he locked the door and just won’t come out. He’s just not answering the phone. By the time this is live, he’ll be gone.

I was worried he was going to be like gone by the time we got off stage. I was like, yeah, that’s amazing. Very well.

So I have a question for the group since Jason brought this up. And wow, that is hot. That is hot.

That is so hot. Is it going to make a difference who’s in the seats? Like what difference practically is it going to start to make? It does feel like the industry is going to do as the industry wants to do a little bit. I think that’s a fair question.

And I was used dropping on one of your earlier sessions. And it is a very fair point that, you know, leadership of these agencies is usually a person or maybe a board. And change at that level takes time to filter through to the rest of the agency, particularly to, you know, examiners or staffers outside of that DC bubble.

And so while it’s easy to change talking points quickly, and we have already seen that, I do think it’s going to take longer to see how that translates into material changes in policies and whatnot on the ground. So, David, I’m curious from your perception within U.S. Bank, right? Like U.S. Bank is certainly not the most aggressive. You’re progressive without being aggressive and pushing the boundaries of things.

Have the changes or the belief that there will be some changes on the regulatory front changed strategically? Like some of the direction or your mandate in terms of where you’re pushing? Okay. I’m fighting through the pain of that last time I saw this. I will say, I was going to start this off like playing my get out of jail card that I got.

I was like, all these opinions are those of Dave and Ness. But seeing as you asked me the question from U.S. Bank. Well, no, does it change your mandate, right? No, it doesn’t.

So short answer, no, it doesn’t. Because I mean, ultimately, as you look at it at the master thesis that for us to be successful and innovate quickly with FinTech partners, we need to have our educated regulators alongside with us as we work. And so one thing we’ve been looking at is how do we speed up the education of our regulators into net new spaces, right? If you think of like how people were talking about pegging and stablecoin just 18 months ago versus the conversations today, the use cases have changed so dramatically.

So how do you regulate that space when it’s changing so quickly? How do we do anything in that space where we know that our consumers are suddenly going to, it’s going to be an on demand. It’s like we talked about exponential curves and how they can hurt, right? We know the demand is out there and we know it’s going to go like that. But as a bank, we can’t just turn a switch on a net new product or something like that.

So how do we test safely and bring our regulators along with us too? So no, it hasn’t changed. Right. Nor should you flip a switch and go on.

We can’t, right? You know, Alex, the question I have for you is there are those who do flip the switch and turn things on. We’re in the law of unintended consequences. Let’s throw out two of our favorites in terms of Tomo Credit, Solo Funds, in terms of like they go pursue without a full understanding.

It’s not just regulators that struggle with this. Like as an industry writ large, sometimes even with the best of intentions, we do things that have unintended consequences. Yeah.

I mean, I think the dynamic I notice a lot is the sort of, well, they’re doing it, so we should do it dynamic, right? And so a big part of I think what drives a lot of companies, banks, startups is, sorry, I’m crying because of the hot sauce. The dynamic I see is we don’t really have an idea or we don’t know what to do next, or we don’t know how to grow, or we don’t know or have a firm grounding in the value that we’re providing to our core customers. We don’t even know who our core customers are.

We just want to get to the next thing. It’s really easy when that’s your motivation to draft off of what you see everyone else doing. And I noticed that right now with a lot of, just to pick on like one example, there’s a lot of like speculation being built into financial infrastructure, right? And this includes crypto, but it also includes trading.

It includes meme coins. I think- Event contracts. Event contracts.

Yeah, like Robinhood’s going to sort of get into sporting, sports betting, but not really, but also kind of prediction markets. Like that is profitable. That’s what customers want.

It drives your monthly active users up, like all of these things. And the only way to sort of realize like, boy, we might be headed down a bad path. You can’t look around because everyone is doing it.

That’s not a good guide, right? You can’t even necessarily rely on the conversations you have with regulators because maybe their opinions on that have changed, or there’s new people in place who have a different opinion. You have to have a grounding in, and this kind of ties back, David, to what you were saying. You have to have a grounding in like what we’re trying to do, and who we think we are.

And if you stay with that, sometimes you’re going to be pushing the boundaries on regulation and having uncomfortable conversations. And sometimes you’re going to be way far in the back, and a whole bunch of other people are going to be rushing ahead, and you’re going to have to have uncomfortable conversations with your investors, with the public markets. And they’re going to be like, what the hell? You’re not doing this.

Everyone’s supposed to be doing this. They’re like, that’s not our game. We’re not playing that game.

And I think that’s what I’m looking for, but I don’t see that a lot. So Peter, I have a question for you. Don’t take anything too spicy right now.

It’s like literally all of us are crying now. You kind of call up the canary in the coal mine for part of this in how you help put together content and events for this, right? So I’d say faster than people can launch new products and do these things, where the content moves kind of is ahead of that. Are you feeling like it’s moving faster, all in a homogenous direction, or is it beginning to bifurcate? What do you see as a broad trend about what people want to talk about? Yes.

So it’s interesting, because I think there’s a trend that has really gained steam, I think, in the last probably 12 to 18 months on the content side, and that is individual companies launching their own standalone event to sort of demonstrate their thought leadership. So whereas before, you might have seen a company sponsor a big event, maybe do some webinars and things like that to kind of get their name out there. Now what they’re doing is they’re going to the time and expense of creating an in-person event.

We didn’t see that much pre-pandemic, and we didn’t really see it much, I don’t think, until probably the last 18 months. But that, as someone who’s sort of been in the event space for a long time, I see that as a bifurcation, where you’ve still got the money 2020s and the fintech meetups that are massive events, growing, still really popular, but you’ve got these boutique events. Different than user conferences, like thought leadership events? Really, I’ve been involved in a couple of them, and they’ve made it clear that this was not a user event.

This was not just an event that was to showcase how great they are. They wouldn’t even let their salespeople come sometimes, right? Yeah, you’ve been in a couple of these things. It’s like, it’s all thought leadership.

It’s not about sales. And it’s kind of to your point about, like, we want to be the partner that you come to with questions. We want, like, if we’re figuring out our strategy, we want to be in the room helping you do that.

And that’s just a very different approach to marketing than it is, yeah, we’re going to drop 20,000 at a booth at this show. Right, right. Because I mean, I went to these events thinking that they’ve said they weren’t going to really be a sales tool.

But when you get there, are they really going to be all about building up their brand? And it just wasn’t that they like they did some some brand building, but like they went out of their way. They went out of their way, I think even too much out of their way, too careful to sort of not put their brand front and center. They wanted to put the thought leadership front and center.

And kudos to them. I think it’s a, it’s a great, not everyone can pull it off and not everyone really has the inclination to pull it off. But those that do, I think it can be really valuable.

Well, speaking of thought leadership, one of the exercises Jason, Alex and I get to do every year is we talk about our predictions. Let’s do our thought leadership, flying around. We are now into 2025.

Hard to believe it is only 23 days in, but a lot has changed. What is your hot take prediction for what the next year is going to look like? I actually didn’t do my predictions this year. So I’m not just recycling.

I know I ran out of time and it was already mid-January and then I just gave up. So I’m not recycling something I previously said. You know, I think the sort of pace of enforcement actions in the Bass space, I do think is going to slow down.

Right? Like I forget at this point in this very long day of takes, if I already said this to you, but somebody was asking me, are we already through the eye of the hurricane? And yes, I do think we are. So not that it’s done. I think there’s still some more pain there, but I feel like the worst is probably behind us as far as public regulatory actions.

So I wanted to ask this when you said that earlier, is that because the general sentiment is, hey, lay off, or have we kind of, you know, wiped the slate clean that we have found kind of like the problems that needed to be dealt with and we’re kind of done? I would say more the latter. I mean, certainly there hasn’t yet been enough time for any regulatory leadership changes to flow through. And I’m not even necessarily sure that that’s how they would manifest.

But well, you know, if you think, I sort of date the start of it to like Blue Ridge 2022, although arguably there are like earlier ones as well. So we’ve been through, you know, two, three years of this, and that’s enough time and enough exam cycles where, you know, say the most egregious cases were most likely to get an enforcement probably already have. Yeah.

Let’s hope. Let’s hope. Yeah.

All right. David Ness, personal opinion. Thank you.

And I’m crying again because I just took another bite because my timing’s perfect. I have two, if I can sneak two in quickly, because they’re around one theme. And it came a little bit from listening to conversations today.

And that is around who watches the Watchmen, right? And so my personal predictions would be that we will see a automation of regulation by the regulating bodies themselves. So some use of AI to help in guidance and regulation. That would be amazing.

Or at least a signal for it. Yeah, signal in the direction. 30 year journey begins this year.

I was right, Dennis. And then the flip side of that is people that are building, we’re seeing a ton of AI compliance tools, right? Reg AI, where are you going to go? People that are building that, if they are not building that with the translation layer that is for the five remaining people in the compliance team that are left, we’re not building the right products. Interesting.

I like that last one. Yeah, those are good. I like those.

No pressure. Yeah, yeah, yeah. Goddamn.

All right. So I think for me, I haven’t written about this one yet either, but it probably will come up later. I think there’s going to be a consumer-led rebellion against the credit infrastructure in the US and lenders in the US.

And here’s what I mean by that. So the old model of lending was lenders lend in good environments. And then when the cycle turns, they have a lot of risk in their portfolio.

And as a result of that and their need to limit their exposure, they tighten the credit boxes and they deal with the outcome of that. So the credit infrastructure and the credit ecosystem self-regulated based on overreaching and then pulling back and then overreaching based on the credit cycle. I don’t think that’s what’s happening now.

I think what’s happening now, at least in consumer credit, is lenders have gotten really good at lending just enough money that they can extract the maximum amount of debt from consumers, from borrowers, without pushing themselves to a place where they have a lot of risk exposure. So the thing I’m obsessed with is people are like, well, is the credit cycle going to turn? Are lenders going to have these massive problems on their books? I actually don’t think so. All of the credit signals that you get, it’s like auto lending, super overheated, credit card debt is back above pre-pandemic levels, all these things.

And yet you talk to credit risk professionals at banks and they’re like, we’re actually not that worried. It’s high, yes, but we’re not that worried. And I think BNPL is the best example of this.

Are BNPL portfolios going to blow up? No. Does that mean they’re not taking a lot of risk? No. What it means is they have designed a structural product that just doesn’t have very much risk because it’s a six-week loan at small dollar amounts.

And so if something bad happens, they just turn off the spigot. They’re going to get the bad dollar very quickly. Exactly.

Yeah. And so it’s like, what’s going to happen is I don’t think we’re going to go into an environment where the credit environment contracts because lenders overreached and there’s all this exposure and they have to kind of tighten things down. I think they can just keep driving really close to the cliff and keeping consumers close to the cliff and go, you can handle a little bit more debt, a little bit more debt.

Here’s another little thing you can do. And so I don’t think it’s lenders that are going to cause a contraction or a pullback in that. I think it’s going to be borrowers.

And I think at some point, it might not happen in 2025, probably won’t. But at some point, borrowers are going to sort of wake up and realize, I’m not hitting my other financial objectives because I have been optimized to the exact amount of debt that I can handle. It’s not good for my finances.

The amount I can pay back. Yeah. So it’s good for the lender.

It’s good for the merchants that they’re enabling more commerce for. It’s bad for me and my long-term financial goals. And it’s going to have to be consumers who object to that or who look for a different solution.

And I think it’s going to create a whole new market for personal financial management, debt repayment, whatever the things are that come out of that. But it’s not going to be the same boom and bust cycle we’ve seen before. Very quickly, there was a tweet from the CEO of a well-known buy now, pay later company that was something to the effect of, I think it was like a good employment report.

This is great. It means consumers can keep shopping and keep borrowing. Yes.

Yes. They look at that and they’re like, that’s great because that gives us this little room and we have the exact product that can fit in that little margin. And it’s like, it’s brilliant from a lending perspective.

It’s great for their merchant partners. It’s not good for consumers. It’s not good for borrowers.

And that’s what I think the one of the things that consumers continue to be pushed and pushed. And that’s what I like my take for this year is that there are tools now that were simply not widely available even a year or two ago that allow consumers to really help them manage this you know, the debt cycle. Let’s not call it a trap.

Yeah. Yeah. A debt cycle.

A loaded terminology. Yes. And I think like things like earned wage access, which is one of my favorite innovations in the history of Bintech.

I think that is a way where people have taken on all these buy now, pay later. And they suddenly see, oh my God, I’ve got a $120 payment that’s coming. And I’ve got $80 in my bank account.

That’s right. And so the fact that they can just easily go into the app and say, oh, I need another $100. Boom.

It might cost them, you know, $3 or $4. If they’re smart, they can get it with 24 hours notice and get it for free or two days notice and get it for free. But that availability, I think, will just help consumers get through this morass of BNPL credit card debt that they have.

And will help them keep their head above water. You know, I think hopefully that won’t sort of make their overall situation worse, but will help them manage their financial loss. So I totally agree with that.

Can I point out one thing that I think is just an interesting language thing that sometimes is very telling? I love the like head above water thing. Have you ever been out in the ocean and you’re like, head is technically above water, but you don’t feel very safe because like every time a wave comes, the water splashes up over your mouth, you know, like, God, I like head above water does not mean thriving or getting to where you want to go. And I totally agree with you, Peter.

I mean, I think the tools are being built to make it easier for people to stay right on that edge and to keep their head above water. But like we have to do something more than that. And it’s not a way to live.

Yeah. Yeah. It’s just not going to work.

But consumers have got to want to as well. Consumers are sort of trapped into this like I want to buy that next thing. And so that I’m glad you brought that up because the other thing, and this ties back to what I was saying about speculation too, is how much of it and Hendrix, maybe you can weigh in on this.

How much of it is the job of banks to say no to what customers are asking them for? Because like speculation and gambling, super fun shopping, super fun, right? Like there’s a reason those things drive up. Yeah. Like those drive up your monthly active users.

Like that is it’s what customers want. We’re in the business of giving what customers, what they want. And yet in financial services, there’s this other thing that we’re also supposed to be doing.

Like, I wonder how much of that is a balance there. There’s the great insights from a couple of years ago where we just started to do, not we, but banks in general started to do like notifications, right? Nudges, they used to call them, right? And so I think the prime example is someone was nudged to, maybe you don’t buy that Starbucks coffee, right? Don’t tell me I’m living! Exactly, right? If not, it’s like, this is, the nudges are often bad. Like, because when, when Trump coin got announced, like Robinhood, I got an alert from Robinhood saying, you can now buy Trump coin on Robinhood.

Yeah. You’re like, great. Thanks for democratizing finance for me.

This is fantastic. I love the thing. The nudges can be used both ways.

I mean, I think that, you know, it’s a reflection of the wider culture within which these companies and tools and people exist, you know, in the United States, as is the case in, I guess, most like Western developed countries, increasingly pushing responsibility onto individuals versus like society at large. And so if the idea of, you know, the financial services provider is, their obligation is to maximize shareholder value, like they’re acting rationally to try to extract that from the customers they’re serving. Yep.

Even if that is by giving customers in theory, what they, what they say they want or what their actions reveal that they want. Yeah. But this also comes down to a level of transparency though, right? Then I would think, let’s look at when you had to start putting what the calories and fat content were on the menus attached to things.

I’m never going to Panda Express again. I’ve never drunk an IPA. Ruin that experience.

But think about that moment when you looked at it and you’re like, wait, you’re telling me, I could have had the bacon hamburger and had fewer calories than the salary. I didn’t even want the salad with the like other stuff. Like, and I ate the salad and it was 1200 calories.

And do we need a transparency? Is that what’s going to bring in what Alex was saying around better choice? Well, it’s something that, um, I assume soon to be former acting comptroller, Sue, uh, had touted a couple of times is the idea of some kind of like financial health metric, right? Yeah. Vital signs, right? We have the CRA. I’m actually like, that’s an area of banking law and regulation.

I’m honestly not super familiar with, but like, could there be some sort of customer outcome metric that we hold financial institutions accountable to? And like, what would that look like? How would you do it in practice? Obviously banks would hate it. Um, well, like that’s, I mean, another good example of that that came from a former regulator, uh, Sheila bear, who is at the FDIC. She’s been sort of, uh, railing against the FICO score recently.

And it’s, I think it’s kind of misplaced anger a bit because the FICO score actually is like a useful tool for lenders. But I think what she’s saying is in place of not having those financial health vital signs, it becomes the number that we optimize against. And it’s a bad number to optimize against.

If you’re worried about financial health overall, it’s great for getting access to credit. It’s not a good way to live your life generally. Right.

And so, um, I think that becomes one of those questions where it’s like, but again, private market, who’s going to develop that? How do you bring something like that to market? I was asked, uh, once, like if someone gave you a billion dollars and you could build whatever FinTech thing you wanted to, and you just have to answer to anybody, you just build it. What would you build and credit builder I need you with tips. They’re trying to set me off.

I will not be, I will not, not going to bait me into going crazy on this podcast. Um, no, I was going to say like the, the thing that definitely I would focus on is I would build a consumer facing financial health score that optimizes for that broader set of things. And you’d need a lot of money to do it because there isn’t this sort of natural wedge way to get into the market with it.

But I do think that, you know, uh, acting comptroller Sue, I think he makes a really good point about if this existed in the market to your point about transparency, it would give consumers something else to optimize towards when they wanted to do that. So I want to build on that. I’d love your reaction to this.

This is truly in the, let’s workshop and IDX. It’s not all thought out. So I was on one vision with Theo and Barb Klein, right? Like love those two typically like the voice of optimism.

This is like, Oh sure. Right in the depths of like between Christmas and new years and everyone’s sick of their children being home. And we’re in, you’re talking about the kind of the state of the market and like the broken promise of FinTech was supposed to fix a bunch of things, especially for consumers.

And I made the point, I’m like, I do think at some point here’s like the hot take to work shop is, is there a winning strategy when we have open banking and data available in AI that can actually measure outcomes for things? Is there a winning strategy called? I actually will do good for you and make good on my promise that if I make a claim, not just a non UDAP, but I will make good on a claim about whether I improve your credit score or your savings or help you beating your goals. Is there a winning strategy by doing good? Like, is the promise of FinTech coming back or do the markets always squash that? So can I give one example? It’s like a very small specific example, but I was interviewing the CEO of lending club, Scott Sanborn, right? I know Scott very well. And he was talking about, we actually talking about high interest savings accounts that actually aren’t capital one.

And like, what the hell? Like this is not good for customers. And I always thought that was such an interesting calculation to make from an analytics perspective because I have other business with them, right? And by pissing me off in this way, are you risking your larger relationship with a customer that you value to hold your deposit betas low? And, um, he was sort of explaining the lending club models since they bought radius bank and how they think about deposits. And he was like, yeah, we always want to pay the maximum deposit rate that we can pay.

Like we don’t want to play that game. And I asked exactly the question you asked, which is like, okay, that’s cool. I like that answer.

That’s appealing to me, but make it make sense on a business level. Like explain to me how you make the mechanics of that work. How do you explain it to investors on earnings calls? Like, what’s the case? And he actually had a very good, well thought out answer that essentially was, um, by doing that, we can increase our, uh, ratio of referrals, cross sell, and we can lower our customer acquisition costs.

And so the money we would make there, we’re then taking out of our customer acquisition costs and we measure that. And as long as our customer acquisition costs are lower than what we would benchmark otherwise, we can afford to give all of that money back. And so it was a really good aligned answer on, we can do the right thing for our customers, but we can also make a lot of money doing this.

And it’s stuck in my mind because that’s one of the few times I’ve ever had an interaction with a bank or FinTech executive where they’re like, yeah, we want to do good. And then I was like, but how do you make money doing that? And most people give you kind of fluff when you ask that question. There’s some hand-waving.

There’s a lot of like magic hand-waving in the middle. And like, but this proved to me, oh, okay, that actually does make sense. And you actually have been thoughtful about that.

So I do think it is possible. But it’s not, it’s not going to be, um, I think the predominant driving force of FinTech. I mean, it should be, I would like- It was the crunch.

Yeah. But I feel like the reality is the consumers right now have all of the tools they would need to live a financially healthy life. They’ve got more insight into their spending.

You can get, you know, you can get the rocket money account that shows you details about how your financial life is manifesting. And yet people are as financially unhealthy as they’ve ever been. I love like Jennifer Teixeira, the financial health network.

They do great work. But the reality is they have not moved the needle enough on the financial health of consumers in this country. And I’ve become over the last year or two, a little negative on this thinking, if now people aren’t financially healthy, will they ever be? If we have AI agents going out and optimizing our finances for us, will that make any difference when you really, you have all the tools right now? I think there’s like two different sort of bottom-up and top-down ways of thinking about this.

Top-down meaning, you know, the sort of macroeconomic forces that like all of society is dealing with, right? So particularly in the United States, higher cost of living for home, apartment rent, medical care, education, obviously everything else, while mostly stagnant income. So just like structurally, it’s like very difficult, no matter how good your tools are to overcome those forces. And then bottom-up at like an individual or like personal psychological level is something that has really struck me from moving outside the United States is how just radically different some of these behaviors are, especially when it comes to consumer credit, right? And the fact that I don’t know a single person in the Netherlands who has a credit card, except for me.

And there are, again, there are structural reasons as well as sort of like socio-cultural reasons why that’s the case. But I mean, Alex, you and I have talked about the idea of an easy button, right? It’s like, oh, if I just press this and it fixes my credit history, great. But then how valuable is that to a potential lender or creditor if that easy button is just fraudulently disputing stuff that was actually real or furnishing trade line data that’s bogus? Like my behavior as an individual has not changed.

I’ve just learned what the game is and a way of manipulating the game. Am I going to end up in a better financial position because of that? No, probably the opposite. So one note on that that I think is really interesting about the easy button thing is we compare financial services to healthcare a lot, right? Because they’re very similar.

It’s about behavior. It’s about incentives. It’s about long-term outcomes.

We use the term financial health, right? Like they’re very clear parallels. Here’s one difference. I can’t outsource going to the gym and lifting weights, right? Like if someone goes and lifts weights for me, that does my body no good.

There’s no way to- I’ve heard of Ozempic, but let’s take- No, maybe a couple of things. But for the most part, like I have to like actually do the thing myself. The thing I’m kind of curious about with financial services, and I am not in any way defending credit builder products that are easy buttons, but I do think like going back to your point about AI and AI agents acting on your behalf, your financial health is not something that you yourself need to be like grabbing the heavy metal bar and pushing it yourself.

Someone can do that on your behalf. Now, you still have to have the right long-term goals. You have to be wanting the right things.

You have to make sacrifices to get to where you want to go. But the unpleasantness of getting to physical health doesn’t necessarily have to be as unpleasant in financial health. A few thoughts.

So one, I think, and I’m a bit of devil’s advocate here, I think you can fix some of this problem if you take the human out of the equation, right? So PFM’s been around for forever. We’re still in bad place, right? 15% use it, the rest don’t. And most people have access to the education that can do that.

A lot of people in this moment don’t, that’s the other part of it. And then the other part of it is, so I was at CES, right? And so to your point of like having your body moved around for you, there are now massage chairs that will move your body for you, for keep you healthier, put you into positions like in your yoga for older people. So it’s getting there too.

Terrible analogy. But the other point though, I think is what’s the point of working out, right? Is you want to live longer and a better life longer. That might not actually be the same answer for everybody.

That’s true. Right. Yes.

Fair point. But can you ask the same question from, so you need goals, right? There’s a certain demographic that don’t have any goals from a financial point of view because of the metaconstructure that’s in place, right? They don’t think they’re ever going to be able to afford a house. So can I ask you a question about that? Because I think that you touched on something there that I’m just so curious about, which is, I think Frank Robin Acuity is called this financial nihilism, right? Which is like, I’m never going to get to where I want to go.

I might as well YOLO into the Trump meme point because what the hell, you know, like it’s my one chance to like get out of like this thing that I’m in. And the lottery ticket mentality. That’s the lottery ticket mentality.

That’s exactly what it is. And I’m trying to decide how much of that is sort of supply driven and how much of it is demand driven, right? So the demand driven viewpoint is touching on those structural factors. Cost of living is really high.

You know, inflation is up. Wages are stagnant. Like all of those sort of things that we hear about.

It’s very generational, right? Like we always talk about like Gen Z just doesn’t think they’re going to be able to afford a home. The flip side to that though is, and there’s actually some data to support this. You know, like 1979 was not great either.

And the example I use here is like my parents had to leave the town they lived in to go get jobs somewhere else because they could not afford a home in the place they wanted to live. And they tell me stories about like how they grew up. And I’m like, well, that doesn’t sound amazing.

They’re like, no, you know, unemployment was like a, you know, eight, 9% and, you know, mortgage rates were like in the teens. And I’m like, this is the area of 12, 16. This is kind of coming out of this situation.

Yeah. And it’s like, it’s really bad. And the thing that’s funny is now that they’re on the other side of it, they don’t really think that way anymore.

And if you’re, you know, 20 years old, you have no historical context for how other people’s lives were. And so the other theory I have about financial nihilism is I wonder how much of it is supply driven in the sense that people who sell lottery tickets, once you create a feeling of helplessness where it’s like, you might as well do this because everything else is rigged against you. And you see this in like Coinbase when they would do like advertising, their television advertisements are the most dark and depressing things I’ve ever seen.

They’re like, the system is rigged against you. You have no chance, but buy crypto. And you’re like, okay, like how much of that is programming the way I think about my finances versus how hard is it actually today versus in the 1970s? Reddit, right? Which is the system’s rigged against you.

Let’s take it to the man or woman hedge. Well, I think they’re saying to the man, right? Like let’s take it to the man, right? Like the institutional funds are against you and we’re going to stick it to them. Yeah.

So David, I’m curious because you have both put in the mainline bank, but you’re dealing with a lot of either these startups looking, who do we bring in? How many are playing in this? Like there are two like rose colored glasses and the impact they can have. And how many are to the other extreme of you’re like, yeah, you can make a lot of money doing that, but you’re kind of selling lottery tickets. Like, is there a balance? I think there is.

I think there’s a realism balance. I think I was looking at some, I remember when I first started FinTech, um, which was only seven years ago. Right.

Uh, the average age of independent then was 45 years old. Right. I checked the other day.

It’s now 34. Right. Sounds so.

Yeah. But then my question is like, how soon will it be till his days? If you have a, you know, agenda, agenda, if integrated, right. My son is actually starting while he’s, he’s, he’s six.

But you say that because that gives like, it started off with very much, much more case of they want to build a strong business. Cause they, a lot of the people that started early, early FinTech solve problems that they wanted to solve. Yeah.

Right. So it was much more hopeful and optimistic from that point of view, then you could argue that the VC model kind of skewed some of the metrics and some things were kind of steered off course because of that. For sure.

Um, and so then I think realism kind of settled in over the last three years for sure. And there you’re getting a lot more people that are also just building for, they had successful exits. They want to do something good this time around, right.

It would be, would be the mentality to do it. So you see a lot of people coming, but there’s a great conversation. And I forget where, I forget who told me about this, but it’s a great conversation about really doing something good.

You have to make it profitable at the same time. You tap one or the other. Yeah.

Cause they just won’t survive without both. And the true masters master both. So that’s the kind of long-winded non-answer that basically says early stage, it used to be a lot more business driven with it, with a shred of kind of, we think this is a pain point we have to fix.

Those pain points have been fixed. Most banks have adopted that technology and put it in a system. Now we’re seeing slightly more optimistic things coming through, but they’re tempered by being profitable models at the same time.

So I want to recreate that conversation with you, Theo, and I after this, actually, and I want to get Jennifer Kesher on to like have this, but this is where we started because that was the premise of Perk Street, right? When I left private student lending, where I’m like, this model’s broken because our incentive is to give you as much debt as you can take out because education’s an investment. Yeah. Oh, by the way, you’re never going to be able to keep up with the payments because you’re, you know, real wage growth is not keeping up.

What gets broken though is right. Is Berkshire, you’re supposed to be, Hey, we can give you cash back rewards on a debit card. You’re going to spend less.

The problem was the VCs said, if a little is good, right. Do you know what would be awesome? Yeah. Do you know what would be awesome? Let’s go up to a limit.

I mean, I also wonder to what extent the, you know, some of the mentality that was very popular in sort of startup in Silicon Valley in the past. And I’m thinking of the, um, Silicon Valley TV shows, you know, truism of, you know, we want to make the world a better place. Like it does feel like we may be at a moment in time where like that cultural moment is shifting or ending and moving somewhere else.

And not that, not that that’s going to describe every company and every founder. Um, but, but the, you know, the idea that that is, uh, not only like a laudable goal, but like, like a popular one that like, yes, like this is something that you should incorporate into how you think about starting and building a business. I’m not sure that’s going to be the same in sort of, you know, whatever the next generation of founders is just given the shift in the climate we’ve seen, broadly speaking, and then also specifically speaking in, in, uh, Silicon Valley.

I don’t know if that’s the case. Cause I look at, you know, I’ve got a 16 and 18 year old and I, I talk to them a lot and their friends, and there’s a lot of idealism and not only just idealism, but like justice, social justice is really important. And that you’ve got to, you’ve got to like that.

My son always jokes. Yeah. I’m, I’m a Gen X or, and he says, you guys just screwed up the world for us.

No, that was the boomer. We’re going to have to fix it now. That’s the thing that that’s what they think.

They think they’re going to have to, we’re going to have to fix the world. This is where the last generation that will be able to fix the world. It’s been sort of, it’s a lot of pressure.

It’s a lot of the, um, that, that age group are going to go into business, into FinTech and other areas where they really want to fix the foundational things that are wrong. Like the Durbin amendment. Wow.

Way to leave us on an uplifting. All right. But with that, I am in all seriousness, I want to have this conversation again with some of the other voices who are here, like the world who think about this and the Jennifer’s because I think what that next generation looks like that let’s face it a lot of the foundations being built today, what they’re going to have to be built on.

Let’s have that conversation again. So thanks for being great sports with some very hot, soft, isn’t very hot takes. We’re all going to go fight over the ranch and the but thanks for being part of the hot conversation.

Thank you. Thanks. That’s it for another week of the world’s number one FinTech podcast and radio show breaking banks.

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