How to improve financial literacy with a mobile app

Posted On

By Elisabeth Kindig


Episode 9 of Tech Lightning Rounds explores how mobile applications can help reduce debt, increase personal and business savings, and also plan for retirement. Beth Kindig interviews Twine, Catch and United Income, who are disrupting traditional finance by offering enhanced services to help automate the process of savings and financial management. Interviews are held in “lightning round” format, which are rapid interviews with tech experts for immediate depth on each topic.

According to a Ramsey Solutions study, money is the number one topic that couples fight about and the second leading cause of divorce. Beth Kindig of Intertrust speaks with Steven Dorval, the CEO of Twine, who discusses how couples can establish better habits to meet their goals.

Twine may be able to alleviate stress by helping couples relate differently with money by automating savings for major life goals, such as buying a house or going on a dream vacation. Steven Dorval touches on what couples can do about debt including optimal paydown strategies. We also take the opportunity to ask him about the financial apps on the market that are not FDIC insured.

The core product behind Twine is a saving and investing app that is designed for couples to work collaboratively. The problem that Twine solves is to help people become better savers by making this a consistent habit, and to help open up the opportunity for investment by introducing an easier entry into the finance, which can be intimidating for some. Steven Dorval also discusses who to break the cycle of financial illiteracy that can happen between parents and children.


The growth of mobile banking and other mobile financial services applications are popular targets for attacks. Intertrust Secure Systems delivers proven technology to enable banks and other financial services organizations to build security into their apps, delivering advanced protection from reverse engineering and tampering. Learn more here

TRANSCRIPT

02:39 BK: According to a Ramsey Solutions study, money is the number one topic that couples fight about and the second leading cause of divorce… Twine may be able to alleviate stress by helping couples relate differently with money, by automating savings for major life goals such as buying a house or going on a dream vacation.

02:56 BK: What is Twine?

02:58 Steven: Twine is a saving and investing app designed ideally for couples to be able to work collaboratively, to be able to reach those goals that matter to them, and largely are sort of more shorter-term in nature. So things like saving for a home, or saving for a down payment, saving for a wedding. Something that makes it easier for our people to be able to work together to be able to accomplish their objectives rather than one or the other feeling as if they’re trying to have to do everything on their own.

03:25 BK: What problem are you solving? Is it more of time management or do people actually see something happen to their bottomline from using Twine?

03:34 Steven: Yeah. So… We… I think we solved… We believe we solved two problems. One, a very practical problem of a lot of people want to become better savers, make it a more consistent habit, and they also want to become an investor, but they’re really intimidated by the investing community and all of the jargon that happens. And so, we’re able to help them in a very practical way to save more effectively, to create different financial habits with money, and also to be able to start to test the waters of, “Wow, investing’s not quite so scary, and I can do this, and I can see how it helps me reach my goals.”

04:08 Steven: Because then as they have longer-term goals, the power and the benefits of investing are that much more important. But the second thing we believe we can do is we can actually help to increase and improve communication within that family structure however they define it. So it makes it easier for them to have those conversations that might not come up naturally. We did a survey… When people… While they might talk about money, they don’t talk about it regularly, and they rarely have a very scheduled way to be able to talk about it, and in general money creates stress. So how do we reduce that stress and increase their financial literacy, or their ability to be good in financial lives? And by doing that we hopefully can help them make their lives happier.

04:55 BK: Yeah. We have an interesting problem right now where unemployment is low, but wages are also low. Wages are not much higher than they were in 1989, relative to inflation. What does Twine do to help with the future of savings and investing exactly? Do you address those problems?

05:11 Steven: Right. Yes. It seems from the outside almost an overwhelming sort of challenge, right? It was heartbreaking during the government shutdown to hear how many people with stable jobs found themselves living so paycheck to paycheck. And so, I think the best way we can try to address that is by trying to help people to establish different healthier habits around saving and investing. So what we hear from our customers is the thing they like about it is that they can set it up once, they can establish their recurring deposits, and then they can go about their lives and they know good things are happening in the background. Right? So if we can establish a different relationship with money, and not make it quite as a conscious choice that you have to do every day, then we think that can help to improve those things and make it so that somebody isn’t sort of so stressed out by living paycheck to paycheck, that if something goes wrong, which inevitably it does, that there’s a little bit of a backstop and then they can also be thinking about…

06:10 Steven: The things that are ultimately driving their satisfaction in their life, which is not money, that’s not what we heard in the consumer insights. It’s money enables those things that make their family better. And that’s why a vacation is such a popular goal for us because people don’t want to give that up. They know their children are only gonna be young once, or somebody who now has teenagers, it seems like just yesterday, our first time we went to Disney World and we wouldn’t have missed that for the world. And so we wanna enable more people to be able to have that same type of experience and memory. And so by establishing that habit, there’s probably some tortured analogy to the same thing with the obesity epidemic. If we could just change people’s relationship with food, then we would be able to help reduce all of those things. And the same thing with money, if we can just change their habits and their relationship and the way they think about it, and sort of de-escalate the stress, then we think that good things can happen.

07:01 BK: Steven Dorval touches on what couples can do about debt, including optimal pay-down strategies. I also take the opportunity to ask him about the financial apps on the market that are not FDIC insured.

07:14 BK: What do you foresee as far as tech trends in regards to debt and savings? Can you go over that maybe again?

07:20 Steven: Sure. So when it comes to debt, we think that there’s two topics. One, how do you maybe do a better job of educating or maybe creating more transparency for people before they get into debt? And then the second thing is, well, once people are in debt, either for good reasons or bad reasons, how can… Are there things that you can do to be able to help people to improve and reduce that, right? So on the prevention side, especially the biggest source of debt these days is student loan debt. So, if can you do a better job. And so many people don’t realize how much debt they’re taking on because maybe their parents aren’t particular… Have a lot of financial literacy. And then the child just knows that this is the right thing to do and they almost to sign away their lives without ever realizing. So can we do… Can technology make it easier for people to understand what exactly it is that they’re signing up for? And be able to make an informed decision.

08:14 Steven: Maybe going as far as to say, “Well, what is the return on that investment?” Not that that’s how people rationally think about it but there’s something. Could we figure out a human-centered way to be able to help them make that calculation? And then on the, once you are in debt, it’s some combination of looking at your sources of debt and saying, “What might be optimal pay-down strategies? Are there different ways to be able to do that?” Within the student loan debt space, there are some student loans that you ought to refinance and others that might not be a good idea to refinance. So helping them to sort that out and also being able to just uncover maybe hidden sources of savings that make it easier to be able to put a little bit more money towards those debts.

09:00 BK: You had mentioned, or I believe some of your website and whatnot, has mentioned that technology has leveled the playing field when it comes to investing. Mobile has brought on a bunch of mobile apps that are not FDIC insured, financial apps. What is your take on that?

09:17 Steven: I think the first thing is that it’s important for there to be transparency. And so to make sure that whatever you’re doing and whatever your services are available, a customer understands clearly and explicitly what it is that they’re getting. And then the second piece of it becomes then how do you make it easier for a customer to understand? Well, so it is FDIC insurance, to get the FDIC insurance, maybe you have to give up some yield. And how do you help someone to make that trade off? And so the way we think about it is that if somebody is risk-averse, and they don’t want to take market risk, then we will give them a FDIC-insured savings option. But then if they do… If we can educate them about the benefits of maybe taking on a little bit more risk and being able to earn a slightly higher return, and that comes with a different type of protection, then we wanna be able to give them that opportunity to do that. So the key is transparency and helping the customer to be able to make an informed decision at the end of the day. And I think there’s been some instances where it hasn’t been entirely clear to customers exactly what is going on.

Please Subscribe and Review the Podcast