Lab 021: New Bank Account, Who Dis?

It is twenty twenty.

Happy New Year.

You know, at the top of the year, everybody, I feel like, is holding that mirror up and saying, what am I going to do different this year?

Yes, you see all the commercials for gym memberships and things like that, because people are trying to get their their fitness in order.

Yes, I need to do that as well.

I feel like you can always count on a couple of things. You can count on people getting gym memberships and saying they're working out, people packing that lunch. People are saying I'm not gonna eat out as much this year. I tweeted that.

I tweeted that. The other day.

I was like the mod over twenty twenty is you have food at home?

Eat what you got on your fridge? TT.

Yes, And I think people are hyper focused on their pockets, definitely, And you know that could be for many reasons. I think sometimes after the holiday season, after you've purchased all those gifts.

Yeah, I feel like I was in a better space because I told everybody, no one is getting a gift, no one, no one over the age of six.

That's getting again. I'm behind it.

I'm TT and I'm Zakiah and from Spotify Studios.

This is dope laps.

My timeline has been filled with people talking about cutting expenses and generating new lines of income. Sometimes people say, I didn't do as much with my money or I didn't do as well with my money in twenty nineteen, so in twenty twenty, I'm gonna make some changes. Have you seen that kind of stuff.

I've seen some memes that are like, oh, how to save you know, a few thousand dollars by the end of the year, And it has like a metric where it's like, if you save, you know, two dollars every day, then you'll be able to get to a certain amount of money, or if you save like two dollars and four dollars and six dollars.

And things like that.

And so people are trying to find all the cheat codes to level up with their bank account.

And I think this puts us in just the right position to kind of jump into some of the tools people are using to hit these financial.

Goals, because there are a lot out there.

So this week we're talking about fintech. Fintech is short for financial technology. In order for something to be considered fintech, it must be technology that connects you to a financial system.

So like to your bank or your credit card or something like that.

Right, And you may think you don't know any fintech apps, but I guarantee you that you do.

Yes, fintech apps are basically running our lives, and we had no idea.

There are a couple of different categories, and I won't hit all of them, but those that are kind of digital banking, so Chime if you've heard of that. Those that let you send different payments, so Venmo, Samsung pay cash app, business tools, so things that help you if you have a business, that help you kind of run your business. Retail investing so Acorn if you've heard of that one, or Robinhood or Symphony if you use that

Yes, there's stuff for car insurance, medical insurance.

If you're already using these or thinking about using one, we're here to help you learn a little bit more about how these apps work and how they can work for you.

And how you can get yourself situated for twenty twenty.

So let's get into the recitation.

Now that we know some examples of what fintech is, what questions do we have?

I want to know how these apps make their money? Should I trust them? Are they selling my information?

Are they ribbing us? And we don't even know what.

Makes people use these apps? And if I'm trying to save more money in twenty twenty, which apps should I use? What strategies should I follow?

Okay, so now that we know the questions that we want to ask, let's jump into the dissection.

Fintech is a major industry.

By September twenty nineteen, about two thousand, seven hundred fintech startup companies raised over one hundred and sixty billion dollars of capital.

That's a lot of money. Lots The various types of fintech can be broadly clustered into category is like consumer lending, point of sale systems, retail investing, personal finance, money transfer, and crowdfunding, just to name a few.

We're going to walk through some of the different categories, highlighting the positives and negatives. Then we'll outline strategies using these apps to reach your twenty twenty financial goals, and.

To help us get into the nitty gritty about all things fintech, we called on doctor Bill Mauer.

My name is Bill Mauer, and I'm an anthropology professor at the University of California at Irvine, where I direct a research center called the Institute for Money, Technology and Financial Inclusion. And basically at that institute, what I study is the interaction between new technologies and how those things interact with people's existing financial practices, savings behavior, their understandings of money and value, their understandings of debt, and so on.

Fintech is all around this, and it can feel like these apps have been around forever, but that's not exactly the case.

Yes, so our first question for doctor Mauer was when did all of this stuff start popping up?

This really kind of hit the scene in a big way in two thousand and eight and two thousand and nine with the launch of the iPhone.

Yes, the iPhone launch in the US in two thousand and seven, but the iPhone three G came on the scene in two thousand and eight revolutionary and changed everything.

All of a sudden, people have this really cool device that fits in their pocket and is basically a terrific interface into a whole bunch of different applications, our whole kind of app Ecology grew up around the iPhone and similar devices, and people in Silicon Valley and in the banking industry and payments industry started realizing, Hey, this device, this suite of devices and apps could really change people's relationship to their money into the existing financial and banking infrastructure.

I love that he describes this as ecology because we've talked about ecology on a couple of different episodes. Yes, and so ecology is just how different things. Usually in biology we say how different organisms interact with one another, But now we're saying how these different apps talk to each other. How do people want to access their information now that they have a smartphone. So it's really cool to think about this in the context of more of a relationship.

Yeah, so these apps have created their own special environment, that's right.

So the first category we're walking through is personal finance. These are apps like Mint, credit, Karma, you need a budget, and even your personal banking gap. Generally they help you manage your spending and saving.

These apps basically serve almost as like training wheels. Right, So it's like training wheels on a bicycle that teaches you a little bit about budgeting and investing or savings. It's usually not enough to get you where you need to go, but it gives you basic skills in a basic vocabulary. So then you can start talking to other people, to friends, to your parents, or even walk into your credit union or bank and start asking better questions.

And these apps are services can be really good for helping people make smarter financial decisions. This help comes primarily in two ways. The first is by data visualization, or giving people charts and graphs show them what they're really doing with their money.

For so many people, money's just coming in and going out and they're not really being mindful about it or paying any attention to where things are going.

We all know we're getting more than the basics when we go to Target. Yes, you're getting stuff that's not on your list.

You went there for toilet paper. You came out with a flat screen TV. The hair supplies that little one dollar area in the front, it's a wrap it is. I'm in there getting all seasonal decor whatever they have. I'm grabbing it like I do need a new toaster.

I think we would all be shocked if we could see just how much we're spending at Target every month.

What most of these budgeting apps do is they connect up to your bank account and your you know, your debit card and your credit card, all of your accounts, and they're constantly pulling data in from those accounts, so they're seeing what you're doing, and then they can represent that data to you with cool visuals and graphics to help you understand where your money's going and then to help you change your behavior, at least in theory.

Yes, for me, I'm a visual learner, so you know, seeing the dollar size of like, yeah, the money's going down, right, But when you see that pie chart and it says, hey, sixty percent of your shopping was at Target, that's a reality check. Yeah.

For me, I realized that I spend way more money on pizza than I do on like toothpaste.

I hope, so unless you're eating that toothpaste. One of the Finzech apps that I used, and I used a couple of years ago is Mint.

Oh, I use that too.

Really. I like Mint because it will kind of show you all these different categories. You can create some new categories, and they can say, hey, you're spending more on this this month than you did last month or outside of your budget. What Mint showed me is that I use lift a lot, and so I was like, you know what, tt sometimes you don't need someone to drive you.

Sometimes you can drive yourself or walk.

Ah.

That's not a part of my New Year's resolution, but I ain't working out.

So for us, these types of visualizations really help us understand what some of our spending patterns or trends are. But the other way fintech helps people be smarter with their money is through gamification.

And what that means is, you know, there's little points that you earn, or little stickers or stars, or there's bars that fill up with you know, green or the you know the the red circle slowly turns into a green circle.

Even though I don't want to believe that I'm swayed by this type of gamification, I know that it's true. I want to get all the stars, all the stickers. I want to have nine lives, whatever it is. I want to get the super plus bonus, right, I want all those things.

You know, when you're driving our ways and you see that that little power up thing coming, it's like, oh, once you cross this place and you get ten points, I'd be so excited.

I don't even know what those ten points do.

And then you're just tapping into basic psychology right off, Like we get a little reward for doing something, and our dopamine goes crazy in our brain and we're like, ooh, that felt good, I want more of that.

There you have it. Fintech makes you feel good.

I love a gold star or you know something filling up green or whatever.

It makes me feel like, go tt go t T.

While data visualization and gamification might help us make smarter decisions, the fintech environment also brought about some new norms that make managing your spending a little bit harder. One of the things about some of these apps, and I guess you could call this a downside, right, is that they sometimes send you mixed messages.

Right, So, you might be spending a lot of money on pizza, but then you get an ad.

That it shows a coupon for a pizza place.

So why is that some of the budgeting apps, the the apps themselves make their money by selling ads to you or by you know, kind of making you offers that they get a little bit of a return on.

So now that you know that you can avoid those ads, so sorry, TT doesn't mean that you get more pizza.

Fine.

Another category is point of sale and shopping. These are apps like Venmo, cash App, PayPal, Zel, and Square, and we use these apps to purchase products or services. It makes paying really easy and avoids some of the hassle of cash transactions. It's also a really great tool for some small businesses because they can avoid the fees that

I think initially I was a little skeptical, and some of my friends were skeptical about these apps.

I first definitely was skeptical at first.

And now it feels like everybody's using them.

You know, it just became it became so generalized and second nature to people over time to just start putting their credit card information into everything. Right.

But what we know, maybe this is based on some of my own personal experience, is is that these apps make it really easy to spend money because often all of your information is already stored or pre populated in the app.

Yes, because the way that smartphones are set up these days, everything auto populates your name, your address, your cell phone number, your social Security number, your mama's made a name, what you ate for breakfast, everything.

And we talked about how putting credit card information yes into your browser, and.

We talked about that on our end of the year mixtape.

When you have mobile browsers and even browsers on your computer that auto populate your credit card information, right that save it and auto populate, you're like, oh, yeah, okay, cool, Yes, I will buy all of these things on Amazon right now because my card is already there.

That can lead to a lot of late night shopping.

I do admit I did buy that cool Aunt sweatshirt. I knew it.

I knew it. The thing here is these various types of fintech can make capturing your coins really easy, but it also can make giving them away pretty easy too, so be careful with that. The next category is consumer lending. These include affirm, after Pay, Credify, and bond Street. Are

And Outfitters and a lot of different clothing websites now.

And there are some technologies like Zel that yes have a standalone app, but are also integrated. So Zell is integrated. If you have Bank of America, zel is an option. If you have Wells Fargo, zell is an option. And so now that's why one in two people that have a bank account have access to Zel. That's amazing because they did. They have the best of both worlds. You can download another app, or you don't have to. You just use it in your own banking app. It's pretty clever.

Definitely.

It gives people the opportunity to make purchases that they can't afford all at once and pay it off in tiny chunks.

Let's just take the holidays for example. If I don't have cash or credit, I might take a payday loan and those things have incredible interest and have all these fees attached to them. But something like a firm or afterpay allows me to make a purchase and I can pay it in small chunks. Now, this still requires you to have some type of credit, while offering more payment options is really great. Some of these fintech apps use

Yeah, so some consumer lending companies have access to our social profiles, our cell phone location information, and browsing histories and they're using that to determine our credit worthiness.

The key thing here is that all of these different companies have proprietary algorithms.

An algorithm is an equation that is used to determine a risk or an outcome. What some of them might be doing is taking like your browsing history and putting that into their algorithm to determine your credit worthiness.

So the thing to remember is that these algorithms are proprietary. That means they belong to those companies and they don't have to share what the algorithm actually is. The problem with that is that if we don't know what information is being collected or used, we can't really tell if it's being used correctly or maybe be a misinterpreted.

One of the really pernicious things here is you'll have people in the industry who will say, oh, hey, it's an algorithm. It's a computer. This is going to eliminate bias because you're not going to have someone sitting in a loan office looking at someone across a table from them, where implicit or explicit bias can creep in. This is totally neutral. It's the computer, but so much depends on the data that's fed into it, the histories of how those data are collected.

Yeah.

I mean, what if my niece has my phone, she's five years old, and let's say she's been on YouTube binge watching cartoons, and then the consumer lending company sees that, and they may consider YouTube binge watching cartoons a negative marker in their algorithm.

But we have no way of knowing that, right, we don't. So that's kind of the tricky part about all of this. You know, we've talked about bias in the past, but this is something to really consider. And this is something that the new Apple credit card really recently came under fire about. So the Apple credit card, which is paired with glob and sacks. There were reports that it may have some type of bias against women.

Women are getting lower credit limits than their husbands, even if they have the same household, in the same bank account, and that sort of a thing.

And so there's something in that algorithm that's giving them that. And it may not even be explicitly if you're a woman lower, if you're a man higher, But it could be something else around patterns or trends that we don't even realize. But we don't know that algorithm, so we can't say right right now, New York state regulators are

A goal set for yourself, a realistic goal. And a realistic goal might be something like, I'm going to pay off twenty percent of my credit card debt this year, right, not fifty, not seventy five, not all of it. It's gonna pay a twenty percent of it, and then you can use those apps to track how you're getting toward that goal.

Having a realistic goal is important because otherwise you can get frustrated and just give book. The second step of your strategy should be a debt assessment. Pull together all of your loans, credit card balances, car loans, student loans, all that stuff, and compare their interest rates.

And start really focusing on those highest interest debts, the highest interest credit cards. Pay those off first, right, and then work your way down. Don't waste your time going all like investing in bitcoin or whatever while you're trying to pay off your debt. Right, you're focusing on paying off your debt.

Yes, you have to crawl before you ball, focus on your debts before you start investing.

Yeah, invest in yourself before you're investing in other things.

So we have a strategy for debt, how should we manage the rest of our budgets.

There's the fifty to thirty twenty budget rule, and this is a thing that Elizabeth Warren and her daughter came up with, and basically they're like, you should allow yourself fifty percent on your actual needs and that's like your rent, your mortgage, your food, medicine stuff, that kind of thing. And then they say thirty percent on your wants, on your desires, and then twenty percent to your savings and or paying off your debts. I think that's a pretty

Even though fintech is about making transactions easier and more convenient to help keep our spending under control, doctor Maer suggests that we make things harder for ourselves. So don't have it so that your information, your credit card information auto populates in Amazon or anything like that. Make it so that you have to physically put it in every single time.

And that's going to create a tiny little mental speed bump so that you think about it just for like ten more seconds. Anything you can do to slow yourself down is going to help.

So now, if my information doesn't auto populate on my iPhone when I'm searching in the night, I'm going to have to message you and say, hey, here's this link. Can you buy this for me? I'll venmo you tomorrow.

We're like, okay, sure, my stuff is still stored, you're not gonna take it out.

Doctor Marra actually said that that's a good idea.

Even that I think is better. Right if you do a thing of like, you know, hey, T T, can you buy me this thing? I'll venmo you, and then you're spending all that time texting, and then TT is like what does Seqi really need that? And then maybe TT's like do you really need that? And Seki is like yes, Like shut up, give me the thing that

I think I'll make really great purchases. So if TT says it's stupid, I'm gonna say, you're not thinking about this in the right way. Let me add some perspective and.

Then I'll have a long conversation and maybe by the end of that you won't want it anymore. So, when you're ready to use fintech as a tool in your financial strategy, how do you evaluate which one to go with? There are two big things to consider. One is fees. Some apps make a profit by charging you to use their services, and those fees can add up, so read the terms and conditions carefully. The other thing to research closely is the company's customer service.

If there's no easy way to communicate with an app, or you have a question and you can't get it answered, that's a big red flag, right If you can't pick up the phone and call someone, or you can't get into a little you know, in a chat box and talk to someone, or there's no way to email them, then I'd be a little bit concerned.

Ultimately, fintech is supposed to work for you, and if it's not, you can always go old school. There's no shame in ditching the tech.

Sometimes it's actually easier for people to save with cash. Have that material cash in a drawer, lock it up, don't go in there, don't look at it, only think about it, you know, on Paige. And then when there's a big chunk of it and it's making making you nervous or making you twitch, just take it to the bank.

One of my favorite things is to use cash. Oh, I don't even know what that looks like anymore. I'm sure you don't. It is all digital.

I don't care cash I don't have. I don't have a quarter, I don't have a nickel, I don't got none of it.

I'm always a friend that has some cash, you know. I like to start out and say, this is how much cash I have for just ridiculous purchases. This is my cash for whole foods, for coffee, for a soft drink, like, this is my cash for that. And when that's done, that's it. There's no more.

I would run into issues because I once it runs out, then my brain will be like, you need it now, now you really need that coke and exactly, and I'd be like, well, I need a Coca Cola.

I know I'm out of my cash, but I have this card.

Well, then my strategy wouldn't work for you. And that's okay. That's the thing to remember. Everything ain't for everybody. That's a good conclusion for this episode. Yes, do what works for you, and for some of y'all, in order to find out what works for you, you might have to spend a little time looking in the mirror. You have to say, what is my weak spot? Is it wingstop on Fridays for limon pepper wings?

Those are delicious?

Is it a double impossible whopper tt? Yes? And all of my weaknesses our food I'm finding. But guess what twenty twenty we eat and what we have at home. That's what I said I would do, and that's what I'm gonna do.

So I'm going heavy veggie. I mean, you know I eat a lot of support.

Yes, my friend she loves an herb, she loves lentils, and she loves a green leafy greens are the way to go. And so I know that my.

Weak spots are clothes and food. And it's not even food like grocery store food. It's like going out to eat. If you say at seven forty five, can you meet me at eight thirty four? Oysters Yes I can every time, whether I had it on, whether whether it was my plan or not. Yes I can. And so I want to think a little bit more. I want to be able to put a road bump or a speed bump between me and old abbit.

I always fall victim to ads on social media. Really they are so good, they really know me.

So what I've been doing is when I see an AD, I'll say no, I'll say remove this ad. It is not relevant. And so I won't see it over and over and over again, because that's another thing that gets me. If I see an AD three or four times, I'm like, okay, well I needed. Then one of my strategies that's been working for me for shopping is I will put all this stuff in my shopping cart.

Oh yes, I like this. I'm going to get it down to an even number. I need to get it down to under this amount. Right, If it's three hundred dollars in my shopping cart, I need to get it down to two hundred, always one hundred lower, which is already the wrong scale to be shopping on. And then the next thing I do is just leave it in

And if I forgot about it, I didn't need it exactly, I didn't need it. Yeah, sometimes you just need a good night sleep in between putting it in your cart and hitting complete purchase.

And that saved me so many times. I logged in the other day on anthropology. Do you know how many campbells popped up in that shop of part? All Right, that's it for Lab twenty one. Don't forget to check out our website for a cheat sheet on today's episode. You can find it and sign up for our newsletter at Dope Labs podcast dot com.

Also, we love hearing from you. What do you think about today's lab? What are your ideas for future labs? Our number is two O two five six seven seven zero two eight Call us.

You can also find us on Twitter and Instagram at Dope Labs Podcasts, tt is on Twitter at dr Underscore t Sho.

And you can find Zakia at z Said So.

Follow us on Spotify or wherever you listen to podcasts. Special thanks to our guest doctor Bill Mauer. We'll link to his website in our show notes. This episode of Dope Labs is produced by Jenny Ratlet Mass of Wave Runner Studios and Elizabeth Nikano. Mixing and sound designed by Hannis Brown, Special thanks to roy Hurst.

The original theme music is by Taka Yasuzawa and Alex Sugi Eurra, with additional music by Elijah Alex Harvey.

Dope Labs is a production of Spotify Studios and Mega Owned Media Group, and it's executive produced by us T. T. Shadia and Zakiah Wattley. My favorite exercise is dinner parties. I like to shuffle things around. Chop yes, pick a pull down the oven, pull out?

You want to do that exercise today?

If you have the food, I'm happy to