The Future of Financial Wellness: The Evolution of the Debbie App

Jim Marous (00:11):

Hello, and welcome to Banking Transformed, the top podcast in retail banking. I'm your host, Jim Marous, Founder and CEO of the Digital Banking Report and co-publisher, The Financial Brand.

Jim Marous (00:22):

Two years ago, we introduced you to the Debbie app, an innovative rewards platform aimed at improving financial wellness and helping people understand how they're using credit. Now, we're excited to welcome back Frida Leibowitz, one of Debbie's co-founders to discuss their journey since our last conversation.

Jim Marous (00:44):

In a world where economic uncertainty has become the norm, Debbie's mission to transform borrowers into wealth builders has never been more crucial. We'll explore how the platform has evolved, the challenges they're facing, and the impact they've made on users' financial lives. Join us as we delve into Debbie's growth story, their adaptive strategy, and their vision for the future of financial wellness.

Jim Marous (01:13):

Over the past two years, the Debbie app's founders have refined their approach to financial wellness, adopting to economic uncertainties, while staying true to their core mission of empowering users to overcome debt and build wealth. The app's growth has been accelerated by industry partners and the increasing need for consumers to manage finances better.

Jim Marous (01:36):

I met our guest at Finovate Event in New York City in 2022, where Debbie received the best of show designation. So, before we start, can you share a little bit about your background, Frida, and how you adopted your platform to help users navigate today's financial uncertainty?

Frida Leibowitz (01:55):

Yeah, absolutely and thank you for having me. It's funny, every time I say my personal story, I feel like I have to do a different twist on it because I've repeated it so many times, but it's kind of therapeutic. I say that me building Debbie is a very long-winded and difficult way of fixing my childhood traumas. So, yeah, we're getting there.

Frida Leibowitz (02:15):

But though for me, I as we were just talking about, came to this country as 10-years-old from Israel, came with a single mom who was not college educated, who wanted to come here, give her kids a better future. And she had a hair salon, just kind of working. She was very smart, very hardworking.

Frida Leibowitz (02:36):

But we very quickly fell into a terrible cycle of poor financial decisions, and I think that we talk a lot … in the last decade, I can't tell you how many times I've heard pitches around, “Let's give people more access to credit. And all these poor people and immigrants and low-income people, they need more access to credit.”

Frida Leibowitz (02:52):

I have not seen any other country in the world where credit is more accessible. I'm not saying it's easy to access something. There are definitely areas where we need more, but the areas that I've seen expand are not the areas where consumers need.

Frida Leibowitz (03:03):

Giving consumers access to buy now, pay later, so they can buy a larger TV and a Peloton and go on vacation, that's not the kind of access to credit that they need. And unfortunately, that's the kind of access to credit that's hurting them a lot. And when I say them, I also mean us because I've been in the same exact place.

Frida Leibowitz (03:19):

And so, I really saw how this cycle of every time you walk into a Macy's, Walmart, Target, you're using credit, you're being incentivized. You're actually getting 20% off your purchase today if you just open up the store card and then you could take all this nice stuff home without paying for it out of pocket. And it becomes intoxicating until it's really, really not.

Frida Leibowitz (03:36):

And so, I got to see how that cycle turned out pretty badly. And you end up paying three times the price for everything because you're paying with interest. You don't have enough money left at the end of the month to put into savings.

Frida Leibowitz (03:46):

Eventually, I was super lucky, I got a scholarship to go to NYU, study finance of all things. I myself felt at the exact same trap. And this is where I like to kind of point out the whole thing that we've been taught around financial literacy, because when we talk about financial insecurity and financial instability, the FinTech side and the banking side, they all like to talk about financial literacy: oh, it's because the people aren't literate, they don't understand how interest works.

Frida Leibowitz (04:16):

As I said, at the summit, that's BS. That's BS, and because you could know how many calories are in a cookie, you could know it's bad for you. And consumers do know, they know it's bad for them, they're still going to eat the cookie.

Frida Leibowitz (04:28):

I knew that I shouldn't spend more money than I earn. I knew that I didn't have the money for that larger TV. But when you build an environment where all the incentives and our financial systems are on spending, behavioral economics 101, we just follow incentives, that's how our brain works. And the clear the incentive is, the sooner it is in the timeline, the more I'm going to follow that incentive.

Frida Leibowitz (04:49):

And so, I think that realization for me, being a graduate of one of the top business schools in the country, being very financially literate, still going into $15,000 in credit card debt. And going through that cycle, I understood, okay, something here isn't working, and first, I tried to join the industry, tried to do it from within, so I spent a few years at Marcus by Goldman Sachs very early days, building consumer deconsolidation loans and other credit products.

Frida Leibowitz (05:17):

Eventually, still realized that we were just building different wrappers around the same problem and band aid solutions, but the incentive system wasn't changing. And that's really where the seed for Debbie was planted.

Frida Leibowitz (05:29):

I started venting to my now co-founder Rachel who was my best friend from college and we'd lived together during college and after. And we really thought about, okay, how can we change the game by changing the incentives? And that's really what Debbie became, is that incentive structure for good financial habits.

Jim Marous (05:46):

You said so much there. I think one of the things that resonates with me, and I remember this two years ago and we discussed it, is that I had a good job, I came from a good family, we were good, solid middle class people. But it was only when I woke up one day and realized I was owing more monthly in credit card payments than I was making.

Jim Marous (06:08):

And I was no dummy, as you said, I knew what the damage could be, but it was so easy. And you continually want to internally either want to show what you've done, show what you've accomplished before you should.

Jim Marous (06:24):

And I think the one thing that's really interesting about Debbie, as opposed to a traditional credit card reward, which really simply incentivizes you spending more, your incentives really are about getting better.

Jim Marous (06:38):

We're going to give you the tools and we're going to give you an offsetting reward for making better decisions that you know you have to make. It's interesting, since our interview two years ago, how has your user base and the impact that you have changed? Can you share some metrics or key success stories.

Frida Leibowitz (07:01):

Absolutely. Wow, it's changed a lot, and I think that when we started this ... one of the best advice I got as a young founder was stay married to the problem, not the solution, and that's exactly what we've done.

Frida Leibowitz (07:14):

We always knew what the issue was. And when I say the issue, I don't mean people are in debt – people are in debt is a very large over overarching … there's a lot of different reasons why people are in debt, but we really focused on this idea of people are making poor financial choices, that is the problem we set out to solve. And we understood that it has to come with some sort of better incentive structure, so that was always it.

Frida Leibowitz (07:35):

But we really tried to make this more and more universal and create a platform that can apply to any other good financial decisions. So, whether that's paying off debt or adding money to your savings account, or reducing spending in certain categories, all of those things. And we more and more turn this into what I call like a reversed credit card rewards program.

Frida Leibowitz (07:55):

Because it's essentially, like you just said, it's points based on transactions, but for good financial transactions. So, as opposed to getting points when you're spending, you're getting points when you're paying down debt, adding money to savings, reducing spending certain categories, et cetera.

Frida Leibowitz (08:10):

And I think what that has done in terms of impact has been incredible. And we really also leveraged this power of like that atomic habits basically (Michael, Ben and I both love that book). And we said, we don't need consumers-

Jim Marous (08:23):

Me too, it's my favorite reread, just what I listened to on the dog walks over and over again because there's so many tidbits not just from a personal basis, but from a business basis that make a lot of sense.

Frida Leibowitz (08:34):

Absolutely. And I think that at the base of it, the whole book revolves around this idea of start small. You don't need to get consumers to have a monthly budget. A monthly budget's too big, even a weekly budget's too big, one transaction.

Frida Leibowitz (08:48):

So, I think a lot of the realization and the evolution of the product was everything that we do needs to be revolved around one action. And it could be as small as it is, a $5 debt payment should get rewarded. A $5 money to your savings account should get rewarded.

Frida Leibowitz (09:02):

And that's really what starts creating an amazing flywheel and then consumers start ... you start getting this like instant gratification, that little dopamine rush every time you're getting W points in real time. And that's how we've been able to get to a place where our users are 30% less likely to miss a payment. And that's when you compare.

Frida Leibowitz (09:17):

So, we've looked at the data, we basically took the user set. Every user that comes in will link their accounts. And when they link their accounts, we apply, we actually get two years’ worth of transaction history. So, we can see on average, per quarter, how many missed late payment fees did they get before Debbie versus after, and that's what we see a 30% decline, huge. Just talk about how much money consumers are saving.

Frida Leibowitz (09:40):

And on the other side, we also saw users start to put around a hundred dollars on average per month in their savings account. And that's huge for people who have not saved anything. And who are making an average between 40 to 60K a year … I was even lower middle class and they're able to put that a hundred dollars, whereas when they came to Debbie, they were not putting any money into their savings account. And so, I think that has really been incredible to see.

Frida Leibowitz (10:04):

The other really amazing thing (and this one we could not have done without our credit union industry partners), is that we're able to also help them access these amazing products that they've never heard of.

Frida Leibowitz (10:15):

Many of our users have never heard of a credit union. They don't know what a credit union is, they don't know that it exists. And all of a sudden, when they're joining Community Financial, and they can get a 10% APY emergency fund account for up to a thousand dollars, that's wild. That's great. That's something that they're so excited by.

Frida Leibowitz (10:36):

And then on the other hand is on the debt payoff side, we've been able to slash our users’ interest rates in half via debt consolidation loans from our credit union partners. And these rates are not something that you can access elsewhere. And I think being able to open up this very opaque market, it's so crazy because it's like watching two blind parties trying to find each other.

Frida Leibowitz (10:55):

Credit unions are out there doing the thing, walking around trying to find consumers. And consumers are out there like, "Help, help, help me. I need access to better products.” The banks are killing you with the fees. And they're not finding each other. And I think that we kind of see ourselves as like shedding light on the whole thing and helping to build the bridge. Because at the end of the day, consumers need credit unions and credit unions need consumers.

Jim Marous (11:16):

It's interesting, you talk about those partnerships, which actually has evolved quite a bit over the last two years since we last talked. What are some of the new features and partnerships that have really significantly enhanced your offering, Debbie's offering since our last conversation?

Frida Leibowitz (11:33):

Wow, so much. So, I think also when we ... until early 2024, we had a wait list for Debbie. You couldn't even join Debbie because we had ... our first two credit union partners, they were not able to support everyone. And then we just got started getting slammed with signups. Users really wanted access to this rewards program, and we were not necessarily working with a financial institution in their area.

Frida Leibowitz (11:56):

And so, I think one of the biggest things is bringing on more partners. So, bringing on folks like University Federal Credit Union out in Texas, bringing on Community Financial Credit Union, ELGA. So, really bringing on some additional partners to create more room for users to be able to access. And we're still working on many, many more. If you’re a credit union listening to this, we have so many users to offload. We're still waiting for a financial institution partner in their area.

Frida Leibowitz (12:23):

So, I think that has been really incredible. And then on the feature side, it keeps coming down to the same theme. And this is something that we're going to keep working at, which is what is the smallest action that can become a catalyst for something bigger that we can get you to take on every part of your financial life?

Frida Leibowitz (12:41):

And that is something that we are doing a lot of research on. We've gotten incredible data set today of not just traditional credit reports but also real time transaction behavior, at this point, thousands and thousands of accounts.

Frida Leibowitz (12:59):

And we also have actual engagement behavior. When a user comes in, we see what they're doing on the app, we see how they're engaging, we see the content they're engaging with, and we can tie all that together to come up with learnings and how to help consumers help themselves basically. And build those better behaviors.

Jim Marous (13:16):

You also just worked on a deal for onboarding, helping the onboarding process overall. Can you tell us a little bit about that?

Frida Leibowitz (13:26):

Absolutely. And this is part of like the two blind parties kind of situation, where what's happening today is that applying to become a member of a credit union, in most cases that I've seen, it's more difficult than opening up a checking account at a neobank.

Frida Leibowitz (13:43):

It's just a lot harder. There's more information that they need from you. It's tougher and it's worth it. It's a hundred percent worth it. We set out to create an experience where a user can see, okay, there's a clear carrier, and I'm getting help and I'm getting the coaching that I need to actually be able to join the credit union.

Frida Leibowitz (13:59):

And so, what we've done with Debbie is, as you know, Debbie is a rewards program that's free to consumer as long as you are working with one of our partner financial institutions. So, one of our credit unions. If you're not currently working with one of our credit unions, we'll route you, we'll match you with one and we'll help you open up the account.

Frida Leibowitz (14:18):

We were able to actually do integrations where inside of the Debbie flow, when you're signing up for this free rewards program, a membership application is automatically created for you already with the credit union that we matched you with. And that's actually going to mean that you're going to have a checking account, potentially savings account. And that's where all of your debit rewards are going to start being funneled into. When you actually are able to cash out yours, they'll go into theirs.

Frida Leibowitz (14:41):

That piece of building an embedded account opening flow, first of all, it tremendously increased the conversion rate. We have more than 2x the conversion rate to be able to get consumers to actually complete their application and get it done.

Frida Leibowitz (14:55):

But it's also just created a much smoother experience where now consumers, they're learning about this amazing rewards program. They're like, "Oh, there's an amazing credit union in my area, ideally, who's able to sponsor these rewards for me. They're interested in investing in my financial health and building a relationship with me. And by the way, with just clicking a couple buttons, I can already apply to become a member of this credit union, " and I think that has been game-changing.

Jim Marous (15:22):

You simplified the process, you've made it easier to work with you, which we forget about that. And your comment about doubling the number of accounts that are actually opened, that's what we see industry-wide, that if you fix the account opening process, if you bring it down from what is traditionally 12 to 15 minutes, down to three to five minutes, that can be done with some of these really good APIs and these programs you work with, it helps everybody.

Jim Marous (15:51):

As you mentioned, it's one of these blind on the street. Well, you now have a win, win, win. You have a win with the onboarding partner, you have a win for the financial institution, and you have a win for Debbie, and obviously the consumer, but it works really well there.

Jim Marous (16:05):

You mentioned about the rewards program, have you made any changes to your reward system based on user feedback or behavioral insights over the last two years?

Frida Leibowitz (16:14):

Yeah, absolutely. So, like I said, and this is actually happening real time. So, you're one of the first to hear this, and it's going to be released hopefully in the next few months, is we're moving more and more to structure this very similar to our credit card rewards model, where it's transaction based and the points actually equal the amount of the transaction and we have different categories.

Frida Leibowitz (16:38):

We're moving to that system in order to be able to be very nimble, be able to move quickly, test different things. And also, be able to, again, reward the smallest, tiniest behavior that you might be taking, create each one of those things into a powerful experience. The other thing that this allows us to do, which I'm very excited for, is also be able to build more loyalty for our credit new partners.

Frida Leibowitz (17:01):

So, one of the things that we're going to do with this reward system is start having multipliers. Just like with credit card points, you can earn 2x or 3x or 5x even in certain categories. We're doing something very similar for the credit unions.

Frida Leibowitz (17:13):

For example, we'll say to a user, "Hey, we see that you're putting a hundred dollars a month in your Chase savings account. You're earning a low yield on that and you're getting 1x Debbie points for every dollar that you're putting in that account. If you put it into your Community Financial Credit Union account, you'll get 2x points per dollar and you'll earn a much higher yield."

Frida Leibowitz (17:29):

And then that's when you start taking an existing behavior and create a very clear incentive. I move my savings, my direct deposit or whatever it is, my monthly savings contribution to this account, and I'll get more points, and those points they actually have value.

Frida Leibowitz (17:47):

And I think that is something that we're very, very excited to see. We already did a small test during the last tax filing season when people were getting their tax refunds. We tested out, we had users, we said, "Hey, you, we see that your tax refund landed in your account," we were able to detect that.

Frida Leibowitz (18:04):

“If you move that money into your regular savings account, whatever you were using before, you'll get 1x points, it's still good, you'll earn some points. If you put that into your credit union account, you get 2x points.” And with that small test, which is a one-time campaign, 67% of the users chose to move their tax refund into their credit union account.

Frida Leibowitz (18:27):

A new relationship that has just been established, but something that they were willing to now … it was a very clear, oh, I'm going to move this 2000, $3,000 in my tax refund and I'm going to be able to get a lot of points for this. And so, I think that is something that I’m super, super excited to see how we can use this new rewards model to do a many different and interesting things both for consumers and credit unions.

Jim Marous (18:49):

Well, and it's not just about the credit card debt now, it's about the overall financial wellness thing. You mentioned about the savings aspect. And it's strange, I'm an old man, it's not too much of a surprise for anybody on the podcast, but the reality is my very first meaningful savings account has happened the last five years where I started embedding a lot of automatic transfers for Acorns.

Jim Marous (19:13):

And I started seeing like a real savings account, one that I've actually taken out of because it was getting substantial enough that I found uses for some of that savings, but I had never had it, it was always a cashflow deal. I had money, it was just not anywhere that was resembling the savings account. It was the lack of debt, or it was a checking account that was over overbalanced.

Jim Marous (19:37):

And the reality is the feeling you feel, the confidence you feel, the comfort level of saying, "Jesus, if something happens, I can respond to it quickly." Which Lord knows over the last four years, we've seen a lot of things happen that impact it.

Jim Marous (19:54):

And especially, I keep on referring to our very first conversation that it's not just people that are on the lower end of the financial scale. It's really those people that are in the lower middle or even middle or even higher end, because it's not like we spend like we should. We spend like we want, which is a lot different.

Jim Marous (20:16):

So, a lot of the things you've discussed today have really been extraordinarily positive, but startups and companies like yours have challenges. What's been your most significant challenge over the last four years, two years.

Frida Leibowitz (20:29):

Wow, four years ago, well, we weren't born so-

Jim Marous (20:34):

We can start from there. Exactly.

Frida Leibowitz (20:36):

But I think that actually the thing that keeps me up at night the most, and I think that I think as a credit union adjacent company, and I think we see ourselves very much embedded in this industry now and want to grow with the industry. Like I said, we're watching a very incredible yet painful growth process happen. And that growth process, it's a challenge. It's a challenge that will need to partner together, credit unions and FinTechs to figure out to solve.

Frida Leibowitz (21:09):

For most credit unions that we work with, we are the first digital channel at scale that's funneling deposit accounts, that's creating deposit accounts. They really haven't done it. They're not working with Bankrate and NerdWallet and whatever it is, they don't have that for deposit accounts.

Frida Leibowitz (21:23):

And so, I think that we start ... and we were ready to go, we're startups, we're like growing fast. And at some point, like one of our partners, we were sending them a thousand leads a month to open up accounts. So, a thousand potentially new members.

Frida Leibowitz (21:39):

And we started seeing, all of a sudden, the credit unions realized, oh, like this dream that we wanted is so attainable. So, on the one hand, they were very excited, but on the other hand, they started getting really scared and we started having a lot of issues. And then they get extremely risk averse on the fraud policy.

Frida Leibowitz (21:53):

Now, acquiring a consumer inside of your branch is not going to look like acquiring a consumer online for many, many reasons. One is the process, most obvious ones, but also the type of consumer who's going to come to that branch. And the type of consumer who's going to come to you online are going to look very different.

Frida Leibowitz (22:08):

And we all know, we were told from a young age, the internet is a dangerous place, there are a lot of different people hanging out on the internet. And so, you have to know how to fit if you want your organization to have that kind of presence and be there, and also be able to access all the amazing people who are on the internet. You also need to understand that there's going to be … and be able to take some risk, be open to some risk, but also know how to overtime work through things.

Frida Leibowitz (22:35):

I'll give you a perfect example of something that that happened to us that I was like, okay, there's some work that needs to be done here. One of our partners and they were one of the earliest ones, we had started sending leads and they had great rates on their deposit accounts, and our users were loving it.

Frida Leibowitz (22:51):

And one of our users loved it so much that they went on Reddit and posted about Debbie and how great it is and about this account that they got and whatnot, and they were so excited. Next thing we know, that credit union's getting a wave of like all these super weird applications coming out, who knows who's hanging out on Reddit.

Frida Leibowitz (23:13):

And they freaked out, they were like, "Oh my God, what do we do?" We didn't even know we had to dig in because we didn't even realize that this happened. We were like, "We're not sending you these leads. We don't know where they're coming from."

Frida Leibowitz (23:23):

And then ultimately, we did some digging, some Googling, figuring it out and saw this Reddit thread. And then I had to really calm them down and say, “Look, guys, like this is what happens when you are on the internet, lots of different people are going to find you. And this is okay, and this is normal. And let's walk through it and figure out how to be smarter about it.”

Frida Leibowitz (23:43):

And so, I think these are the things that credit unions, like they really want to grow. And then like any other growth process, once growth is happening and all of a sudden there are different side effects to this growth, you have to be able to stay calm throughout, work together to figure things out.

Frida Leibowitz (24:03):

So, I would say right now, it's really figuring out those little kinks and understanding, okay, when you start having a really large online presence, how do you work together as a FinTech and a credit union to be a place that is open to the right people, but protective enough so that the wrong people don't come through.

Jim Marous (24:23):

It's interesting that your biggest challenge is being able to handle growth. And one thing that we've seen in the credit union space and the community banking space and in the FinTech space, is a higher and higher level of co-collaboration where both parties realize we're going to be having some rough spots here. We're going to have some gravel road instead of a perfectly paved road, and we've got to have patience for each other.

Jim Marous (24:47):

But when it comes down to is trust; trusting your partner on both sides, the ability to actually leverage that trust to say we're co-collaborating, but the end result is going to be so good, it's worth some of these growing pains. And it's not always going to be put all together in a nice package, because if you wait that long, it's often too late.

Jim Marous (25:08):

So, let's take a short break here and recognize who's sponsoring this podcast.

[Music Playing]

Jim Marous (25:16):

Welcome back to Banking Transformed. Today, I'm joined by Frida Leibowitz, co-founder of Debbie, the financial wellness platform. We've been discussing the needs of the credit strap segment, and also those who just want to get better with their financial management capabilities and how Debbie has really built scale over the last two years.

Jim Marous (25:37):

So, Frida, how do you measure success around customer experience, level of engagement, and content delivery?

Frida Leibowitz (25:48):

I think in terms of measuring success, there are the obvious things, which is retention, users coming back to the app. We're very lucky and very thankful our users, they get quite hooked, so I think by month 12, 60% of them are still using the app regularly, and that's huge for an app that's dealing with your money.

Frida Leibowitz (26:09):

But I think bigger than that, like I said, from very early days – and maybe because for us this was definitely a personal agenda and a mission to fix the issue around financial wellness, we really measure the success of users by what percentage of them are paying off debt, like net reducing their debt and net increasing their savings. And by the way, each one of our credit union partners gets a monthly report with that number for their membership.

Frida Leibowitz (26:40):

So, they will see, hey, since starting with Debbie, X percent of your members have reduced their debt by X amount, and Y percent of your members have increased their savings by this amount. And that's really important because at the end of the day, we want to measure, okay, is this working? Are we getting people there?

Frida Leibowitz (26:57):

And this is also something that I think the first wave of financial wellness really wasn't able to capture. We were doing all this financial literacy as my favorite thing, and we were teaching people things, and we were showing them charts and all these personal finance management apps, we're giving you these tools. At the end of the day are we making a difference? Did we know? Are people making better decisions? Are they getting from point A to B? That was very hard to measure.

Frida Leibowitz (27:23):

And so, for us, it was very important to build that in from day one, where the users have stats. Each one of our users also gets a monthly report, their personalized report where they can see for the month that just passed and from the time that they joined Debbie, what is the net change?

Frida Leibowitz (27:39):

The other really important thing from a behavioral psychology perspective with this is I think that when you look at the traditional personal finance management apps and even the Credit Karmas of the world, it's kind of like a more of a bathtub.

Frida Leibowitz (27:51):

They'll just show you some timeframe. There's no beginning or an end, there's no clear, what is my next goal? Where am I reaching? And as a person, usually you're like, "Okay, my credit score increased, my credit score decreased, my savings increased, my savings decreased." But it's just like on a monthly basis, but people also like to see over time and there needs to be a clear starting point.

Frida Leibowitz (28:08):

So, for us, with our users, we establish that starting point is the day they joined Debbie, the day they started this journey, and we make that into like a big deal. And everything from that point forward, both for them and for the credit union, is tied to that moment. And we keep showing them, we level set, this is where you started, and now here's how much you've paid off. Here's how much savings you've added. Here's right where you've been able to reduce spend in certain categories. And I think that has been really powerful and helpful for us to be able to measure our success.

Jim Marous (28:37):

It's interesting, we talk to a lot of solution providers and one of the biggest challenges sometimes is you may have a great solution, but you haven't helped your partners deploy it or getting results back for what's going on.

Jim Marous (28:50):

I often talk to solution providers, say, “Guys, if you're not providing those capabilities to actually take them all the way into the deployment phase,” because while it seems to make all the sense in the world, give it to them, they'll use it, it's not often used.

Jim Marous (28:05):

And the results, if you don't get measurement of results, then at some point, you're going to become a cost or an expense as opposed to a revenue source. And the fact that you provide these solutions, these reports, everything else to show, how have you done helps in the deployment stage.

Jim Marous (29:24):

Before the break, we talked about the challenges that Debbie has faced over the last few years. What are the biggest challenges you see your financial institutions that you meet with, I'm not going to say your clients because they're perfect, but let's say those organizations that you are out there trying to sell, what are the biggest challenges that they have in working with a company like Debbie?

Frida Leibowitz (29:51):

This is going to go back to one of those typical, whenever you look at ... on a personal note, I realize as human beings, we always say like the biggest blocker to our own success is ourselves usually. We are our own biggest enemies in those-

Jim Marous (30:04):

Worst enemies.

Frida Leibowitz (30:05):

Right, we're the ones that make it difficult for ourselves. And I think that there are a lot of things contributing to the fact that credit unions might be struggling in certain areas. There are a lot of things in the economy, in the market, and even on the legal front, so many things there.

Frida Leibowitz (30:22):

And then there's of course, they'll talk about the NCUA and how they're cracking down on them and give them a hard time, a lot of different things. But at the end of the day, I keep seeing over and over again, the only ones that could really help credit unions get better is credit unions themselves. Like they really need to help them.

Frida Leibowitz (30:37):

And I think within that, there's one thing that I'm really ... I'm also on a little mission to fix is, the problem is not ... and we've already seen that a lot of the executives on the executive and board level, those men and women are going out there to the conferences, they're getting hyped up, they're excited, they want to adopt technology, they want to do certain things. So, many of them will even get on board.

Frida Leibowitz (31:00):

I think it used to be, that part was more difficult. But actually, what I'm seeing now from a lot of organizations, the top of the organization, very bought in. They also are the ones that are signing deals with us, with other companies, they're ready to go. But what starts happening is they'll sign the deal, and then they'll just pass it off to their team.

Frida Leibowitz (31:17):

And there is a layer of middle management in the credit union space, they're not the ones going to conferences, they haven't gone through this transformation. They don't understand and they are just getting bombarded from the top. They're just inheriting, “Okay, we just signed a partner, Debbie, go, go forth and prosper and figure this out and go actually build it.”

Frida Leibowitz (31:39):

And they're also, in many, many cases, a little powerless. They don't have decision making power and what technology the credit union's adopting, they don't have decision-making power and how the technology is going to be used.

Frida Leibowitz (31:49):

And I think that's very difficult. As an organization you want to create change, and even for us, with big things, there does need to be like a more holistic and kind of an approach where the more stakeholders are going to be part of the decision. At the very least once, the decision has been made, brought in a little earlier and given the power to make changes.

Frida Leibowitz (32:12):

The other thing is that oftentimes I'll see people at middle management, they have to ask for permission for everything. Like any meeting they want to get on the calendar, any little risk decision they need to make, they have no independence.

Frida Leibowitz (32:27):

And so, when we come to them and we're like okay, we need X, Y, and Z, we need to, we need access to this flow, that flow, and then they can't give us access to certain things. Or they need to ask for permission and go through many, many layers and I get it, then they get frustrated, and we get frustrated together with them because it's very hard to get moving that way.

Frida Leibowitz (32:45):

And so, I really think that the key here, one of the biggest things that can help innovation accelerate tremendously is thinking about how to position middle level management and all the foot soldiers on the ground that are working with us on the data … these are my real partners at the end of the day.

Frida Leibowitz (33:02):

My partner is not the CEO of the credit union. As great as they are and as much as I love talking theory with them, I mean they’re manager of innovation, they’re manager of their marketing manager, they’re whoever else. Those are the people I need with me, and I need those people to have the right power and to feel empowered to be able to make certain decisions and move on certain things.

Jim Marous (33:22):

That is so key for you because we see it over and over again. We talk about in this podcast all the time that unless you have a person or level of an organization that's willing to do things differently, because the implementation of your project is going to be put upon them and it's going to change the way they currently do things. So, you have to actually say, I'm willing to do things differently, which seems logical, but it's very hard to implement.

Jim Marous (33:51):

The other thing we find is human nature says, I want to take any kind of friction out of the way of me implementing this because it'll take me less time. So, I'm not going to include compliance right now. I'm not going to include this area right now. Not going to include this area right now.

Jim Marous (34:06):

Unless you get them all on the front end and have them all buy into the end journey, you aren't going to get there, because everyone's going to have a reason for not doing what you want to do in the way you want to do it.

Jim Marous (34:19):

You see this with the onboarding process, if you're not going to change the things you answer for the know your customer, you're not going to get to a better plan, a better way of implementing and onboarding consumers.

Jim Marous (34:34):

So, it's crazy, but you're right, the biggest challenge to digital transformation is the banker themselves. Because we get in our own way.

Jim Marous (34:46):

So, when you look at what's gone on over the last several years, what is your vision as you look forward? What excites you about what's coming up with Debbie or with the marketplace that's going to really going to make banking better?

Frida Leibowitz (35:04):

Yeah, I think this is really my ... first of all, Debbie, in terms of like who I want us to become one day – it's like I joke I want us to be like a Noom, Credit Karma and Bilt Rewards had a baby. There’s this idea of being a marketplace where you know you're going to find great deals, at the same time being a place where you know you could work on any financial habit that you want to build, and get rewarded in the process and have this really exciting component to it right around the rewards.

Frida Leibowitz (35:34):

So, I think that that's something that we want to be there for any consumer, for every financial milestone they want to hit. If you have a really big financial goal and you're like I have no idea how I'm going to get to this goal because it's far and it's big, and I don't want to know where to start – you come to Debbie, you get started, and you have a motivating journey to get there.

Frida Leibowitz (35:52):

I think the other really, really big thing, and this is where we're as a company, making a huge bet on the credit union industry – and by the way, I cannot even tell you how many times like VCs because we're a venture-backed company, and you should know it's very tough as a startup. But when we made that decision to go after credit unions, that counted out many …

Frida Leibowitz (36:14):

We basically automatically excluded many VCs from potentials for us because VCs don't understand the credit union space. They don't see the potential. They're looking at the numbers, they're looking at this industry, and they're like this is not going to get us … we hear this all the time, this isn't going to create a venture scale outcome.

Frida Leibowitz (36:30):

And that's where I really want to challenge that. And we're on a mission to change that because I do think credit unions can be on the map. They can do so much more than they're currently doing. They can reach so many more consumers.

Frida Leibowitz (36:42):

And the reason why I believe that is not just because I believe credit unions are great, it's because I see the demand on the other side. It's like I was telling you, it's like watching huge demand from the consumer side, and then huge demand on the credit union side, and just seeing how the bridge is just not there.

Frida Leibowitz (36:57):

But I do really think that there could be a very interesting wave of bringing back credit unions and putting them back on the map and making credit unions this kind of … like I said in one of the articles that I wrote, like the craft beer of banking.

Frida Leibowitz (37:12):

And everybody loves craft beer. That craft beer made such a huge wave over the last couple years, why can't we do the same thing with financial services, with the craft beer of financial services. This is a much more personalized hands-on consumer friendly option. There's no reason why we shouldn't be able to make credit unions cool again (no pun intended or maybe intended).

Jim Marous (37:40):

Final question, what recommendations do you have for financial institutions? Every one of them is trying to make it better for their members. Every one of them wants to come back and justifiably own a greater percentage of what's happening rather than have their members go elsewhere for services.

Jim Marous (38:00):

If you were in charge of a small financial institution, a credit union today, what would be the first thing that you'd say you need to do to make it so you can go along this journey?

Frida Leibowitz (38:14):

Again, I'm probably biased but think just about incentives. Incentives and where they are and how do I build a program and organization where the incentives are in the right places, and it's a win-win situation for everyone involved.

Frida Leibowitz (38:28):

I think you also need to really put yourself in the consumer's shoes. Don't sit in your shoes and think about what you think people should be doing because that's where we get run into the cycle of like this financial literacy bubble and oh, we need to educate the people.

Frida Leibowitz (38:43):

But that's not you being in someone's shoes. No, understanding, okay, I'm making 40k a year, I have a family to feed. I have these kinds of things to do. I want to have nice stuff, I want to access these nice things, like I am not making poor financial decisions because I don't understand. I'm making them because I want to buy my kids this nice thing that I can't afford to buy them.

Frida Leibowitz (39:02):

Like once you are in that place and you understand it and you understand, okay, I have a set of incentives in front of me, and right now they're not great – so, I think thinking about that that's what I would do.

Frida Leibowitz (39:14):

And part of that, and this is part of what we're trying to also do, is think about bundling. In the last decade, we've seen a huge unbundling wave of financial services. It used to be that you had one or two banking relationships and everything you had was within those two relationships, or one relationship or whatever it is.

Frida Leibowitz (39:31):

That's not the case anymore. Like you just said before, you can have an Acorns account, and you can have your other primary financial institutions, and you can have your mortgage one place, and your auto loan another place and your investment somewhere else, and your high yield savings account somewhere else. And it's so easy to open up accounts now, there's no real barrier. There's no reason why you're not going to go find the best deal.

Jim Marous (39:49):

And most of them are easier than in your organization, which is a big-

Frida Leibowitz (39:53):

Absolutely. They're easier and there's no compounding benefit of why I should keep banking just with you. That relationship that we have, that I have with my financial institution isn't really getting me anything.

Frida Leibowitz (40:06):

They're not giving me a better deal than they're giving the next person who just walked in and never had a relationship with them. So, if you are not going to give me that benefit of the relationship, we're both going to lose.

Frida Leibowitz (40:14):

And so, I think creating more bundling financial services, again, like re-bundling them and thinking about creating compounding incentives will be really interesting. Again, we're really helping do that with the multipliers.

Frida Leibowitz (40:26):

So, basically like if you are joining Debbie through MSU FCU, for example, you'll earn higher and higher multipliers every month, the more products you take in the marketplace with MSU FCU. So, then it becomes interesting because the more products you have under one umbrella, the higher your monthly rewards rate is.

Frida Leibowitz (40:40):

So, things like that I think are really, really important to think about when you're thinking about building a financial services at scale that you want to grow with your customers.

Jim Marous (40:49):

Frida, it's great to have you on the show. I realized as we were halfway through this podcast that we don't have many revisits with FinTechs that have new ideas that succeeded, that make a great interview two years later.

Jim Marous (40:49):

Congratulations, I don't want to ever take this for granted. I know you don't take it for granted because you're working it every day, but the reality is the chance of the failure in this industry are so much greater than the chances of success, especially looking at where we've been in the last two, three years. The ability to get money, to be a startup that's run by women to get money. I'm sorry, let's not fake it then as, “Oh, it's easier.” No, it's harder.

Frida Leibowitz (41:35):

We are under 2%, we get under 2% of VC money, and we are 20% of the founders.

Jim Marous (41:40):

And knowing your firm and knowing the co-founders, your ability to say no and it's not right. That's really hard when yes, it's the answer you really need, but you said it before on the VC front, there are times when you're saying it's not the people we need to partner with.

[Music playing]

Jim Marous (41:58):

And congratulations, the growth of your platform is really exciting and what you're doing in the marketplace is really exciting. And it really is clear that your vision and the vision of community financial institutions are equal. They're right along the same line. What you're trying to achieve is what they're trying to achieve.

Jim Marous (42:19):

So, I wish you all the luck in the world. I don't think I'm going to wait two years to see what you're doing, because you have so many things going on right now, both that already announced in things you're going to be doing. It's going to be really interesting to see that when you catch up to yourselves, what the expansion can really be. So, thank you very much for being on the show today.

Frida Leibowitz (42:38):

Yeah, thank you so much for having me. This was fun.

Jim Marous (42:42):

Thanks for listening to Banking Transformed, the winner of three international awards for podcast excellence. If you enjoyed today's interview, please take some time to give our show review on one of your podcast apps.

Jim Marous (42:55):

Also, be sure to catch my recent articles on The Financial Brand and the research we're doing for the Digital Banking Report.

Jim Marous (43:02):

This has been a production of Evergreen Podcasts, a special thank you to our senior producer, Leah Haslage; audio engineer, Chris Fafalios, and video producer, Will Pritts.

Jim Marous (43:12):

I'm your host, Jim Marous, until next time, remember, rewarding consumers for making smart financial decisions can be the key to customer engagement and loyalty.

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