The year 2020 is just a few months away.Tech gurus predicted that by this point cars would fly, we’d have the ability to control appliances with our minds and smart homes would make dinner for our families.
When you picture the American Dream, you might think about finding a steady, high-paying job, getting married, settling down. You might even picture a home with a white picket fence and a quiet life in the suburbs.
We’re still working out the kinks on many of these technologies but we’ve already arrived at cultural shifts that are impacting the way we as innovators build out these technologies. We’re talking to people, learning what makes them tick and iterating as we go to meet them where they are. We’re innovating quickly. But despite our best efforts, we have a way to go before some of our more institutionalized structures catch up with us.
Consider Sally – a young professional who is just getting by on her modest salary. Sally was the first in her family to attend college, so she didn’t have any real guidance as she was applying to schools, making decisions about her career and learning about student loans. She decided to attend the University of Texas at Austin because she heard public school is cheaper than private school, and she chose Accounting as her major because it’s a safe career path that offers a comfortable salary.
Upon graduation, Sally now finds herself swimming in $80,000 of student debt with a career path she really isn’t very passionate about. While one could argue that Sally should’ve used her high school adviser as a resource, it’s also worth considering maybe the process of taking student loans was too convoluted for Sally. Sally is making payments on her loans as best as she can, but she doesn’t understand why she can’t see the light at the end of the tunnel with her student debt. She just continues to get large bills in the mail, and she feels like she’ll be stuck forever.
Now take Jake – an Uber driver, father of two and hardworking husband. His family long outgrew their tiny apartment but buying a home has never really seemed like an option. Jake and his wife have little savings and homes in his area are very expensive. Jake’s credit score isn’t stellar, and in fact, Jake doesn’t really understand what credit means in the first place.
In this case again, these financial structures are hard to understand, and we use a lot of terminology that doesn’t make sense to Jake, who has no background in finance. Jake wishes he could provide a larger house for his family, but he doesn’t understand what it takes to improve his credit score and take out a loan with the bank.
Finally, I’d like to tell Sarah’s story – another young professional without savings for a rainy day. When her car broke down, she turned to payday loans to scrape together enough money to pay for her expensive repairs. She needed money fast because she couldn’t afford to miss a day of work.
Sarah’s family wasn’t in a position to loan cash, so she turned to the only place she knew would get the job done. She knew payday loans probably weren’t a good idea, but she didn’t have any other options and now, she struggles to make such expensive payments. She isn’t sure why her loan keeps growing and she can’t pay down her debt.
In this case Sarah doesn’t understand her loan, but she also lacks access to better loan options that might be more affordable for her. She is trapped, unable to make payments simply because she had one emergency expense she was not prepared for.
Building products that work for consumers
While our parents told us to save our pennies, plan for retirement and spend wisely, the reality today is that many people don’t have this option. We’re living in a world that looks a little different than it did for our parents – people are stringing together jobs for quick cash and they’re doing their best to make ends meet in the now.
So while we’re busy innovating away in the land of technology, flying cars and smart homes, maybe it’s time we take a moment to pause and consider how we can shift our culture away from the financial structures that are no longer working for us. It’s our job as strategists to make sure we’re meeting people like Sally, Jake and Sarah where they are and to create financial products that make sense.
Shane Berry, Head of Design at LendUp/ Mission Lane said it perfectly:
“The content needs to be approachable. You know, we talk about educating people and what things mean. We can’t use bank speak, we need to use human terminologies that actually resonate. And it also matters how we approach the problem set.”
My 2020 prediction: financial institutions that better educate a changing population, provide resources to consumers of every background and make sense in the now.