WEBVTT - Lab 021: New Bank Account, Who Dis? 0:00:00.680 --> 0:00:02.520 It is twenty twenty. 0:00:02.640 --> 0:00:03.440 Happy New Year. 0:00:03.600 --> 0:00:05.160 You know, at the top of the year, everybody, I 0:00:05.200 --> 0:00:08.360 feel like, is holding that mirror up and saying, what 0:00:08.400 --> 0:00:09.800 am I going to do different this year? 0:00:09.920 --> 0:00:12.960 Yes, you see all the commercials for gym memberships and 0:00:13.039 --> 0:00:15.720 things like that, because people are trying to get their 0:00:15.920 --> 0:00:16.960 their fitness in order. 0:00:17.360 --> 0:00:18.840 Yes, I need to do that as well. 0:00:18.960 --> 0:00:20.599 I feel like you can always count on a couple 0:00:20.600 --> 0:00:23.640 of things. You can count on people getting gym memberships 0:00:24.120 --> 0:00:27.639 and saying they're working out, people packing that lunch. People 0:00:27.640 --> 0:00:29.240 are saying I'm not gonna eat out as much this year. 0:00:29.240 --> 0:00:29.920 I tweeted that. 0:00:30.000 --> 0:00:31.080 I tweeted that. The other day. 0:00:31.120 --> 0:00:33.239 I was like the mod over twenty twenty is you 0:00:33.360 --> 0:00:34.400 have food at home? 0:00:34.600 --> 0:00:35.840 Eat what you got on your fridge? TT. 0:00:36.200 --> 0:00:39.800 Yes, And I think people are hyper focused on their pockets, definitely, 0:00:40.200 --> 0:00:42.240 And you know that could be for many reasons. I 0:00:42.280 --> 0:00:45.320 think sometimes after the holiday season, after you've purchased all 0:00:45.320 --> 0:00:45.800 those gifts. 0:00:45.920 --> 0:00:47.280 Yeah, I feel like I was in a better space 0:00:47.320 --> 0:00:49.520 because I told everybody, no one is getting a gift, 0:00:49.720 --> 0:00:52.280 no one, no one over the age of six. 0:00:52.159 --> 0:00:54.440 That's getting again. I'm behind it. 0:00:54.880 --> 0:00:57.880 I'm TT and I'm Zakiah and from Spotify Studios. 0:00:57.920 --> 0:01:13.920 This is dope laps. 0:01:14.640 --> 0:01:17.120 My timeline has been filled with people talking about cutting 0:01:17.160 --> 0:01:22.440 expenses and generating new lines of income. Sometimes people say, 0:01:22.440 --> 0:01:24.480 I didn't do as much with my money or I 0:01:24.520 --> 0:01:26.600 didn't do as well with my money in twenty nineteen, 0:01:26.640 --> 0:01:28.720 so in twenty twenty, I'm gonna make some changes. Have 0:01:28.760 --> 0:01:29.640 you seen that kind of stuff. 0:01:29.680 --> 0:01:32.120 I've seen some memes that are like, oh, how to 0:01:32.200 --> 0:01:34.720 save you know, a few thousand dollars by the end 0:01:34.720 --> 0:01:36.400 of the year, And it has like a metric where 0:01:36.440 --> 0:01:38.959 it's like, if you save, you know, two dollars every day, 0:01:39.040 --> 0:01:40.920 then you'll be able to get to a certain amount 0:01:40.920 --> 0:01:43.240 of money, or if you save like two dollars and 0:01:43.280 --> 0:01:44.880 four dollars and six dollars. 0:01:44.920 --> 0:01:45.720 And things like that. 0:01:45.800 --> 0:01:47.600 And so people are trying to find all the cheat 0:01:47.640 --> 0:01:49.880 codes to level up with their bank account. 0:01:50.080 --> 0:01:52.520 And I think this puts us in just the right 0:01:52.560 --> 0:01:55.200 position to kind of jump into some of the tools 0:01:55.240 --> 0:01:57.600 people are using to hit these financial. 0:01:57.160 --> 0:01:59.000 Goals, because there are a lot out there. 0:01:59.200 --> 0:02:03.120 So this week we're talking about fintech. Fintech is short 0:02:03.120 --> 0:02:07.240 for financial technology. In order for something to be considered fintech, 0:02:07.320 --> 0:02:10.720 it must be technology that connects you to a financial system. 0:02:10.480 --> 0:02:13.600 So like to your bank or your credit card or 0:02:13.600 --> 0:02:14.280 something like that. 0:02:14.560 --> 0:02:18.080 Right, And you may think you don't know any fintech apps, 0:02:18.120 --> 0:02:19.680 but I guarantee you that you do. 0:02:19.919 --> 0:02:22.640 Yes, fintech apps are basically running our lives, and we 0:02:22.720 --> 0:02:23.800 had no idea. 0:02:23.960 --> 0:02:26.119 There are a couple of different categories, and I won't 0:02:26.160 --> 0:02:28.560 hit all of them, but those that are kind of 0:02:28.800 --> 0:02:32.360 digital banking, so Chime if you've heard of that. Those 0:02:32.360 --> 0:02:36.480 that let you send different payments, so Venmo, Samsung pay 0:02:36.680 --> 0:02:39.799 cash app, business tools, so things that help you if 0:02:39.840 --> 0:02:41.679 you have a business, that help you kind of run 0:02:41.760 --> 0:02:45.000 your business. Retail investing so Acorn if you've heard of 0:02:45.000 --> 0:02:47.600 that one, or Robinhood or Symphony if you use that 0:02:47.760 --> 0:02:51.680 banking system. Crowdfunding, so Kickstarter is a fintech app, go 0:02:51.840 --> 0:02:54.399 fund me, that's right, And Patreon is a fintech app 0:02:54.400 --> 0:02:57.920 as well. Even some new insurance options are actually financial 0:02:57.960 --> 0:02:59.239 technology companies. 0:02:59.400 --> 0:03:02.480 Yes, there's stuff for car insurance, medical insurance. 0:03:02.720 --> 0:03:05.440 If you're already using these or thinking about using one, 0:03:05.480 --> 0:03:07.880 we're here to help you learn a little bit more 0:03:07.919 --> 0:03:10.679 about how these apps work and how they can work 0:03:10.720 --> 0:03:11.200 for you. 0:03:11.320 --> 0:03:13.720 And how you can get yourself situated for twenty twenty. 0:03:13.760 --> 0:03:15.079 So let's get into the recitation. 0:03:16.320 --> 0:03:18.640 Now that we know some examples of what fintech is, 0:03:19.400 --> 0:03:21.000 what questions do we have? 0:03:21.520 --> 0:03:23.440 I want to know how these apps make their money? 0:03:23.560 --> 0:03:25.720 Should I trust them? Are they selling my information? 0:03:25.840 --> 0:03:28.799 Are they ribbing us? And we don't even know what. 0:03:28.880 --> 0:03:31.720 Makes people use these apps? And if I'm trying to 0:03:31.720 --> 0:03:34.679 save more money in twenty twenty, which apps should I use? 0:03:34.760 --> 0:03:36.400 What strategies should I follow? 0:03:36.560 --> 0:03:38.200 Okay, so now that we know the questions that we 0:03:38.280 --> 0:03:40.400 want to ask, let's jump into the dissection. 0:03:42.920 --> 0:03:44.520 Fintech is a major industry. 0:03:44.720 --> 0:03:49.360 By September twenty nineteen, about two thousand, seven hundred fintech 0:03:49.400 --> 0:03:54.480 startup companies raised over one hundred and sixty billion dollars 0:03:54.480 --> 0:03:55.040 of capital. 0:03:55.200 --> 0:03:57.720 That's a lot of money. Lots The various types of 0:03:57.760 --> 0:04:01.240 fintech can be broadly clustered into category is like consumer lending, 0:04:01.360 --> 0:04:05.680 point of sale systems, retail investing, personal finance, money transfer, 0:04:05.840 --> 0:04:07.680 and crowdfunding, just to name a few. 0:04:07.760 --> 0:04:09.920 We're going to walk through some of the different categories, 0:04:09.960 --> 0:04:13.960 highlighting the positives and negatives. Then we'll outline strategies using 0:04:14.000 --> 0:04:17.120 these apps to reach your twenty twenty financial goals, and. 0:04:17.200 --> 0:04:19.160 To help us get into the nitty gritty about all 0:04:19.200 --> 0:04:21.880 things fintech, we called on doctor Bill Mauer. 0:04:22.320 --> 0:04:25.200 My name is Bill Mauer, and I'm an anthropology professor 0:04:25.200 --> 0:04:28.520 at the University of California at Irvine, where I direct 0:04:28.560 --> 0:04:31.760 a research center called the Institute for Money, Technology and 0:04:31.800 --> 0:04:35.640 Financial Inclusion. And basically at that institute, what I study 0:04:35.880 --> 0:04:40.159 is the interaction between new technologies and how those things 0:04:40.240 --> 0:04:46.240 interact with people's existing financial practices, savings behavior, their understandings 0:04:46.240 --> 0:04:49.599 of money and value, their understandings of debt, and so on. 0:04:50.000 --> 0:04:52.039 Fintech is all around this, and it can feel like 0:04:52.080 --> 0:04:54.760 these apps have been around forever, but that's not exactly 0:04:54.760 --> 0:04:55.159 the case. 0:04:55.279 --> 0:04:58.320 Yes, so our first question for doctor Mauer was when 0:04:58.400 --> 0:05:00.200 did all of this stuff start popping up? 0:05:00.400 --> 0:05:03.159 This really kind of hit the scene in a big 0:05:03.200 --> 0:05:04.760 way in two thousand and eight and two thousand and 0:05:04.880 --> 0:05:07.240 nine with the launch of the iPhone. 0:05:07.360 --> 0:05:09.559 Yes, the iPhone launch in the US in two thousand 0:05:09.600 --> 0:05:11.719 and seven, but the iPhone three G came on the 0:05:11.720 --> 0:05:16.120 scene in two thousand and eight revolutionary and changed everything. 0:05:16.480 --> 0:05:18.760 All of a sudden, people have this really cool device 0:05:18.800 --> 0:05:21.200 that fits in their pocket and is basically a terrific 0:05:21.279 --> 0:05:25.320 interface into a whole bunch of different applications, our whole 0:05:25.440 --> 0:05:28.920 kind of app Ecology grew up around the iPhone and 0:05:29.000 --> 0:05:33.000 similar devices, and people in Silicon Valley and in the 0:05:33.000 --> 0:05:37.320 banking industry and payments industry started realizing, Hey, this device, 0:05:37.600 --> 0:05:40.839 this suite of devices and apps could really change people's 0:05:40.880 --> 0:05:45.080 relationship to their money into the existing financial and banking infrastructure. 0:05:45.279 --> 0:05:47.800 I love that he describes this as ecology because we've 0:05:47.800 --> 0:05:50.480 talked about ecology on a couple of different episodes. Yes, 0:05:50.760 --> 0:05:53.919 and so ecology is just how different things. Usually in 0:05:53.920 --> 0:05:57.000 biology we say how different organisms interact with one another, 0:05:57.560 --> 0:06:01.320 But now we're saying how these different apps talk to 0:06:01.360 --> 0:06:03.920 each other. How do people want to access their information 0:06:04.000 --> 0:06:06.320 now that they have a smartphone. So it's really cool 0:06:06.360 --> 0:06:08.240 to think about this in the context of more of 0:06:08.240 --> 0:06:09.200 a relationship. 0:06:09.360 --> 0:06:13.440 Yeah, so these apps have created their own special environment, 0:06:13.600 --> 0:06:14.040 that's right. 0:06:14.360 --> 0:06:17.720 So the first category we're walking through is personal finance. 0:06:17.880 --> 0:06:20.839 These are apps like Mint, credit, Karma, you need a budget, 0:06:20.839 --> 0:06:23.440 and even your personal banking gap. Generally they help you 0:06:23.480 --> 0:06:24.800 manage your spending and saving. 0:06:25.000 --> 0:06:28.680 These apps basically serve almost as like training wheels. Right, 0:06:28.800 --> 0:06:31.080 So it's like training wheels on a bicycle that teaches 0:06:31.120 --> 0:06:33.800 you a little bit about budgeting and investing or savings. 0:06:34.240 --> 0:06:36.400 It's usually not enough to get you where you need 0:06:36.440 --> 0:06:38.719 to go, but it gives you basic skills in a 0:06:38.760 --> 0:06:41.800 basic vocabulary. So then you can start talking to other people, 0:06:41.920 --> 0:06:44.800 to friends, to your parents, or even walk into your 0:06:44.800 --> 0:06:47.520 credit union or bank and start asking better questions. 0:06:47.720 --> 0:06:49.880 And these apps are services can be really good for 0:06:49.960 --> 0:06:54.040 helping people make smarter financial decisions. This help comes primarily 0:06:54.080 --> 0:06:58.159 in two ways. The first is by data visualization, or 0:06:58.200 --> 0:07:01.280 giving people charts and graphs show them what they're really 0:07:01.320 --> 0:07:02.200 doing with their money. 0:07:02.520 --> 0:07:05.520 For so many people, money's just coming in and going 0:07:05.560 --> 0:07:07.880 out and they're not really being mindful about it or 0:07:07.920 --> 0:07:09.800 paying any attention to where things are going. 0:07:10.160 --> 0:07:12.320 We all know we're getting more than the basics when 0:07:12.320 --> 0:07:14.440 we go to Target. Yes, you're getting stuff that's not 0:07:14.480 --> 0:07:15.000 on your list. 0:07:15.080 --> 0:07:17.160 You went there for toilet paper. You came out with 0:07:17.240 --> 0:07:20.680 a flat screen TV. The hair supplies that little one 0:07:20.720 --> 0:07:23.640 dollar area in the front, it's a wrap it is. 0:07:23.760 --> 0:07:26.400 I'm in there getting all seasonal decor whatever they have. 0:07:26.480 --> 0:07:28.760 I'm grabbing it like I do need a new toaster. 0:07:29.240 --> 0:07:30.640 I think we would all be shocked if we could 0:07:30.640 --> 0:07:32.960 see just how much we're spending at Target every month. 0:07:33.160 --> 0:07:35.600 What most of these budgeting apps do is they connect 0:07:35.680 --> 0:07:39.400 up to your bank account and your you know, your 0:07:39.400 --> 0:07:41.400 debit card and your credit card, all of your accounts, 0:07:42.000 --> 0:07:45.040 and they're constantly pulling data in from those accounts, so 0:07:45.040 --> 0:07:48.120 they're seeing what you're doing, and then they can represent 0:07:48.240 --> 0:07:51.640 that data to you with cool visuals and graphics to 0:07:51.680 --> 0:07:53.880 help you understand where your money's going and then to 0:07:53.920 --> 0:07:55.880 help you change your behavior, at least in theory. 0:07:56.160 --> 0:07:59.800 Yes, for me, I'm a visual learner, so you know, 0:08:00.120 --> 0:08:03.000 seeing the dollar size of like, yeah, the money's going down, right, 0:08:03.040 --> 0:08:06.400 But when you see that pie chart and it says, hey, 0:08:06.600 --> 0:08:09.920 sixty percent of your shopping was at Target, that's a 0:08:09.920 --> 0:08:11.200 reality check. Yeah. 0:08:11.200 --> 0:08:13.840 For me, I realized that I spend way more money 0:08:13.920 --> 0:08:17.680 on pizza than I do on like toothpaste. 0:08:18.040 --> 0:08:21.560 I hope, so unless you're eating that toothpaste. One of 0:08:21.600 --> 0:08:23.600 the Finzech apps that I used, and I used a 0:08:23.600 --> 0:08:25.320 couple of years ago is Mint. 0:08:25.480 --> 0:08:26.400 Oh, I use that too. 0:08:26.600 --> 0:08:31.400 Really. I like Mint because it will kind of show 0:08:31.440 --> 0:08:34.199 you all these different categories. You can create some new categories, 0:08:34.200 --> 0:08:36.920 and they can say, hey, you're spending more on this 0:08:36.920 --> 0:08:39.640 this month than you did last month or outside of 0:08:39.640 --> 0:08:42.400 your budget. What Mint showed me is that I use 0:08:43.000 --> 0:08:46.240 lift a lot, and so I was like, you know what, 0:08:46.320 --> 0:08:48.720 tt sometimes you don't need someone to drive you. 0:08:48.800 --> 0:08:50.880 Sometimes you can drive yourself or walk. 0:08:51.120 --> 0:08:52.880 Ah. 0:08:52.920 --> 0:08:55.240 That's not a part of my New Year's resolution, but 0:08:55.360 --> 0:08:57.240 I ain't working out. 0:08:56.880 --> 0:09:00.320 So for us, these types of visualizations really help us 0:09:00.400 --> 0:09:02.920 understand what some of our spending patterns or trends are. 0:09:03.520 --> 0:09:06.280 But the other way fintech helps people be smarter with 0:09:06.280 --> 0:09:08.040 their money is through gamification. 0:09:08.520 --> 0:09:11.920 And what that means is, you know, there's little points 0:09:11.960 --> 0:09:15.360 that you earn, or little stickers or stars, or there's 0:09:15.440 --> 0:09:18.880 bars that fill up with you know, green or the 0:09:19.240 --> 0:09:21.720 you know the the red circle slowly turns into a 0:09:21.760 --> 0:09:22.360 green circle. 0:09:22.600 --> 0:09:25.920 Even though I don't want to believe that I'm swayed 0:09:25.920 --> 0:09:28.640 by this type of gamification, I know that it's true. 0:09:28.960 --> 0:09:31.760 I want to get all the stars, all the stickers. 0:09:32.240 --> 0:09:34.880 I want to have nine lives, whatever it is. I 0:09:34.880 --> 0:09:37.160 want to get the super plus bonus, right, I want 0:09:37.200 --> 0:09:37.920 all those things. 0:09:38.000 --> 0:09:40.040 You know, when you're driving our ways and you see 0:09:40.040 --> 0:09:43.959 that that little power up thing coming, it's like, oh, 0:09:44.240 --> 0:09:46.360 once you cross this place and you get ten points, 0:09:46.559 --> 0:09:47.480 I'd be so excited. 0:09:47.600 --> 0:09:48.959 I don't even know what those ten points do. 0:09:49.320 --> 0:09:52.200 And then you're just tapping into basic psychology right off, 0:09:52.320 --> 0:09:55.079 Like we get a little reward for doing something, and 0:09:55.160 --> 0:09:58.080 our dopamine goes crazy in our brain and we're like, ooh, 0:09:58.120 --> 0:09:59.439 that felt good, I want more of that. 0:10:00.040 --> 0:10:02.360 There you have it. Fintech makes you feel good. 0:10:02.559 --> 0:10:06.040 I love a gold star or you know something filling 0:10:06.120 --> 0:10:07.360 up green or whatever. 0:10:07.559 --> 0:10:10.840 It makes me feel like, go tt go t T. 0:10:12.720 --> 0:10:16.559 While data visualization and gamification might help us make smarter decisions, 0:10:16.679 --> 0:10:19.600 the fintech environment also brought about some new norms that 0:10:19.640 --> 0:10:22.800 make managing your spending a little bit harder. One of 0:10:22.840 --> 0:10:25.800 the things about some of these apps, and I guess 0:10:25.840 --> 0:10:28.160 you could call this a downside, right, is that they 0:10:28.200 --> 0:10:30.160 sometimes send you mixed messages. 0:10:30.360 --> 0:10:32.959 Right, So, you might be spending a lot of money 0:10:33.080 --> 0:10:36.440 on pizza, but then you get an ad. 0:10:36.000 --> 0:10:38.240 That it shows a coupon for a pizza place. 0:10:38.480 --> 0:10:41.199 So why is that some of the budgeting apps, the 0:10:41.600 --> 0:10:45.640 the apps themselves make their money by selling ads to 0:10:45.679 --> 0:10:48.960 you or by you know, kind of making you offers 0:10:49.000 --> 0:10:50.839 that they get a little bit of a return on. 0:10:51.120 --> 0:10:53.680 So now that you know that you can avoid those ads, 0:10:54.040 --> 0:10:56.960 so sorry, TT doesn't mean that you get more pizza. 0:10:57.240 --> 0:11:00.160 Fine. 0:11:01.120 --> 0:11:04.560 Another category is point of sale and shopping. These are 0:11:04.559 --> 0:11:08.520 apps like Venmo, cash App, PayPal, Zel, and Square, and 0:11:08.600 --> 0:11:11.800 we use these apps to purchase products or services. It 0:11:11.840 --> 0:11:14.280 makes paying really easy and avoids some of the hassle 0:11:14.320 --> 0:11:17.800 of cash transactions. It's also a really great tool for 0:11:17.880 --> 0:11:20.360 some small businesses because they can avoid the fees that 0:11:20.400 --> 0:11:23.760 are normally attached to card purchases. And it's good for 0:11:23.840 --> 0:11:26.520 the customer because then we don't have to have a 0:11:26.600 --> 0:11:29.680 minimum amount purchased in order to use these apps like 0:11:29.720 --> 0:11:30.800 we do with a credit card. 0:11:31.000 --> 0:11:34.360 I think initially I was a little skeptical, and some 0:11:34.400 --> 0:11:36.240 of my friends were skeptical about these apps. 0:11:36.400 --> 0:11:39.120 I first definitely was skeptical at first. 0:11:38.960 --> 0:11:41.199 And now it feels like everybody's using them. 0:11:41.160 --> 0:11:44.439 You know, it just became it became so generalized and 0:11:44.559 --> 0:11:46.959 second nature to people over time to just start putting 0:11:46.960 --> 0:11:48.960 their credit card information into everything. Right. 0:11:49.400 --> 0:11:51.480 But what we know, maybe this is based on some 0:11:51.520 --> 0:11:54.960 of my own personal experience, is is that these apps 0:11:55.000 --> 0:11:57.920 make it really easy to spend money because often all 0:11:57.920 --> 0:12:00.680 of your information is already stored or pre populated in 0:12:00.720 --> 0:12:01.079 the app. 0:12:01.320 --> 0:12:04.000 Yes, because the way that smartphones are set up these days, 0:12:04.200 --> 0:12:08.880 everything auto populates your name, your address, your cell phone number, 0:12:09.160 --> 0:12:13.280 your social Security number, your mama's made a name, what 0:12:13.360 --> 0:12:15.079 you ate for breakfast, everything. 0:12:15.400 --> 0:12:18.320 And we talked about how putting credit card information yes 0:12:18.640 --> 0:12:19.920 into your browser, and. 0:12:19.880 --> 0:12:22.800 We talked about that on our end of the year mixtape. 0:12:22.840 --> 0:12:25.719 When you have mobile browsers and even browsers on your 0:12:26.200 --> 0:12:29.600 computer that auto populate your credit card information, right that 0:12:29.679 --> 0:12:33.080 save it and auto populate, you're like, oh, yeah, okay, cool, Yes, 0:12:33.160 --> 0:12:34.960 I will buy all of these things on Amazon right 0:12:34.960 --> 0:12:36.360 now because my card is already there. 0:12:36.559 --> 0:12:38.319 That can lead to a lot of late night shopping. 0:12:38.400 --> 0:12:41.119 I do admit I did buy that cool Aunt sweatshirt. 0:12:41.800 --> 0:12:42.360 I knew it. 0:12:42.440 --> 0:12:46.319 I knew it. The thing here is these various types 0:12:46.360 --> 0:12:51.080 of fintech can make capturing your coins really easy, but 0:12:51.120 --> 0:12:53.400 it also can make giving them away pretty easy too, 0:12:53.440 --> 0:12:59.320 so be careful with that. The next category is consumer lending. 0:12:59.480 --> 0:13:04.760 These include affirm, after Pay, Credify, and bond Street. Are 0:13:04.760 --> 0:13:07.640 these apps not exactly? Not all of these are apps, 0:13:07.720 --> 0:13:10.000 So a firm is something you'll sometimes see on a 0:13:10.040 --> 0:13:12.400 website when you get ready to check out, and it 0:13:12.400 --> 0:13:15.200 may say you can split your payment into you know, 0:13:15.480 --> 0:13:18.040 you can do this with zero percent financing over twelve months. 0:13:18.360 --> 0:13:22.600 Peloton offers a firm I've often seen on like shop 0:13:22.640 --> 0:13:24.960 bopped and some other websites they offer after pay so 0:13:25.040 --> 0:13:25.600 you buy it. 0:13:25.559 --> 0:13:29.800 And Outfitters and a lot of different clothing websites now. 0:13:29.760 --> 0:13:32.840 And there are some technologies like Zel that yes have 0:13:32.920 --> 0:13:36.160 a standalone app, but are also integrated. So Zell is integrated. 0:13:36.200 --> 0:13:37.880 If you have Bank of America, zel is an option. 0:13:37.960 --> 0:13:40.320 If you have Wells Fargo, zell is an option. And 0:13:40.360 --> 0:13:42.920 so now that's why one in two people that have 0:13:42.960 --> 0:13:45.760 a bank account have access to Zel. That's amazing because 0:13:45.760 --> 0:13:47.880 they did. They have the best of both worlds. You 0:13:47.880 --> 0:13:49.720 can download another app, or you don't have to. You 0:13:49.800 --> 0:13:51.760 just use it in your own banking app. It's pretty clever. 0:13:52.080 --> 0:13:52.680 Definitely. 0:13:52.760 --> 0:13:55.960 It gives people the opportunity to make purchases that they 0:13:55.960 --> 0:13:58.839 can't afford all at once and pay it off in 0:13:58.920 --> 0:14:00.000 tiny chunks. 0:14:00.040 --> 0:14:02.320 Let's just take the holidays for example. If I don't 0:14:02.360 --> 0:14:05.440 have cash or credit, I might take a payday loan 0:14:05.520 --> 0:14:08.560 and those things have incredible interest and have all these 0:14:08.600 --> 0:14:11.440 fees attached to them. But something like a firm or 0:14:11.480 --> 0:14:15.719 afterpay allows me to make a purchase and I can 0:14:15.720 --> 0:14:18.160 pay it in small chunks. Now, this still requires you 0:14:18.200 --> 0:14:21.320 to have some type of credit, while offering more payment 0:14:21.360 --> 0:14:24.080 options is really great. Some of these fintech apps use 0:14:24.240 --> 0:14:27.040 something called alternative risk scoring. This is a practice that 0:14:27.120 --> 0:14:31.720 can mine other types of data to determine your credit worthiness. 0:14:32.040 --> 0:14:36.600 Yeah, so some consumer lending companies have access to our 0:14:36.680 --> 0:14:42.000 social profiles, our cell phone location information, and browsing histories 0:14:42.000 --> 0:14:45.080 and they're using that to determine our credit worthiness. 0:14:45.200 --> 0:14:47.360 The key thing here is that all of these different 0:14:47.400 --> 0:14:49.840 companies have proprietary algorithms. 0:14:50.040 --> 0:14:53.760 An algorithm is an equation that is used to determine 0:14:54.200 --> 0:14:56.840 a risk or an outcome. What some of them might 0:14:56.880 --> 0:15:01.480 be doing is taking like your browsing history and putting 0:15:01.480 --> 0:15:04.840 that into their algorithm to determine your credit worthiness. 0:15:05.160 --> 0:15:08.120 So the thing to remember is that these algorithms are proprietary. 0:15:08.160 --> 0:15:10.680 That means they belong to those companies and they don't 0:15:10.760 --> 0:15:14.200 have to share what the algorithm actually is. The problem 0:15:14.200 --> 0:15:15.960 with that is that if we don't know what information 0:15:16.080 --> 0:15:18.520 is being collected or used, we can't really tell if 0:15:18.560 --> 0:15:21.000 it's being used correctly or maybe be a misinterpreted. 0:15:21.280 --> 0:15:24.000 One of the really pernicious things here is you'll have 0:15:24.080 --> 0:15:26.800 people in the industry who will say, oh, hey, it's 0:15:26.840 --> 0:15:29.920 an algorithm. It's a computer. This is going to eliminate 0:15:29.960 --> 0:15:33.080 bias because you're not going to have someone sitting in 0:15:33.080 --> 0:15:37.360 a loan office looking at someone across a table from them, 0:15:37.520 --> 0:15:40.680 where implicit or explicit bias can creep in. This is 0:15:40.720 --> 0:15:44.520 totally neutral. It's the computer, but so much depends on 0:15:44.680 --> 0:15:47.560 the data that's fed into it, the histories of how 0:15:47.560 --> 0:15:48.840 those data are collected. 0:15:49.160 --> 0:15:49.360 Yeah. 0:15:49.400 --> 0:15:51.680 I mean, what if my niece has my phone, she's 0:15:51.720 --> 0:15:55.240 five years old, and let's say she's been on YouTube 0:15:55.760 --> 0:15:59.520 binge watching cartoons, and then the consumer lending company sees that, 0:16:00.120 --> 0:16:04.520 and they may consider YouTube binge watching cartoons a negative 0:16:05.160 --> 0:16:06.840 marker in their algorithm. 0:16:07.040 --> 0:16:09.040 But we have no way of knowing that, right, we don't. 0:16:09.360 --> 0:16:11.160 So that's kind of the tricky part about all of this. 0:16:11.440 --> 0:16:13.840 You know, we've talked about bias in the past, but 0:16:13.920 --> 0:16:15.720 this is something to really consider. And this is something 0:16:15.760 --> 0:16:18.720 that the new Apple credit card really recently came under 0:16:18.760 --> 0:16:21.480 fire about. So the Apple credit card, which is paired 0:16:21.480 --> 0:16:23.840 with glob and sacks. There were reports that it may 0:16:23.840 --> 0:16:25.480 have some type of bias against women. 0:16:25.640 --> 0:16:29.280 Women are getting lower credit limits than their husbands, even 0:16:29.320 --> 0:16:31.400 if they have the same household, in the same bank account, 0:16:31.440 --> 0:16:32.200 and that sort of a thing. 0:16:32.560 --> 0:16:35.240 And so there's something in that algorithm that's giving them that. 0:16:35.280 --> 0:16:38.200 And it may not even be explicitly if you're a 0:16:38.200 --> 0:16:40.120 woman lower, if you're a man higher, But it could 0:16:40.160 --> 0:16:42.480 be something else around patterns or trends that we don't 0:16:42.520 --> 0:16:44.600 even realize. But we don't know that algorithm, so we 0:16:44.640 --> 0:16:47.480 can't say right right now, New York state regulators are 0:16:47.480 --> 0:16:51.080 investigating whether Apple credit cards algorithm is sexist. When we 0:16:51.120 --> 0:16:53.320 come back, we'll talk about how you can make smarter 0:16:53.480 --> 0:16:57.320 financial decisions in twenty twenty and how to evaluate what 0:16:57.480 --> 0:17:17.160 fintech to try. We're back, so how can we make 0:17:17.240 --> 0:17:20.160 smart financial choices in twenty twenty? Is there a way 0:17:20.200 --> 0:17:23.800 to use fintech for our good? According to doctor Mauer, 0:17:24.320 --> 0:17:27.359 you shouldn't rely entirely on technology to get your finances 0:17:27.359 --> 0:17:29.800 back on track. Instead, you should use it as a 0:17:29.800 --> 0:17:33.080 tool part of your larger strategy, and the first step 0:17:33.119 --> 0:17:35.159 of that strategy shouldn't be to download a nap it 0:17:35.200 --> 0:17:36.080 should be to set. 0:17:35.880 --> 0:17:39.760 A goal set for yourself, a realistic goal. And a 0:17:39.800 --> 0:17:43.080 realistic goal might be something like, I'm going to pay 0:17:43.080 --> 0:17:46.160 off twenty percent of my credit card debt this year, right, 0:17:46.280 --> 0:17:49.240 not fifty, not seventy five, not all of it. It's 0:17:49.280 --> 0:17:51.879 gonna pay a twenty percent of it, and then you 0:17:51.920 --> 0:17:54.240 can use those apps to track how you're getting toward 0:17:54.320 --> 0:17:54.800 that goal. 0:17:55.400 --> 0:17:58.560 Having a realistic goal is important because otherwise you can 0:17:58.600 --> 0:18:02.040 get frustrated and just give book. The second step of 0:18:02.080 --> 0:18:06.320 your strategy should be a debt assessment. Pull together all 0:18:06.320 --> 0:18:10.280 of your loans, credit card balances, car loans, student loans, 0:18:10.320 --> 0:18:13.520 all that stuff, and compare their interest rates. 0:18:13.480 --> 0:18:17.520 And start really focusing on those highest interest debts, the 0:18:17.600 --> 0:18:21.359 highest interest credit cards. Pay those off first, right, and 0:18:21.400 --> 0:18:24.520 then work your way down. Don't waste your time going 0:18:24.560 --> 0:18:27.480 all like investing in bitcoin or whatever while you're trying 0:18:27.520 --> 0:18:29.840 to pay off your debt. Right, you're focusing on paying 0:18:29.840 --> 0:18:30.600 off your debt. 0:18:30.800 --> 0:18:33.560 Yes, you have to crawl before you ball, focus on 0:18:33.600 --> 0:18:35.960 your debts before you start investing. 0:18:36.240 --> 0:18:39.919 Yeah, invest in yourself before you're investing in other things. 0:18:40.359 --> 0:18:43.080 So we have a strategy for debt, how should we 0:18:43.119 --> 0:18:44.480 manage the rest of our budgets. 0:18:44.680 --> 0:18:47.760 There's the fifty to thirty twenty budget rule, and this 0:18:47.800 --> 0:18:50.040 is a thing that Elizabeth Warren and her daughter came 0:18:50.119 --> 0:18:53.040 up with, and basically they're like, you should allow yourself 0:18:53.119 --> 0:18:56.560 fifty percent on your actual needs and that's like your rent, 0:18:56.600 --> 0:18:59.560 your mortgage, your food, medicine stuff, that kind of thing. 0:19:00.080 --> 0:19:03.280