Economic Health

Human-Centered Finance

Millions more Americans are in financial distress today. It’s time to rewrite the personal finance playbook, with purpose.

Obvious | 12/08/2020

2020 has led many, myself included, to question their social, moral and financial foundations. Thriving adults have moved back into their parents’ homes (fortunately for me, I never actually left…). Friendships have fractured as stances toward a resurgent social justice movement increasingly bear on our social standing. More pressingly, millions of employees have lost their jobs due to macroeconomic factors beyond any of our wildest imaginations. After these explosions, however, the sparks of fresh, early stage innovation glimmer.

A renewed emphasis on community, collaboration and change offers hope after the wreckage of 2020. As we seek to rebuild the foundations that the past year has leveled, we at Obvious continue to come back to personal economic stability as an essential cornerstone. Such stability demands knowledge, resources, access, experience and refined habits. Today, as the number of Americans with major income volatility and experiencing financial distress soars, we must rewrite the playbook for those approaching a financial cliff.

Standing on the Shoulders of Giants

For some, it is challenging to remember a time when the new new thing was not the obvious choice. The nightly news gave way to Netflix. The local pizza joint lost its monopoly power to Postmates. Yet, in some circumstances, older models have something to teach us. Few institutions better exemplify this than USAA. Founded in 1922, USAA is a unified financial services platform that offers banking, investing, and insurance to people and their families who serve, or once served, in the US military. Whether you need an auto loan, catastrophe insurance, a 529 plan, or a mortgage, USAA has you covered. As a one-stop shop for its 13 million users’ financial services needs, USAA is a formidable force. While the company’s 2019 revenue of $36 billion puts USAA in the Fortune 100, its Net Promoter Score (NPS) is more than 4x the industry average and supports its 96% member retention. And the company never raised venture capital!

So what explains USAA’s historic success? Community, customer service, and a comprehensive suite of services. Today, as we revolutionize our offerings for the underserved, we ask—might this be replicable? I hope so.

Modernizing for Main Street

Nationwide, millions are plunging into financial precarity at an accelerating pace, impairing many millions of people’s ability to save for retirement, invest in education and weather unexpected storms. With 35% of Americans experiencing financial distress over the course of their lifetimes, the need for more supportive systems like USAA is plain. The organization makes clear the extent of their support — “When you joined USAA, you became part of a family who stands by you during every stage of your life.” So, what can USAA’s methods teach us about redesigning the financial services industry in a way that better balances both profit and purpose?

Ignite via Identity: Obvious’ track record of investing in purpose-driven consumer businesses has taught us that there’s nothing more powerful in customer acquisition than affinity. Psychologically, humans want to feel seen, heard, appreciated and supported. Why should we settle for any less from our service providers? USAA capitalizes on this reality by targeting a specific customer base of common background—members of the US military and their families—and delivering a curated suite of services that meet their needs in a language they understand. The organization goes so far as to put employees through mock boot camps so that they can better understand the culture of the US armed forces and the mindset of USAA’s member base. By embracing identity and empathy as core tenets of both customer acquisition and service, USAA delivers industry-leading member satisfaction, meeting the demands of company ethos while also driving substantial profits.

In seeking stronger financial safety nets for millions of underserved Americans, might an identity-driven approach emerge as the most effective wedge into the broader financial services ecosystem? If so, might specific identity-aligned slices of the 57 million freelancers, 60 million Hispanics, or 73 million Boomers present attractive, addressable opportunities for mission-aligned entrepreneurs with true founder-market fit? And what role might branding, language and go-to-market strategy play in establishing a company that becomes a trusted and relatable resource for a given demographic?

Emphasize Engagement: As emerging enterprises begin to show scale, both investor and operator attention quickly shifts from customer acquisition to retention. Having witnessed the meteoric rises of the most valuable consumer platforms of the past decade, we’ve learned that resilient retention is driven by substantive engagement. By compelling a consumer to converse or co-create, one fosters a deep sense of investment that drives loyalty and leverage over time. USAA achieves this by inviting members to assess and continuously improve their financial footing through its proprietary Financial Readiness Score (FRS) and step-by-step field guides to economic enhancement. So armed, USAA’s member base is able to realize tangible improvements to their financial profiles—which motivates them to reach for even more. Frequently, such ambition is not an individual effort. By encouraging members to invite their families to the platform, USAA offers a multiplayer mode of sorts, further propelling the engagement flywheel. As a new generation of financial services providers aspires to optimize their own retention, how might they engage their customers monthly, weekly and even daily? Will the degrees of gamification (an agent of attention) and education (a driver of financial literacy) be meaningfully influenced by a specific company’s target user base? And could the essence of such engagement evolve over the course of a consumer’s relationship with a given platform?

Package for Purpose: In today’s ocean of optionality, personalization has emerged as a driver of both discoverability and trust. The Google searches of the early 2000s have given way to the Goop Gift Guides of today. Consumers are seeking products, platforms and services tailored to their specific needs, preferences and financial profiles. In this environment, USAA offers a broad range of targeted products while never aspiring to be everything to everyone. For USAA, determining what not to offer—premium home insurance, for example—has been almost as important as understanding what financial products offer the greatest benefits for its members. By solving for the Goldilocks effect, USAA enhances its cross-sell potential while minimizing confusion and the risk of associated churn, optimizing its customer lifetime value (LTV) over time. Conceptually, such an approach is worth emulating. But will comprehensive launch offerings or sequential feature releases afford disruptors the best chance at driving consumer awareness, understanding and adoption over time? Could the layering of financial services enable fintech platforms to expand into new categories that were previously challenged from a customer acquisition cost (CAC) or margin perspective? And will greater access to user data allow providers to both more effectively upsell customers and accurately price risk?

At Obvious, we envision a human-centered financial system designed to serve all stakeholders, regardless of their zip code or the number of zeros in their bank account (our portfolio company 

One is taking this challenge head-on). With trustworthiness, transparency, flexibility, and security as defining characteristics, we foresee a world where expanded access will drive expanding opportunity for companies and their customers alike. If you’re as inspired by the potential for purpose-built platforms to fortify the financial footing of the millions of Americans that need it most, we’d love to hear from you.