Banking with WiseWage By Adam Rust Goals for Today Learn some - - PowerPoint PPT Presentation

Banking with WiseWage

By Adam Rust

Goals for Today

• Learn some more about how people bank and save.
• Discuss New Thinking on Financial Health
• Introduce WiseWage

Banking for Everyone?

• There is a bank on every corner, but most banks are not

interested in serving every person on every corner.

• 14.1 million adults do not have a bank account of any kind.
• 48.9 million adults might have a checking account, but they do

not have a savings account.

What do unbanked people think about banks?

• Most people without a bank account used to have a

bank account. = they had a bad experience before

• Only one-quarter of the unbanked have a stated

intention to get an account. = people think they don’t belong in the system.

• But - more than half of the unbanked are not interested

in getting an account in the future. = they will need to be convinced to return to the system

10 20 30 40 50 60 Don't Have Enough Money Don't Trust Banks Privacy Fees to High Surprise Fees ID, Credit Don't Need Inconvenient Hours Other

Blue – a Reason not to have an account Green – main reason not to have an account

The unbanked and underbanked still have to pay bills – how do they do it?

10 20 30 40 50 60 70 80 Write a check use a credit card use a debit card electronic bill pay use a money order prepaid card cash

Unbanked Underbanked Fully Banked

Younger people more likely to be unbanked

5 10 15 20 25 15 to 24 25 to 34 35 to 44 45 to 54 55 to 64 64 or older

Banking Status by Age Cohort

Unbanked Underbanked

The cost of being unbanked or improperly banked

Unbanked: Americans spent $2.1 billion cashing checks, $3 billion in non-bank remittances, $900 million in walk-in bill-pay, and $800 million on money orders.* Improperly banked: 70 percent of checking account overdraft fees are paid by low- wealth individuals** Risky: Carrying cash puts a person at risk of theft. Negative experience = last experience: Overdraft and minimum balance fees convince people to leave the banking system. On average, low-wealth consumers pay four overdraft fees ($130+/-) per year. It’s not just the direct financial costs – it’s also the lack of velocity in receiving wages.

The Problem with Check Cashers

They take Money

SERVICE FEES CHECK CASHERS TAKE FROM AVERAGE WORKERS

WHICH CAN BUY…. OR… OR…

They take Time

NUMBER OF HOURS CHECK CASHERS TAKE FROM AVERAGE WORKERS

WHICH CAN BUY…. OR… OR…

9

$

711

PER YEAR

2 3

DAYS OF GROCERIES FOR A FAMILY OF 4

2 7 3

SCHOOL LUNCHES

5 3 5

PUBLIC TRANSPORT SHORT TRIPS

15

hr

PER YEAR

3

DATE NIGHT MOVIES WITH SPOUSE

1 9 7

MATH PROBLEMS SOLVED WITH CHILD

6 2 4

FACEBOOK WALL POSTS

Source: CurrenC San Francisco

Savings is Hard to Do; It’s Worth It

We had realized the American dream, and were living a very expensive lifestyle, the type of lifestyle where it is difficult to turn off the spigot.“

• Ken Lay, former CEO of Enron
• Compound interest is the eighth wonder of the world. He who

understands it, earns it. He who doesn’t, pays it. Compound interest is the most powerful force in the universe.

• Albert Einstein

Where do people save their money?

10 20 30 40 50 60 70 80

Save money under bed In a savings account in checking

• n a prepaid card

Unbanked Underbanked Fully Banked

Path # One:

Change How People Manage their Money

Findings from Data How Successful Savers Plan to Save

They Tap the Power of their Goals

• They establish a specific savings aim.
• They plan how they will measure success
• They make the goal relevant
• They bind their goals within a period of time

They understand their obstacles

• They identify why, when, where you make mistakes
• They create if-then plans
• They make achievable goals

ENDOGENOUS:

• New exercisers (2017): high frequency, achievability, and known

reward

• New flossers (2010): Those who committed to flossing before

(2.2x) or after (8x) an existing habit were more successful than those who did not.

• New exercisers (2015): Rewards most effective with “skin-in-the

game.” EXOGENOUS

• New Voters (2003): one pre-election reminder increased

participation for successive elections.

• Savings deposits (2013): Reduce friction to deposit (with

encouragement) and increase friction to withdraw

Findings from Data Habit Formation Best Practices

Results from the 52-Week Challenge

$0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $0 $10 $20 $30 $40 $50 $60 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52

Left Side = Weekly Save Right Side = Net Savings

How are we doing as a nation of savers?

Assets and Debts

• 40 percent of adults have less

than $400 in cash for an emergency.

• Most people have more debt

than savings

• Only 29 percent have six

months of savings Self-perception

• Two-thirds say they are saving

money

• Most people think they are

experts on money.

• 20 percent say their retirement

plan is to win the lottery

The New Retirement

Savings Level upon Retiring

No savings <$5,000 $5k to $74K $75 - $200k More than $200K

Results

• Most people plan to work part-

time in retirement. Many people develop disabilities that make it hard to work.

• Most people run out of money

before they pass away.

• Twenty percent say they will

never stop working.

• One in six people over 70 is still

working

Path # Two

Change The Products People Use to Manage Their Money

• Could it be the products, not the people?
• If so, what would the products be?
• How would they be designed?

Access Safe Credit Build Net Worth Protect from Risk Manage Spending

The Pillars of Success

About WiseWage.org

• A web portal marketing overdraft-free FDIC-insured

debit cards.

• Easy-to-use, FREE, and available to consumers from

smartphone or desktop anywhere in the United States.

• They incorporate what we know about savings

WiseWage provides safe and affordable bank accounts

• No credit pull.
• Absolutely fee-free!
• Our accounts pay more than 2 percent interest.
• Each also has budgeting tools.

FDIC-Insured Digital Bank Accounts

Example – Empower Budgeting Tools

Compare current interest Rates on Savings at WiseWage versus other banks

2.15 2.12 0.01 0.25 0.03 0.5 1 1.5 2 2.5 Empower Varo Wells Fargo BB&T Self-Help Bank of America

Interest Rate

Empower Varo Wells Fargo BB&T Self-Help Bank of America

Oh, the money you’ll save!

• No monthly fee
• Free ATMs
• No minimum balance fee
• No fee to buy things
• Free bill-pay
• Free photo check deposit
• No overdraft fees
• No international transaction fees

Comparison of Accounts

Bank of America Wells Fargo Varo Money Empower

Monthly Fee $12 $10 $0 $0 Minimum to Open $100 $25 $0 $0 Waiving Fee Rules With Direct Deposit of at least: $250 $500 n/a n/a Or minimum balance of $1,500 $1,500 n/a n/a Overdraft fee $35 $34 n/a n/a Pays interest? 0.03% 0% 2.12% 2.15%

Let’s Try It – It’s Your Turn to Bank Better

Questions? Call Adam – 919.260.3653 adam@reinvestmentpartners.org

WiseWage.org