One of the missing pieces for personal finance managers is that many of them require a lot of work. From categorizing spending to acting on any of the analysis, there’s typically a big enough cognitive lift that limits their use.
Tally wants to change that. At the heart of its personal finance tools is automation — the company offers an automated debt manager that helps people save money, manage their cards, and pay down their balances faster.
When you speak with Tally’s co-founder and CEO Jason Brown, you quickly understand that his ambitions to bring automation extend way beyond paying down debt. Jason sees an opportunity to roll automation out to many of our personal finance challenges and pain points. He describes this evolution as the third wave of consumer fintech — where we move beyond mobile tools into complete financial automation where we don’t need to carry the emotional or functional burden of managing our finances.
Automation's growing role
I don't know how many of your listeners and readers have read the book Sapiens by Yuval Noah Harari. When they write the history books, what are going to be the big themes? One of the key themes will be the role automation plays in shaping the human experience in many parts of our lives. There's nothing more stress-laden in our modern lives than our relationship with money. I'm inspired by the idea of taking something that's purely mathematical -- managing money which computers are really good at -- and transfer the cognitive burden to machines.
The reason I'm so passionate about automation is that growing up, there was a lot of stress and anxiety about money in our household. My mother, in spite of being super intelligent, hard-working and incredibly disciplined, she hasn't been able to reach her goals. That tells me that something is really broken about the system. I think the solution is to have this intelligent intermediary that interfaces with the outside financial world on our behalf and is really our advocate for us.
Automation is the third wave of consumer fintech
The first wave of consumer fintech was immediately after the financial crisis. We saw the emergence of many online lenders. Then we move to the mobile tools wave, where we saw a lot of neobanks and new stock trading platforms designed from a mobile-first perspective. The third wave is a race to complete financial automation.
What differentiates the third wave is that previous waves were about giving people tools they can use with their intelligence and time. Now, there's an intermediary layer of intelligence which is actually using the tools for us on our behalf, removing the emotional and functional burden of having to do the work.
Removing the emotions
My mental model is the ultra-wealthy -- people with teams of people working in Greenwich, Connecticut for them. They have a team of experts managing their complete financial lives. I believe it's possible to build all this into software and give it to people who otherwise wouldn't have access to it in the American middle class.
On one side, there's a squishy relationship with what humans desire and the tradeoffs they require. This multi-period financial optimization over an 80 or 90 year life isn't something hairless apes evolved to do. So, on the one side, kind of being a therapist for what the human heart want and then once there's a picture, outsourcing the thinking and execution for it -- it gets me very excited.
The Tally debt manager
The core experience is the home screen. It's a picture of a person sitting with her feet up on the table drinking coffee. There's no charts, graphs or recommendations. Our north star is to fully automate this one job. It took us three and a half years to build the financial and technology infrastructure to do that. Once we achieved that, the user experience is amazing. You just download the app, provide some details around your credit card and information so we can do a soft credit check. From that point forward, Tally takes responsibility for paying all your credit cards for you when they're due and then you pay Tally.
This guarantees that customers never pay credit card late fees again. We also automatically sweep over balances every night if users are going to be assessed high interest by the cards. Finally, built into the core experience, is a robo-adviser for debt. It looks at your upcoming income and expenses and figures out how much of your free cash flow you can invest in paying down your revolving debt.
Moving into savings
Our view is that complete financial automation will be reached among the American middle class. When we look at the two most fundamental financial jobs Americans need done, the first is getting rid of card debt. 44 percent of Americans households have it. The next most important thing is to be able to build a cash buffer. We said, let's start at the bottom of the pyramid in terms of fundamental needs and then we can work our way up.
Our users range from recent college grads to parents with kids graduation from college. Our core target audience is the average American making average wages. We have 99 percent monthly retention. Once people experience automation, they don't wake up in the morning wanting to take back that work and stress. Our NPS and referral scores are very high -- about a third of our growth comes organically. The rest is coming from our video, digital, and traditional marketing.