At our recent DataDay Conference, Sudev Balakrishnan, chief product officer at Stash, delivered a talk on product development that should be required reading/listening/watching for anyone in the field.
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On Stash and learning from consumer
Stash’s roots are in investing but it’s added products and features so that today, it looks very much like a bank. It has more than 4 million users. Sudev didn’t grow up through the ranks at financial services companies and that works for him and Stash.
“I used to run product for GrubHub, the food delivery company,” he said.
“I always tell people that I know very little about finance and that’s the reason why I joined Stash, because I always saw Stash as a company that is not a financial company. It’s a company on a mission to make financial services habits. And that’s something that’s very prevalent in the consumer services industry.”
Moving from product portfolios to personalized offerings
Sudev’s background in consumer contributes to his understanding of what financial services do right and where it fails customers. The status quo in banking means that consumers themselves have to choose which products they think they want at any given time — leading to a lot of confusion and sub-optimal outcomes.
“When I think about the status quo in banking, I think about how the financial services industry offers a vast suite of financial products, and it’s up to the consumers to pick and choose from those financial products to the best of their ability,” said Balakrishnan.
“Now, there’s all this complexity, without any larger picture to how all this fits into the user’s day to day life. The user goes about his day to day life, living, making money, paying bills. There is a picture in their mind of how their life works out. That picture doesn’t exist in banking. Banking provides capital at a particular point. Maybe a life event. Maybe the user has a kid. Maybe the kids are about to go to school. Maybe you just need a house at a life event. You almost have to tap out and say, I want capital now.”
The mistake of the overdraft fee
Balakrishnan takes aim of the overdraft fee as an indicator of the brokenness of the current banking system. It also shows how tone-deaf the industry can be to consumer needs and wants.
“If I just think of the simple overdraft fee and say, what is an overdraft fee? Philosophically, it’s a mistake you make when you try to access capital from this industry. A mistake, a human error. The financial services industry makes over $34 billion from that mistake each year. I can’t see how this could ever be consumer centric to take advantage of someone’s human mistake when they are trying to access the primary thing that your industry was designed to give them access to,” he said.
How Stash builds products
Balakrishnan says that Stash incorporates tools, guidance and automation into everything it builds. It looks to create simple tools for its customers — for example, his team built a very simple account opening process that enables Stash users to complete just a few steps before they can put money away into their account. Stash encourages users to get started with something small — say, $20 a week.
Next, guidance is important. Stash offers what Balakrishnan calls “a 10th grade education”. It’s at that point he feels financial education goes missing from our educational system.
Then, there’s automation. People, he says, are certainly capable of making smart financial decisions, but they suffer from decision fatigue. This real emotion means that people are tired of continually making decisions. It’s here that Stash aims bring automation into its experience.
“We have evolved as humans to actually automate some of that decision making. So, automation is the ability to parlay the benefits of good decision making over time in your favor. So if you were to make a decision to put ten bucks today and ten bucks to more than ten bucks today, or you just say, I want to put ten bucks every day, there’s a massive difference in the adoption and success you achieve in those two pathways,” he said.