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Insights: How Automation is Ushering in the Third Wave of Fintech

November 12, 2019 00:00 AM UTC
- Updated May 06, 2020 14:49 PM UTC

Jason Brown, cofounder and CEO of Tally, stops by the Fortune studios to discuss the future of financial technology. (November 2019)

Transcript
[MUSIC PLAYING] JEN WIECZNER: Tally specializes in financial automation. You also do some debt repayment. Can you tell us a little bit about how that works? JASON BROWN: Yeah, well, so we're a financial automation company, which means that we are building a service that can do all of your financial thinking and your financial work. And so we started about found and a half years ago building what is now the first and only automated debt manager. And it helps people get out of credit card debt faster and save money along the way. And then we recently added an automated saving service that helps people save towards a goal or build a rainy day fund. And ultimately, what we're working towards is to be able to do all of the financial thinking and work for consumers, so that they can set really big objectives like, I want to be a homeowner. And along the way we're getting rid of their card debt, saving a down payment, improving their credit score, and then eventually financing a home. So it's about being able to really take that emotional and cognitive load off of consumer shoulders and do that in an automated fashion with software. JEN WIECZNER: So walk us through exactly how this works. JASON BROWN: So with Tally, you just download the app, scan in your cards. And then we actually take responsibility for paying your cards for you and then you pay Tally. And the advantage there is anytime we detect you're getting charged interest by the cards, we actually sweep over your balances overnight and move them over to Tally at a lower rate. And we guarantee you're not going to have any late fees. The way our algorithms manage your cards, they get you out of debt quite a bit faster. And our average customer saves over $5,000 in interest. So it's really about taking that burden away, but also making people better off financially. There's really three waves of consumer fintech. The first wave was post financial crisis. And this was the emergence of the online lenders, student loan lenders. And after that came mobile tools. And that's really where we're at right now. So that's where you've got Credit Karma, a lot of the neobanks, online stock trading. And these are just really easy to use mobile tools that you can open up the tool box and do your financial work. The place that it's going is it's going to a world where there's an intelligence service that actually is doing that thinking and work for you. And instead of you having to spend your time and figure out what should I do, it has already figured that out based on your goals. So you just communicate in human language about what you as a person want and then it actually does those things for you. So our view is very strict which is automation means we do all the thinking and work. ROBERT HACKETT: I'm interested in this shift you describe toward full financial automation. But one of the major issues we see in technology right now is you've got these companies like Facebook and Google, and they've got these black boxes. They serve you recommendations and whatever they like. And you don't really know exactly what they're doing, whether it's in your interests or in their interests. So when it comes to financial automation, how can someone be certain that a startup such as Tally is providing the best possible recommendation for them. Same thing for robo-advisors and people making investment choices on behalf of other people. JASON BROWN: Yeah, well, I think it really starts with the business model. I mean, when you have an ad-supported business, your customer is really advertisers and the product is the consumer. And that puts you in a difficult situation because you're not always going to do what's best. If you shift it and say, well, the customer is my customer and I will align my business model with delivering them value, then you bring the incentives in line with each other. So again, taking a look at Tally cards, we only can make money if we're actually saving a customer money on interest. So people who are using Tally that, let's say, don't have any interest charges, they get to use Tally for free and they get all the benefit which we're fine with. But anytime we can see, hey, we can save you money, we're going to do so and then Tally will actually earn revenue. So I think it has to do with just the general focus around what is best for the consumer mathematically and doing that. And I think that's the power of having computers do your financial work. Because let's just take a real human financial advisor. They're supposed to be doing what's best for you, but are they getting fees and incentives from different financial products to nudge you in one direction or another. Whereas, Tally effectively has an auditable log. And every decision that the system made on your behalf, we can justify why mathematically that was the best thing to do at the time. And even 100 years from now when I'm dead and gone, if let's say auditors want to come in and look at what happened, there's actual trail on every single move. So that's one of the things that I get excited about is moving actually away from human advisors into computer systems where you have that kind of mathematical accountability. Because at the end of the day, computers optimize towards goals. And if the goal is make this customer better off, then you really shift the power, if you will, to the consumer. [MUSIC PLAYING]