Barefoot Innovation Podcast

My conversation with Chuck Harris, President of NetSpend, is our final episode for 2015. Thinking back on the brief eight months since we launched Barefoot Innovation, I'm struck by the enormous terrain we've covered. As we start into the new year, I'll be sharing my own thoughts on what I've been learning from these discussions. For now, though, enjoy listening to Chuck Harris, who touched on many of the major themes we have explored so far: the rise of fintech, prepaid cards, mobile platforms, mission-oriented companies, non-bank providers, partnerships, financial inclusion the underserved and underestimated consumers, regulatory challenges, uncertainty, and most of all excitement. Like some of our other guests, Chuck Harris leads a young company in a field, prepaid cards, that didn't even exist until well into his career. He says he feels lucky to have "stumbled" into a role that combines good business with doing good, a mix that is both challenging and rewarding (a sentiment expressed by many previous guests). It's interesting that this episode follows on the heels of my discussion with the Comptroller of the Currency, Tom Curry, as it shares a common emphasis on the need for a new kind of collaboration as the financial sector undergoes disruption, including between industry and regulators. I think this kind of new dialogue is starting to emerge – a topic we'll spend time on in 2016. NetSpend was established in 1999 as a way for "college kids to spend money," and has since grown into a leading provider of reloadable prepaid cards and related financial services. It focuses on consumers that Chuck calls "self-banked" – the people often referred to as un- or under-banked. NetSpend seeks to empower the self-banked with FDIC-insured offerings through its network of over 70,000 distribution locations and 130,000 reload points. They have helped more than 10 million consumers make purchases, pay bills and manage their money without needing a checking account or credit history. In addition to prepaid cards, NetSpend offers a range of services including P2P and standard bank transfers, online and mobile apps, and budgeting tools. You can learn more about them at www.netSpend.com. Chuck joined the company 2010 after serving as general manager of the payment solutions division of Intuit. He previously held multiple positions for Electronic Clearing House, including President and CEO, President and COO, and as a director. He has also held leadership roles with Chase Paymentech, including as President and CEO of Merchant Link, a wholly owned subsidiary of Chase Paymentech. He holds a B.B.A. in finance from the University of Texas at Austin. We recorded this conversation at the Money 20/20 Conference in Las Vegas, where Chuck and I both were speakers. That fact prompts me to suggest a new year's resolution for our listeners, especially those in traditional financial fields: attend a fintech conference in 2016. Money 20/20 is the biggest, absolutely packed with energy and ideas and about 10,000 people. And I always recommend CFSI's Emerge conference, which uniquely explores how new technology can benefit both providers and consumers. (remember that I serve on CFSI's board of directors). People often ask me how to learn quickly about innovation. For most, the best first step is to immerse in in the excitement of a tech conference. 2016 preview….and please consider donating: Barefoot Innovation will return in the New Year with a widening dialogue and extremely interesting guests. The early lineup will include one of the architects of Dodd-Frank; a primary author of America's consumer financial protection regulations; a credit counseling leader; a top bank's chief innovation officer; our first talk with a company built around Bitcoin, the founder of one of my very favorite startups; and a large bank's compliance officer with detailed suggestions on how to design a "regulatory sandbox." The sandbox concept -- the idea that fostering financial innovation will sometimes require a regulatory safe space for experimentation – is generating increasing dialogue among both industry and regulators (in fact, I'm heading today for London for a round table with the UK's Financial Conduct Authority on a sandbox proposal they issued this fall.) We'll explore it in the coming months. The above list of early 2016 guests includes only the episodes we've already recorded! They are full of insights and surprises (I'm even rating one of them PG-13). We have many more people set to talk with us, including leading regulators, bankers, non-bank executives, tech experts, compliance experts, policymakers, and many, many startups and other innovators. The robustness of the schedule reflects the fact that Barefoot Innovation has been growing far faster than I expected, and has in fact evolved into a major undertaking for me and the two young people who help me produce it. If you're enjoying the series and want to keep more episodes coming, let me encourage you to provide support for it, in any amount you like. Meanwhile, I wish you all a holiday season filled with peace and joy, and will look forward to connecting in the New Year. If you enjoy our work to bring together thought provoking ideas and people please consider a contribution to support the site. Donate Please subscribe to the podcast by opening your favorite podcast app and searching for "Jo Ann Barefoot", or in iTunes.

I'm delighted to be able to share with you this very special episode of Barefoot Innovation, because my guest is the 30th Comptroller of the Currency, Thomas J. Curry. Our conversation is a particular treat for me, because I myself am a proud alum of the OCC. Many years ago I was the first women Deputy Comptroller of the Currency and also the youngest to serve in that role. My worldview has always been shaped by that experience – by the agency's tradition of excellence, the weight of its mission, and the talent of its people, including, now, its far-flung diaspora. At the Comptroller's office in southwest Washington, I think everyone probably notices the interesting juxtaposition of its modern architecture and bright, open work space on the one hand, with its prominent display of the historical portraits of former comptrollers on the other. Those portraits embody a legacy that dates back to the Civil War. Congress passed the National Currency Act of 1863 to replace the existing, unstable system of bank notes – hence the agency's non-descriptive, rather archaic name. For listeners who are not steeped in bank regulation, this is the primary regulator of all national banks. It's an independent bureau of the Treasury Department, and is called, for short, the "OCC," for Office of the Comptroller of the Currency. It is our oldest bank supervisory agency. The OCC has 4,000 employees, in 91 locations (including London). It oversees more than 1,600 national banks and federal savings associations and 50 federal branches and agencies of foreign banks. It charters federal financial institutions, supervises them for safety and soundness, and retains some consumer protection responsibilities even after most of that role transferred to the Consumer Financial Protection Bureau. It also retains regulatory power under the Community Reinvestment Act. The blending of old and new reflected in the oil paintings is a metaphor for the thing that prompted me reach out to Tom Curry. Last summer, he established an OCC task force on Responsible Innovation, asking a team of his senior leaders to undertake a focused examination of how technology is reshaping financial services, and how best to regulate the huge changes ahead – the kinds of issues we talk about in this series. The team is exploring this inflection point in finance. How is technology likely to disrupt the traditional banking industry? Will banks – especially community banks – lose market share to innovators, including those with simple, mono-line strategies and relatively low regulation? How should regulation protect consumers? And remember, this is a prudential regulator, and so they are especially grappling with the question of how best to protect the financial system itself. As you will hear, Tom Curry has many preliminary thoughts on those questions. He cautions against getting swept up in innovation fads, some of which end badly, as recent history has shown. He also talks candidly about the fact that regulators are not wired to look at the upside opportunity of change – they are culturally primed to see the risk in things, to say "no." Shifting that mindset will be a challenge. He believes the future lies in collaboration – that traditional institutions and innovators together can lead the industry toward a future of responsible innovation, one that works for customers and communities and for providers. He said, "We're still early in the process, so I can't tell you exactly where we'll end up," but he has made a priority of understanding these new trends, including positioning the OCC to "quickly evaluate those products that require regulatory approval and identify any risks associated with them." Before joining the OCC in 2012, Mr. Curry served as a director of the FDIC beginning in January 2004 and as Chairman of the NeighborWorks® America Board of Directors. He previously served five Massachusetts Governors as the Commonwealth's Commissioner of Banks and as First Deputy Commissioner and Assistant General Counsel within the Massachusetts Division of Banks. He entered state government in 1982 as an attorney with the Massachusetts' Secretary of State's Office. A veteran of the dual-banking system, Mr. Curry also chaired the Conference of State Bank Supervisors and served on the State Liaison Committee of the Federal Financial Institutions Examination Council (FFIEC), including as chairman. Even back in my days at the OCC, we saw ourselves as innovating in a time of rapid change in technology and industry structure. My own unit was an innovation – I led the establishment of the initial OCC consumer protection function. The OCC itself was old then, and is older now. It was and is a learning organization, about the evolving financial system and about how to regulate it. I've been able to talk with most of the members of the new innovation task force, and I'm extremely impressed with what they're doing. Even the bitcoin blogosphere is excited to see what they have in store. So please enjoy this unique opportunity to hear from one of our preeminent financial regulators, Thomas Curry. And, as mentioned in the episode, click below to find: Remarks by Thomas Curry before the Federal Home Loan Bank of Chicago on Responsible Innovation 2013 amendments to third party vendor management guidelines The OCC's white paper on community banks Please subscribe to the podcast by opening your favorite podcast app and searching for "Jo Ann Barefoot", or in iTunes.

If I had to choose just one episode of Barefoot Innovation to introduce listeners to the series, this is it. My guests are Jesse McWaters of the World Economic Forum and Rob Galasky of Monitor Deloitte, who co-led the WEF's landmark research project on financial technology (executive summary here). Switzerland-based WEF focuses on public/private collaboration and is best known for hosting the annual global forum in Davos. When I first read news accounts of this report, I reached out immediately to Jesse and (new father) Rob to ask them to join our dialogue. It took some time to get together, but we finally met at the WEF offices in New York. It was more than worth the wait. They launched their study of the global evolution of fintech at the Davos meeting in 2014. By the summer of 2015, they had crystallized the keys to understanding it. Their work is built on extensive interviews and on the technique I increasingly see as the key to progress -- convening disparate participants. They held six meetings with traditional financial institutions, disruptive innovators, and regulators in the same room, grappling with the coming change. In their early meetings, the financial industry executives were interested in fintech and wanted to monitor it, but were not worried - Jesse and Rob call them "tepid" about its urgency. By the end, this view had reversed. My guests use words like "bewilderment," "paranoia," "enemies" and "invading the fortress" as they describe the financial industry's rising concern. They also see these concerns starting to give way to hopefulness about the opportunities. The 193-page study has a global scope, emphasizes the developed world, and looks at eleven areas where innovation is driving transformation. What's working? Here are some of the insights Jesse and Rob share in our conversation: While today's banks feel besieged by disruptors on all fronts, the study shows that innovators are actually mainly targeting specific spots where two key factors intersect - that is, where high friction and customer frustration exist in products that are highly profitable. One participant said they are, "skimming the cream." Recognizing these points of vulnerability can guide traditional companies in what to defend and where to allocate capital. The emerging models have certain key attributes -- they are platform-based, modular, data-intensive, and "capital-lite." The disruptors focus on "shadow" or "fringe" areas, avoiding the heavily regulated core world of deposit-taking financial institutions. They are serious about complying with regulations, but strategically choose the rules to which they will subject their businesses. They are using established assets to scale up, a la Uber, rather than investing in a long, expensive process of creating their own products and infrastructures. They are actively partnering with established institutions for this leveraging of both existing assets and infrastructure and also "regulatory permissions." (Interestingly, this is drawing some major investment companies into retail markets for the first time.) They are focused on controlling the customer experience, using their superior platforms and data analytics. A key subset are "mission-oriented" entities creating inclusive and affordable services to consumers and small businesses. Jesse and Rob mentioned Active Hours and LendUp as U.S. examples, in addition to the huge global potential in emerging markets. Advice to industry: Jesse and Rob discuss how all this is impacting the traditional industry, including this advice: Don't count out banks as an "old world industry." Address the twin pressures of having aging legacy operating systems and processes, clashing with the high demands of today's consumers, especially millennials. People increasingly want personalized, bespoke, low-cost services and are ready to trust online providers. Review and clean out the accumulation of old policies and procedures that prevent banks from creating a great customer experience. Don't make the mistake of viewing fintech as a one-year budget issue. Create a new enterprise-wide, multi-year investment model that is not controlled by the current owners of the business line P&L's. Explore merging models for learning, partnering, and "coexistence." Evaluate the wisdom, or folly, of essentially "outsourcing R&D" to the venture capital world until it figures out the winners and losers. Consider that financial institutions may be major players in shaping what will win and what will lose, especially since they have capital. Use their suggestions on how do innovation inside a traditional company. Expect upward age migration of fintech adoption - don't expect to retain even older customers to the end of their lives in old-style products. Watch for big changes in insurance offering options for bespoke, advisory, concierge models and radically new value propositions (they mention Oscar in the U.S. and Vitality in the UK). Understand the likely sequence in which products will be forced to change, and why - they explain this in our discussion Impacts on consumers: Rob and Jesse predict big changes for consumers, including vastly more choice, hugely better customer experience, better pricing, and much better insight into and control over their own financial lives. They also see rising risks and regulatory needs, including that consumers will be harmed by unsuitable, high risk products. Advice for regulators: Jesse and Rob also have insights for and about regulators. Some of the regulators who joined their meetings were among the most thoughtful people they encountered, but they also warn of a very wide delta between the "leaders and laggers" in the regulatory world. They predict likely regulatory arbitrage if that gap does not close quickly. They also emphasize the need for "regulatory sandboxes" (on that point, watch for our upcoming Barefoot Innovation episode on sandbox innovation with Nitish Pandey of BMO Harris). What next? The project plans to leverage its convening power to tackle further priorities. One is exploring the revolutionary potential of block chain technology and distributed ledgers, including and beyond bitcoin. Another is seeking innovation in managing digital identity, including expanded roles for banks. Might our bank someday help us buy a bottle of wine by sending not only the money, but by verifying our age! Enjoy the episode! References: Here are some of the resources and companies we discussed in this episode: World Economic Forum Full WEF report on The Future of Financial Services ActiveHours (accessing pay that's already earned) LendUp (online lending) Transferwise (payments innovation) Oscar (health insurance in U.S.) Vitality (health and life insurance in U.K.) Please subscribe to the podcast by opening your favorite podcast app and searching for "Jo Ann Barefoot", or in iTunes. If you enjoy our work to bring together thought provoking ideas and people please consider a contribution to support the site. Donate

This episode adds a new dimension to our discussions with innovators, by taking us inside a huge company - American Express. My guest is Courtney Kelso, who leads the Amex product and marketing team in Enterprise Growth. I talked with Courtney about two things. First, their strategic move into creating an inclusive set of services, through Bluebird and Serve. And second, what it takes to innovate inside a big company. Interestingly, the two are linked. Their work on building an inclusive strategy is the engine of innovation at American Express. Think about trying to drive disruptive innovation in an organization that's not only enormous and global, but is also 165 years old - one of the oldest financial brands anywhere. As Courtney says, American Express was a freight company, moving Americans west in the 1800's. Innovation and adaptation are in its corporate DNA, but change at big companies is hard. And then also think about taking a company like American Express, which has always epitomized elite, high-prestige financial services, and shifting it from being an exclusive brand to an inclusive brand. It's a fascinating saga, full of lessons for everyone. Inclusion within a famously "exclusive" brand The story starts about five years ago, when American Express looked hard at the changes underway in how people think about both money and technology, and especially mobile -- the ability to run most of your financial life from your phone. They also pondered the fact that Amex was missing an enormous market in the so-called underserved, estimated to be between 65 and 140 million people in the United States - in other words, not a niche. They realized that the economic problems created and worsened in the Great Recession had converged with an emerging set of technology solutions. American Express responded by launching the Enterprise Growth Group, which Courtney joined immediately. The goal was to go after totally different customers with different product sets. They unveiled an alpha version of Serve in March of 2011 , and then built the Bluebird card, aiming to be part digital wallet, part bank alternative, and part prepaid card . The goal was to reach Americans who struggle to manage and move their money or, as Courtney puts it, the people who are either excluded from the mainstream economy or "unhappily banked." An early move was to create a partnership with Wal-Mart to focus on these needs. Along the way, American Express financed the movie, Spent, which brings these customers' needs to life and demonstrates that "it's expensive to be poor." If you haven't seen Spent and shared it in your organization, I recommend doing so. In our conversation, Courtney tells us why they made these changes, how they did it, their efforts to "be respectful" to a customer group they didn't know, what they expected, what they learned about them, and what has surprised them. They undertook a "walk talk chalk," encouraging their leaders to step into the shoes of the kinds of customers who appear in Spent by, for instance, learning what it's like to stand in line on a Friday night to cash to check. They also connected with the Center for Financial Services Innovation (note that I serve on CFSI's board), to bring its recommended Compass Principles into designing these products. They focused human-centered design thinking on challenges like smoothing out financial "lumpiness" for people who earn enough money to pay their bills, but don't have the right amount at the right time. Courtney describes the fascinating and varied ways customers immediately began using the new tools - including as a bank account alternative and to find ways to save. She talks about what people want most. She talks about revelations about the preferences of young customers today, and how savvy they are in using mobile services. Today, her group bases every product design decision on the preferences of mobile users (unlike, say, a bank that views mobile as just a new channel for old products). She explains how, with critical mass established on the platform, they can push the envelope with new features, including the first-ever rewards program on a prepaid debit card. And she shares a progress report -- over $7 billion loaded on the platform as of March 2015, with merchant spend up 300% from 2012 to 2013, and 90% of these customers being new to American Express. Innovation In September 2014, these efforts evolved into creation of FILABs - the financial innovation labs - through which American Express brings together researchers and academics with real live products. After inviting proposals, they selected three partners -- a nonprofit in behavioral science called Ideas 42, along with UC Berkeley and a team of researchers from UCLA. The goal is to use design thinking and agile development methodology to make financial products drive financial health. They are testing new ideas for both processes and products, from nudges and alerts to auto savings and debiting, to see what works. Some of this is proceeding under the aegis of the Consumer Financial Protection Bureau's Project Catalyst, which seeks to foster and evaluate fintech innovation. They'll be releasing significant findings in the near future. In our conversation, I asked Courtney how to innovate in a great big company - after all, her Enterprise Growth group, itself, has over 1,000 people. Her answers may surprise you - including her comment that their most exciting recent innovation idea came from (of all places) the general counsel's office. It's fun to hear the excitement in her voice as she talks about what doesn't work, and what does. Two more observations before we listen to Courtney. In our talk she said, "I'll be honest," and explains that launching an "inclusion" strategy raised some worries about potential harm to the invaluable American Express brand, which had been painstakingly built over 165 years to be synonymous with prestige. So, they surveyed their top-tier customer base, asking whether Bluebird and Serve made them think worse, or better, of American Express. The results were resoundingly positive. Second, think about the picture she paints. She says the company could see, five years ago, that the financial landscape was changing and American Express would have to disrupt, before they were disrupted. She says CEO Ken Chenault launched the enterprise growth initiative to "cannibalize" American Express from inside, through innovation. I'm at Harvard this year writing a book on innovation and regulation, which recently prompted me to read Harvard Professor Clayton Christensen's classic, The Innovators Dilemma and newer related work. One of his insights is that disruptive innovation usually must begin in markets that are lower-margin and less attractive than the ones served by industry leaders. The disruptions gestate and develop in these side-markets, and then eventually burst into the mainstream with a better, cheaper product - often too late for the industry's leading firms to adjust. American Express seems to be following something like this logic, putting its innovation engine in the hands of people trying to reach a separate market that's traditionally been "underserved." The results to date are fascinating. Perhaps it's not a coincidence that Courtney says the whole company now routinely recruits from her team. Here is more on some of the topics we discussed: CFSI's Compass Principles CFPB's Project Catalyst project with American Express Ideas 42 The Lean Startup, by Eric Ries The Innovator's Dilemma, by Clayton M. Christensen Please subscribe to the podcast by opening your favorite podcast app and searching for "Jo Ann Barefoot", or in iTunes. If you enjoy our work to bring together thought provoking ideas and people please consider a contribution to support the site. Donate

Regular listeners of Barefoot Innovation will have noticed that we often mention the Center for Financial Services Innovation (CFSI) and serve on its board. This year, CFSI celebrated its 11th anniversary. A decade ago there was nothing called Fintech. And yet Jennifer Tescher – who when she first entered the financial services industry couldn't balance her checkbook – joined with former OTS Director Ellen Seidman and others who had a remarkable insight: that technology trends would create innovative ways to improve the lives of financial consumers. A former journalist, Jennifer became interested in financial services via reporting on urban poverty and inequality issues. That led to her to join ShoreBank, America's first community development bank, where she explored ways to serve consumers who are deemed risky, in new ways that can be both sustainable and profitable. Fast forward to 2015 and CFSI has become the nation's authority on consumer financial health, and Jennifer, as President and CEO, leads a network of financial services innovators committed to expanding access to high-quality financial services in ways that are sound and profitable. As you will hear in this episode, a majority of Americans are not financially healthy. Research by CFSI and others paints a "frankly disturbing" picture of the economic lives of millions of Americans. Studies also draw strong links between physical and financial health, including how stress affects decision making. Jennifer says it best our podcast: "Wow, wow, wow, huge swaths of people are incredibly challenged!" CFSI is aiming to change this, using a lot of tools. One is seeding new ventures. It founded Core Innovation Capital, which is now an independent VC fund (see Episode 3, where we talked with Core's Arjan Schutte). And 2015 kicked off a five-year innovation contest funded by JPMorgan Chase, in the CFSI Financial Solutions Labs competition. (See our podcast with one of the contest winners, Steve Carlson of Ascend). Second, CFSI convenes people, including through its new membership model and by hosting the annual EMERGE conference, which presents cutting-edge thought leadership and features innovators, executives, and emerging companies in the financial services industries, including guests of this very podcast! Third, CFSI helps identify standards and practices that can help both providers and consumer thrives, as with the Compass Principles for prepaid cards. And fourth, CFSI is doing unique research in deeply understanding the financial lives of American consumers, including through the U.S. Financial Diaries project conducted with New York University. Jennifer is a nationally known expert on all these themes, with a monthly column in American Banker, frequent interviews and articles in the financial press, and major speaking engagements at industry and policy convenings. I am so happy to bring to you my lively interview with Jennifer, showcasing both her prodigious knowledge and her passion for these goals, which, as she says, has so far has kept her from abandoning it all in favor of a Mexican beach! To bolster your own optimism, here are links to the new data and trends spurring CFSI's mission, and links their initiatives and research: Find out how CFSI is powering solutions for a financially health America (and for more on the 9 winners of their first Financial Solutions Lab's challenge). Access to CFSI's research on the state of consumer financial health, including the U.S. Financial Diaries and their Consumer Financial Health Study. For more on illiquid vs. insolvent consumers: My piece in Banking Exchange called Illiquid? Insolvent? Solutions can differ drastically and Aaron Klein's article in American Banker on Shifting the Debate on Small Dollar Credit. For my take on the US Financial Diaries work, see my blog post, "Diary of a Mad Financial System". On new ways of assessing financial well-being: Ron Shevlin's Financial Health is the New Marketing. And mark your calendar for Emerge 2016, June 14-17 in New Orleans! Please come to CFSI's website for a wealth of further information. And now, enjoy my talk with Jennifer Tescher! Please subscribe to the podcast by opening your favorite podcast app and searching for "Jo Ann Barefoot", or in iTunes. If you enjoy our work to bring together thought provoking ideas and people please consider a contribution to support the site. Donate Subscribe Sign up with your email address to receive news and updates. Email Address Sign Up We respect your privacy. Thank you!

This episode takes us fully into grappling with how innovation is impacting community banks and how to respond, through a conversation with one of the most thoughtful and thought-provoking people in the field. The community bank is a unique feature of the U.S. financial system, and Brian Graham, CEO of Alliance Partners, is both one of its most eloquent advocates and an innovator with new ideas on how small banks can compete in the digital age. In 2011, he and his colleagues founded BancAlliance as a collaborative solution that enables community banks to access attractive lending markets typically dominated by larger banks, through use of a shared lending platform. The mission is to empower member banks to diversify prudently into high-quality loans that meet all commercial and regulatory standards – without changing the nature of the community bank. Brian's team initially focused on large commercial loans. Then, in February of this year, they expanded to consumer credit with the announcements that BancAlliance would partner with Lending Club to enable member banks to offer co-branded personal loans to their customers through Lending Club's online platform. The program gives community banks and their customers access to the benefits of the Lending Club's low cost of operations, paired with the banks' low cost of capital, to help drive down the cost of credit for consumers., The Wall Street Journal noted that, even after Lending Club's partnerships with Alibaba and Google, the arrangement with BancAlliance might be its "biggest one yet." CEO of Lending Club, Renaud Laplanche (whom I interviewed in Episode 5), said, "Community banks are the lifeblood of American communities. This program will help them level the playing field with national banks by offering affordable, consumer-friendly loans to their customers. We're excited to make Lending Club's low cost of operations available to community banks, for the greater benefit of their customers." BancAlliance's network includes over 200 banks in 39 states, with assets ranging from $200 million to $10 billion. In aggregate, BancAlliance would rank fourth in branch count among all U.S. banks and 14th in assets. I have been a longtime optimist about the future of community banks, until the last few years. Small banks today face the twin challenges of innovative technology and regulatory burden squeezing the industry's business model from two directions at once. Brian's vision offers a potential model for addressing both. In our conversation, Brian makes the case for the value of community banks; offers advice to them for thriving through technological disruption; and makes suggestions for regulators (including on "suitability). He also describes a proposed new "bill of rights" for small business borrowers – he's been involved with a coalition working on this with the Aspen Institute. Brian also offers insights into how technology, after decades of favoring consolidation and large players, is suddenly creating advantages for small ones, through the unbundling of tech solutions and through unexpected developments like Square, transforming the small business lending market. Brian was previously a partner at Blue Ridge Capital Management, held various leadership positions at CapitalSource and Fannie Mae, and served in the government and investment-banking sectors. He holds a graduate degree from Harvard College and an MBA from Stanford University. It was a pleasure to host him at my former abode in Washington, DC -- the day before I began packing up to move to Boston for my new fellowship on Regulation Innovation at Harvard! It was a very fitting finale for my Washington days and a launch into my "year at the frontier" of fintech innovation. Enjoy the conversation, and as a bonus, click the following for The Small Borrowers' Bill of Rights and an argument from the Aspen Institute on why we need one. Also, remember to watch my website for the Regulation Innovation video briefings on these same topics, coming soon! Please subscribe to the podcast by opening your favorite podcast app and searching for "Jo Ann Barefoot", or in iTunes. Sign up with your email address to receive news and updates. Email Address Sign Up We respect your privacy. Thank you!

Richard Davis grew up in Hollywood and entered the banking world on his 18th birthday as a teller. Today, at age 57, he leads America's 5th largest bank as Chairman and CEO of U.S. Bancorp – parent company of U.S. Bank. Headquartered in Minneapolis, U.S. Bancorp has over $410 billion in assets and businesses across the United States, Canada and Europe, including over 3,000 full-service banking offices and 5,000 ATMs in 25 states. This traditional bank model is now also the foundation for active innovation. U.S. Bank appointed its Chief Innovation Officer, Dominic Venturo, a decade ago (I highly recommend following Dominic on Twitter @innov8tr). They are active in payments technologies, and the holding company owns Elavon, which recently opened a mobile innovation center in Atlanta called "The Grove" focused on "new technologies that enable merchants to accept payments via mobile devices while also ensuring the ease of use and safety of the transaction from the customer's perspective." Richard's leadership earned praise through the financial crisis and its aftermath, including being named "2010 Banker of the Year" by American Banker. The father of three adult children and with three grandkids, he is highly active in civic efforts and philanthropy, including serving on the boards of the Twin Cities YMCA, Minneapolis Art Institute, University of Minnesota Foundation, and National American Red Cross, among many others. He has been the recipient of the President's Lifetime Volunteer Service Award, while U.S. Bancorp and its employees earned the 2011 Spirit of America Award, the highest honor bestowed on a company by United Way. The company also received the 2013 Freedom award, the U.S. Department of Defense's highest award for employers for supporting employees who serve in the National Guard and Reserve. In 2011 Richard received the Henrickson's Award for Ethical Leadership. In 2015, U.S. Bank was named as a World's Most Ethical Company by the Ethisphere Institute, the global leader in defining and advancing the standards of ethical business practices. In my conversation with Richard, he wove together all these themes of business, innovation, and ethics. More than any of our guests thus far, he voices a full-throated faith in the future of retail bank banking -- including branches in lower-income communities. At the same time, he speaks thoughtfully about the need for innovation in the branch and beyond (while warning against falling in love with every new idea). He also offers concrete advice for regulators on how to assure that innovation can flourish. And he talks inspiringly about the need for banks to rebuild the public's trust in them, one customer at a time. He says customers are "the banks' to lose," and that, "If it's good for the industry, it is probably worth doing." Richard's perspective is an invaluable contribution to our search for better consumer financial solutions. Speaking from the vantage point of a lifelong banker at the helm of one of America's largest and most successful banking companies, he shares his thinking about what to keep and what to change, as the industry and its customers face continuous change. For more on U.S. Bank, click here. Enjoy Episode 12 You can subscribe to the podcast on iTunes or by opening your favorite podcast app and searching for "Jo Ann Barefoot".

Luz Urrutia, the global head of retail at Oportun, has been carrying the same credit card in her wallet for 30 years. Having moved from her native Venezuela to the U.S. to study finance at Georgia State University, Luz was thrilled when she landed her first job in the banking industry – only to have her credit card application rejected by the same bank where she worked! Having little or no credit can make adjusting to life in a new country extremely onerous. In our conversation, Luz points out that anything from getting a job to renting an apartment and hooking up utilities is often impossible without a FICO score. Currently, almost half of the Hispanic community in the U.S. is underserved. Luz decided years ago to help the 25 million individuals who represent the un- and under-banked in her community by offering responsible credit-building and affordable loans. Before moving to California to broaden her mission, Luz co-founded and served as President and Chief Operating Office for El Banco de Nuestra Comunidad in Atlanta. Since then, her career has been characterized by a relentless drive to use technology and creative techniques to "score the unscorable" and serve those overlooked by traditional financial institutions. Oportun, formerly Progreso Financiero, was founded in 2005 with the same goal of empowering underserved Hispanic consumers. Its proprietary technology platform scores applicants, even those who do not have credit, and enables Oportun to provide a highly personal experience with back-office efficiency. Headquartered in Redwood City, CA, the customer experience at Oportun is designed with the Hispanic customer in mind. This experience is disseminated through a network of more than 160 stores in five states, often conveniently co-located with or near Hispanic grocery stores, are open 7 days a week into the evening, and staffed by team members who speak Spanish. In recognition of Oportun's goals of increasing economic opportunity for its clients, promoting community development, and serving low-income or underserved communities, Oportun was certified by the United States Department of Treasury as a Community Development Financial Institution in November 2009 and re-certified in October 2013. I spoke with Luz at the Center for Financial Services Innovation's (CFSI) EMERGE conference in Austin, on whose board she has served since 2004 (full disclosure, I am also on the board). Luz has often been recognized for her commitment to improving the lives of underserved financial consumers, including being named as 2009's Latina Business Woman of the Year and American Banker's "Community Banker of the Year" in 2006. Perhaps the greatest reward for Luz, however, is the joy she feels pursuing her mission every day. In our interview you can gladden in her words imbued of passion and excitement (you'll just have to trust that they were accompanied by a brilliant smile!). I am happy to offer this episode of Barefoot Innovation as a pick-me-up for anyone who needs a reminder of the unique work being done throughout the industry to use innovation to enhance the lives of financial consumers, and what revolutionary breakthroughs a strong drive to help one's community can render. To learn more about Oportun Financial, click here. You can subscribe to the podcast at iTunes HERE or open your favorite podcast app and search for Jo Ann Barefoot.

Stoyan Kenderov and I had a truly rich and candid conversation about the evolution of banking innovation and regulation, and though he appears ten episodes into Barefoot Innovation, it was Stoyan who first suggested I record our thought-provoking discussions and offer them as a series of podcasts. Thank you, Stoyan, for your encouragement! In this interview, we travel everywhere from communist Bulgaria to the emerging coding culture of mid-1990s Germany to today's nucleus of innovation, Silicon Valley. In his current capacity, Stoyan leads Business Development and inorganic growth partnerships at Intuit's Consumer Ecosystem Group and its product brands Mint, Mint Bills, and Quicken. As a child who literally disintegrated every toy he and his brother were ever given, Stoyan was born a natural disruptor. His vast curiosity has already taken him half way across the world, and he is ready to pass on his vision and wisdom to the new generation of financial consumers. (It was a real treat to hear how an innovator is teaching his young daughters about financial responsibility!) Stoyan and Intuit incorporate cutting edge behavioral research to create products that are simple, easy-to-use, and shorten the learning curve of traditional financial instruments. Year after year, Intuit is recognized as one of Fortune's "100 Best Companies To Work For" and Fortune World's "Most Admired Software Companies." With the acquisition of Check, and the creation of Mint Bills, the company now offers users a way to search for and set up bill reminders, see what bills are due and pay them with a single click so that they never miss a payment. Wired.com agrees that getting started with Mint Bills is easy; maybe Mint Bills can even help consumers forget that "bills are the worst!" Prior to Intuit, Stoyan held executive positions at payments, telecommunications, and mobile companies such as Amdocs, XACCT Technologies, KPN-Qwest and pioneering German, Dutch and Austrian Internet service providers. He co-founded two start-ups and participated in four successful exits. He is an advisor and mentor at Village Capital – the financial services accelerator and impact investor, and he also invests personally in early stage financial services start-ups in Europe, India and the US. I so enjoyed this conversation with Stoyan, and I hope you are as Intuit as I am. And, finally, here's a bit more to exercise your financial (and listening!) skills: Pop quiz! One of the following is not a startup mentioned in this episode: Vouch, Digit, Even, Gather, Sweep, SavedPlus, Float, Simple, Karma, Acorns, Robinhood, and Coinye. See my previous blog post for more on serving the "underestimated" consumer and how behaviors can change under conditions caused by shortages of a key resource like money, time, or food. Professor BJ Fogg of Stanford's behavior model and how to motivate and trigger responsible consumption. The CFPB's Project Catalyst. The Center for Financial Services Innovation's brief on household cash flow challenges. You can subscribe to the podcast at iTunes HERE or open your favorite podcast app and search for Jo Ann Barefoot.

Episode 9 finds us at the 2015 EMERGE conference in Austin with the winners of the first Financial Solutions Lab competition. The contest is a $30 million, five-year initiative funded by JPMorgan Chase and run by the Center for Financial Services Innovation, or CFSI, the conference sponsor (note -- I serve on CFSI's board). It challenges entrepreneurs to create solutions for the cash flow difficulties facing millions of American middle and lower income-households. Two hundred ninety-eight innovators applied. Nine were chosen. And -- drum roll - one was Steve Carlson of Ascend Consumer Finance, our guest for this episode. Ascend was recognized for its unique approach to broadening credit access and affordability for non-prime borrowers. The company wants to drive a new generation of lending with its Adaptive Risk Pricing tool, which actively monitors and rewards customers for positive financial actions throughout the span of their loan, sharply cutting interest costs. I've known Ascend's Co-Founder and CEO Steve Carlson since we both joined the Consumer Advisory Board of the Consumer Financial Protection Bureau (CFPB) when it first was formed in 2012. Ascend has benefited - and so does our podcast - from Steve's double background in banking and technology. He has held senior executive roles at HSBC and Washington Mutual and advised global financial services firms as a co-founder of Sung Carlson Associates. He was also the head of marketing and business development at Intuit Financial Services (Mint.com and Quicken). (A side-note on Intuit: in the recording, Steve relates its history and I ask if its founder, Scott Cook, got started by making calls from a phone book. Afterwards, I looked up the story and found it in The Lean Startup, by Eric Ries (pages 88-89). He writes that in 1982 Cook "picked up two phone books: one for Palo Alto, California, where he was living at the time, and the other for Winnetka, Illinois." He randomly called people to gauge interest in his idea, and a company was born. For any listeners who haven't read The Lean Startup, do!) In our conversation, Steve describes the impetus behind Ascend, their current status (including their partnership with Lending Tree), and why he believes banking should be a value-driven proposition. He thinks both consumers and the industry can benefit by improving the financial health of consumers. The company's pioneering product, RateRewards, enables borrowers to earn up to 50% off their interest expense by making responsible financial choices throughout the life of their loan. With Adaptive Risk Pricing, Ascend is able to offer loans at rates that reflect real-time performance instead of past behavior. This, Steve says, is reinventing "the whole concept of underwriting and risk assessment." Indeed, many "non-prime borrowers" - a group that actually represents about a third of the U.S. population - are better candidates than their credit scores would indicate. One-time financial shocks and "thin" files can greatly diminish a consumer's chance of getting a reasonable rate on a loan, or even a loan at all at a traditional institution. Ascend is encouraging borrowers to bet on themselves and prove -- through their actions, rather than their credit history -- that they are creditworthy. As Steve says in the episode: "Everyone today [is] going to be in a different stage in terms of their financial health ... I might be in great shape today; tomorrow could be totally different." Ascend is trying to make the road to financial wellness smoother -- something Steve says he feels good about. This episode of Barefoot Innovation became a brainstorming session, as Steve and I tried to think through how innovators, banks and regulators can move toward better ideas for financial consumers -- including musings on how innovators should interact with the world of bank charters and regulation. Enjoy it! And check out more information on Ascend, and on the Innovation Lab winners. You can subscribe to the podcast on iTunes HERE or by opening your favorite podcast app and searching for "Jo Ann Barefoot".