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A Summary of

The ‘Holy Grail’ of Social + Fintech

by
Lauren Murrow, Anish Acharya, D’Arcy Coolican
a16z
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People are talking more publicly about their finances.

  • Individual and student debt
  • Trading
  • Salary

Why?

  • Each new generation is sharing more
  • Financial crises are driving people to talk about the elephants in the room (debt etc.)
  • Hacker mindset is spilling over into finances; people want to beat the system

What is Social + Finance?

Interactions (emotional and cognitive things which occur between people) + transactions (the actual financial stuff going on). When these both work together, the results can be incredible. Examples: - Venmo, which combined chat with money transfer (and an emoji) - SoFi, does personal finance/lending, but made it cool to be one of their members with parties and an acronym

Single-Player and Multi-Player

Many companies/products use social (“multi-player”) as a way to get started, and then move more towards the financial (“single-player”) side of their offering. - SoFi, again, built a tight community and then concentrated on lending - Wealthfront, an investment firm, started out as KaChing - Robinhood, started more social and then moved more towards transactions - Prosper, another platform which started out more social

Why not stay social + finance?

  • It’s hard.
  • Money is still private, so people are less likely to invite each other to a social product that involves money.
  • However, some companies are able to get past this by not blatantly linking to money.
  • Robinhood is one example. It functions more as a game and allows consumers to feel high class and adult since they have a portfolio

New socio-finance companies/products could come from all areas

  • Taking transaction to social (like Robinhood)
  • From social sites, like those which have developed wallets etc.
  • From games, like Fortnite, which now has a token economy
  • From platforms, such as Reddit (think WallStreetBets), which see crazy behaviors that could become mainstream…or not

Examples of socio-finance topics, behavior, and formation…

  • Some emergent social trends stay niche (or subculture). But if stigmas drop for the trend, it could go viral.
  • Crypto is one socio-finance topic that has changed how we talk and think about money.
  • Debt is one of the hardest socio-finance topics to tap into, but Instagram hashtags are one place where this is changing.
  • Products have focused on solving a functional/transactional part of a problem (changing the numbers). But now, products are also starting to focus on cognitive (helping people understand the numbers) and emotional (feeling good about the numbers) parts of problems.
  • There are also many offline socio-finance communities, which could be brought online(think ROSCAs)
  • Some companies (Rally Rd., Mythic, etc.) buy assets and offer part ownership, appealing to the emotional value of owning an object.
  • Cuts down many issues companies face, such as engagement, customer retention, and customer acquisition. The emotional part of socio-finance needs to be concentrated on more going forward. Examples of companies doing this well…
  • Joy – app to rate transactions by how you feel
  • Credit Karma – making debt less scary and providing transparency so you can know how you stack up to others Examples not doing this well…
  • Budgeting and personal finance apps. They have cognitive and functional value, but don’t tap into emotional aspects
  • Portfolio sharing products. Many try to be social, but too heavy into function

 Why is socio-finance so good?

  • Combines the three main levers – cognition, function, emotion.
  • Brings people together
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