People are talking more publicly about their finances.
- Individual and student debt
- 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