Episode #5: Jennifer Tescher

Episode 5

Jennifer Tescher is an expert on financial health and the founder of the Financial Health Network. Jennifer talks with David about how to define and measure financial health as well as what role banks and fintechs can play in ensuring consumers reach their financial goals.

Featured Guest: Jennifer Tescher

Jennifer is the President and CEO of the Financial Health Network, the nation’s authority on financial health. She founded the Financial Health Network in 2004 to champion increased access to high-quality financial products and services for underserved consumers. Over two decades, she has cultivated a robust network of relationships to raise the profile of financial health and has become a nationally recognized thought leader, event speaker, and podcast host. You can find her on Twitter @JenTescher.

David Reiling Headshot

David Reiling

David Reiling is an innovative social entrepreneur focused on empowering individuals through community banking and financial technology. David is the Chief Executive Officer of Sunrise Banks and has been in the community development banking industry for more than 25 years.

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Episode Transcript

Jennifer Tescher: [00:00:00] Fintechs like to say that they’re completely customer-centric.  And I think it’s true from the perspective of a customer experience and user design. If there’s one thing that tech is good at, it is that, designing with the customer in mind and with a problem to be solved.  But that’s not the same thing as saying I’m designing for the outcome I want and the outcome being financial health.

David Reiling: [00:00:29] Welcome to the NextGen Banker podcast, where we explore what’s next in banking and talk with the innovators responsible for creating positive change in the financial sector. I am your host, David Reiling, and I am very excited to welcome Jennifer Tescher as our guest today. Jennifer Tescher is the president and CEO of the Financial Health Network, the nation’s authority on consumer financial health. Jennifer founded the Financial Health Network in 2004 and is a nationally known thought leader on the topic of consumer financial health. She’s a frequent speaker on and champion for high quality financial products and services for consumers. She launched the Financial Health Networks’ annual conference Emerge, the Financial Health Forum, which presents cutting edge thought leadership and showcases innovators, executives, and emerging companies in the financial services industry. Jennifer, it is wonderful to have the opportunity to speak with you today. Welcome to the NextGen Banker.

Jennifer Tescher: [00:01:28] Thank you, David. It’s so great to be with you.

David Reiling: [00:01:31] So Jennifer, we go way back in time. And so I love to start out with a little bit since the founding of the Financial Health Network. Can we go on a little historical journey of what you see maybe as the milestones in consumer financial health, maybe thinking back to 2004 and bring us to the present?

Jennifer Tescher: [00:01:51] Absolutely. But you know, reflecting on how long we’ve known each other it goes back before that, even.

David Reiling: [00:01:57] It does.

Jennifer Tescher: [00:01:58] I’m trying to think about what year it might’ve been, but you know, I’ve got to believe it’s over 20 years now.

David Reiling: [00:02:04] I would agree. And we still look great, don’t we?

Jennifer Tescher: [00:02:07] We sure do.  But you know, it’s so great to have this conversation with you. I mean, I could ask you the same question about, take us through the timeline because we both have been, I would, I would say partners in crime on this journey.

And so, I have to go back really to the late nineties, early two thousands to start this journey with the invention of the internet as Al Gore liked to take credit for it.  I think that really got people thinking about how we might be able to have better reach and serve underserved  consumers with, financial products and services.

So like back then, if you went to a banking conference, you’d see like a bar chart.  And it would say the cost of a teller transaction is, you know, this much, and then there’d be a smaller bar. And it would say the cost of an ATM transaction is this much. And then there’d be a small bar that would say the cost of an online banking transaction would be this much.

So, that idea of meeting the customer where they’re at, and being able to do so, frankly, in a more cost-effective way, I think was a big part of this journey. I think there were some other trends going on. The 2000 census really demonstrated just how significant the growth of the Latinx population has been in this country.

And I think made banks and frankly, other companies, take note that it wasn’t just the mass market. They really needed to be thinking about different segments of the customer. And then the other thing in the late nineties that also brought real awareness was the government’s desire to start pushing out federal benefit checks, social security, disability electronically.  And when they went to do that, they realized that 10 million of those benefit recipients were actually without a bank account, they were unbanked.  And that really caught people’s attention and imagination. How could there be a bank on every corner and still we have all these people who don’t have a bank account?

So I think those, those are the three things that for me, really helped to sort of provide the fuel, the jet fuel for the beginning of this, of this journey.

David Reiling: [00:04:19] Gotcha. And do you see in that kind of historical context, new design? I mean, we’ve seen new products and services and the rise of obviously the internet and in FinTech and so forth.

Are we designing products better or different than we did way back when, or is a checking account, still a checking account?

Jennifer Tescher: [00:04:38] You know, even back at the very beginning, and you and I used to talk about this, the obsession was all about product because like that’s largely how banks and bankers think. But so much of it was about marketing and segmentation, like actually understanding the person you’re serving, or attempting to serve.

And then there was the risk management aspects on both the front and back ends that were so critical to the equation.  Just thinking about product was too narrow and that if it we’re a product problem, we would have solved it by now, right?  So I think that’s too simplistic. Now having said that a lot of the product design or development you see now is all retro.

Like, I feel like in a way there are no new ideas, just new technology to make them better, easier, simpler to deliver. I’m like even buy now pay later. The big trend. That’s nothing new. It’s just installment lending over periods or layaway, maybe, you know. So I do think some of the best ideas that we’re seeing often take shape through fintechs are really ideas that banks pioneered decades ago.

David Reiling: [00:05:52] Gotcha. So when we think about financial health, so let’s talk about that. What is financial health? How do we measure it then?  If it’s not product-based, how do we really define it and then take its pulse as to measuring it?

Jennifer Tescher: [00:06:07] Yes. Excellent word, pulse. So we define financial health as having a day-to-day system that enables you to build resilience and to thrive, to take advantage of opportunity.

It’s really about, managing the downside, you know, being able to weather a crisis, and to be able to take advantage of the upside, and having a system to be able to do that. That’s really what we want for people. So, you know, the thing we should start with is financial health is an outcome.  It’s not a thing, it’s an outcome.

And it’s also not a one-time thing, like a destination, like you take the bus and you get off at financial health town. Like it’s a journey, right? And throughout your life, whether it’s your life stage, life events, things are going to happen to you, good and bad, and you want to be able to maintain your financial health across time. And in fact, if one has good financial health, you’re going to be more likely to be able to take what life throws at you.  And so the idea of financial health is to say, Hey bankers, Hey, financial services companies, you actually aren’t just in the business of selling a neutral product, like a toaster. You’re in the business of selling something that can have a significant impact on someone’s financial health.

What you really should care about, because this is what your customers want from you, is a good financial life, right? And financial health is core to that. So I think we put measurement and methodology to it because it can’t just be some hand-wavy idea. We actually have to be able to measure it because what gets measured gets managed.

And so, you know, we’ve built a whole measurement scheme around it according to eight indicators, around spending, saving, borrowing, and planning and, and have now quite a bit of data over multiple years, really understanding the pulse of financial health in the United States.

David Reiling: [00:08:04] Got it. And so it seems so logical to me that the financial health of a bank’s customers or clients ultimately resembles the financial health of the bank itself because the bank is just an accumulation of all those balance sheets in health, if you will. But my question is, is, are banks helping or they hindering and in the, maybe in the same breath are fintechs helping or hindering in that space?

Jennifer Tescher: [00:08:32] I think, um, both and yes and. So. Uh, you and I have both been at this long enough, I think, to believe that this isn’t really about banks versus FinTech, right? We went through the it’s banks versus FinTech, and then we went through that maybe now they’re friends and partners, and now change in administration in Washington and now it’s a little more, maybe we’re not frenemies. And maybe now we’re enemies again. So it’s been interesting to watch that happen. I think that banks have the potential to do extreme good. And most are not living up to that potential. I think there are some ways in which banks may actually be doing harm, whether that’s intentional or not.

And I think fintechs like to say that they’re completely customer-centric. And I think it’s true from the perspective of a customer experience and user design. If there’s one thing FinTech is good at it is that — designing with the customer in mind and with a problem to be solved. But that doesn’t, that’s not the same thing as saying I’m designing for the outcome I want and the outcome being financial health.

And so I think FinTech also has tremendous potential to be helpful, but isn’t always, and in some cases  can be causing harm whether intended or not. And so I think this is really a mindset shift. Financial health is a strategy and a mindset shift more than anything else.

David Reiling: [00:10:03] Got it. And so there are two things I want to get at there.

One is, I’ll come to this in just a second, but there’s gotta be some type of policy looming around in that measurement. And let me hang onto that for one second. Let’s talk a little bit about, I’ll call it the digital divide, because again, FinTech really good at diving in, solving a problem, and designing something around that.

But I think if anything, the pandemic did show us one thing on how stark the digital divide is. And in some cases how intentional, I mean, when I think of the immigrant communities we serve the distrust for a bank doesn’t end at the bank’s door. It also follows it online as well. So what aspect does the digital divide play in financial health?

Jennifer Tescher: [00:10:52] I think it means that the people who are most financially vulnerable are the least likely to benefit from what technology can offer. I mean, you and I both know that right. Technology is a thing it’s neither good, nor bad. It could be either of those things. And it’s just a tool. So it’s not going to solve all the world’s problems.

But there are things it is good at. And reach is one of them, but if you don’t have access to broadband or to a modern device, you’re going to be really challenged. Like my favorite recent example, it’s not my favorite. It’s awful, it’s actually horrible. But, you know, the new child tax credit, that millions and millions of Americans are eligible for.

There’s a portal that the IRS created to make sure that if you weren’t someone who had to file a tax return, that you could still let the IRS know, Hey, I’m here, I qualify for this and here’s where to send my money. Do you know that that portal really wasn’t available via mobile phone? It’s really only accessible by desktop pretty much.

This is the year 2021, right? So, and that’s such a painful example of an incredible benefit, new benefit, that didn’t exist before that could really help lift up millions of low and moderate income Americans, but they may not be able to literally access it if they don’t have a big honkin’ desktop computer sitting at home and or the broadband access that they would need to get on.

David Reiling: [00:12:31] Right. So I have one comment to that, and maybe it’s kind of a, I’m speaking to the audience here. And that is for the FinTech folks that are on listening. And that is, think about that problem and that issue and design accordingly, but look to intersect, with maybe populations who are not connected and find out where they go. Do they give blood, do they go to a grocery store?

Can you find places to intersect that are comfortable or trusted and do it as easy as the FinTech magic, you know, customer experience, provides?

Jennifer Tescher: [00:13:05] I mean, if it were, if it were me, David, I would be, you know, the smartphone is like, should be like the toaster of the 1950s, like that should be the giveaway.

Right? Exactly. Or give people some broadband access or like this is stuff that, that big institutions, at least, small institutions, this would be tough still, but like that could buy in bulk. Could, I mean, I think I really do think there’s an opportunity here to think about what schools did during the pandemic, right?  Push the equipment out. Think about the gazillions of dollars that all the big tech has been making in the last two years alone as the stock market is soaring. Think about if we could just make sure everyone had access. I also think the Biden administration is very focused on this.

And so I’m hopeful that we’ll deal with some of this last mile problem, particularly in rural areas, in communities of color where it’s particularly challenging. So this one I actually think is solvable, but we can’t just think someone else is going to solve it.

David Reiling: [00:13:59] Yeah, I would agree. And there’s, I’m kind of deep into this issue at the moment, both on the urban and rural side.

And so there are ways in which to do this. There’s great new technologies out. But we just got to test them. We got to get out and experiment and see to do it. And like most things you’ve got to lean into it a bit. So let me switch you back for just a second. Let’s go to, so we have financial health and in your mind, is there a unified set of metrics we can get to that kind of, Hey, if we hit this, you know, six out of 10 of this or five out of four, can we consider that good financial health?

Is there some things that we can measure a benchmark against, which I think ultimately comes to a great policy question. And then that is, can we embed this into the financial services system in which to have it be standardized and measured and examined?

Jennifer Tescher: [00:14:51] Right. So that’s what we’re aiming for. So today when we measure financial health, we actually then segment people into three categories, healthy, coping, or vulnerable.

And we actually can also produce a score, financial health score zero to 100. And so we know where people are. We also know where they are over time. We’re following people over the course of time that we can see how their financial health changes from one year to the next. We’ve recently built a new technology platform actually called Attune, attune.co if you want to learn more, that enables firms to license the technology to essentially measure the financial health of their own customers or their employees, and then benchmark that data against national and regional averages.

Over the course of time, I would imagine that as we get more data and more institutions we’ll be able to, firms will be able to benchmark against themselves, against each other, which I think is important. And then I think, you know, there are obviously macroeconomic factors that go into anyone’s financial situation, right. And banks can’t control for those things. So I think ultimately it’s going to be important to be measuring or benchmarking against like, what does change over time look like nationally and how am I doing as an institution compared to that?  As opposed to some absolute measure of financial health, right?

Because there are just going to be factors out of an institutions’ control.  And so we’re essentially, you know, endeavoring to build out the infrastructure for financial health measurement benchmarking and then advice, right. Well, what do I do? Measuring is great as the first step, but then you got to take action against it and then you’ve got to come back again and see, did it work? Is it moving the needle for people?

David Reiling: [00:16:40] No doubt. And so it would be really interesting to see your model pre-pandemic, during the pandemic and hopefully post. I know we’re in this place where we’re still experiencing some significant shock as a result of COVID-19. Boy, if you had to take a guess as to where’s the America’s financial health today from a consumer perspective, in regards to the pandemic, did we just fall off the cliff or did…

Jennifer Tescher: [00:17:11] I don’t have to guess actually, because we’ve been doing this, which is great through our, through our Financial Pulse.  We started this before, you know, before the pandemic and have been going ever since. In fact, we’ve been collecting data more frequently as a result. And I would say that the message is counter-intuitive.

So going into 2020 things were actually looking good. Remember how low unemployment was. And when unemployment gets that low, the people who are the most vulnerable, you know, are starting to actually see not only job gains, but wage gains. So we were starting to see some wage growth and then for other people, right, the performance of the stock market, et cetera, was making them better off.

And so coming into 2020 people were in quite good shape. And then, very quickly there was job loss or lost hours and people were really stressed, but then the government came in with a pretty heavy response. And there was a lot of aid. It took time to flow, but once we start started seeing it flow, you know, you saw people’s savings, go through the roof.

Now it’s not that hard in a country that has a savings rate as low as ours. But nonetheless, you really saw people in pretty good shape. So I don’t mean this to say that people weren’t going hungry, right. Or having to choose, make difficult choices. But remember we put moratorium on foreclosure and on eviction, there was just a lot of support.

So in a way, I think it’s a great example of how the safety net really worked. And so I think the next release of data will really tell us how people are faring now, at this point, particularly as the safety net is starting to come undone a little bit, right? Like we’re going to lift the moratorium, the extra unemployment insurance that people were getting is gone in many states, and will eventually be gone in others.

So in some senses from a macroeconomic perspective, it’s a little bit, it’s potentially a little bit of a lagging indicator.

David Reiling: [00:19:18] Yep, I hear ya. I’m very curious to see how your data continues to fare. Particularly as these safety nets kind of fade off. Particularly we see the potential for a big issue in regards to housing, and particularly rental housing, from the eviction standpoint.

And so we’re working like crazy, not only to preserve affordable housing, but to figure out ways that landlords can work with those tenants. Because I think that’s one key area; it’s such a big expense, usually in somebody’s financial health.

Jennifer Tescher: [00:19:47] For an institution like yours, like it’s a double whammy because those tenants may be your customers, but those landlords are definitely your customers and your small business borrowers or your real estate borrowers.

And listen, when they’re not getting paid, it hurts them too. And so I’ve heard that the government aid essentially to landlords has also been slow in coming. So I’m a little concerned about that as well.

David Reiling: [00:20:11] Yeah. And the things we don’t often realize is the people living in those apartment buildings are the ones who are the waiters and waitresses in the restaurants we attend.

And so if you think you’re getting, it’s hard to find workers in those spaces today, when they don’t live there anymore, it’s going to be even harder. So the ripple effect across is, is a really big and important one to everybody involved from a community or society standpoint. So Jennifer, I have a I’ll call it the magic question of the NextGen Banker.

This is, as we think about our audience and the quest to improve society’s financial health, what skills, what abilities, what mindsets does the next generation of a banker need to possess in order to help improve consumer financial health?

Jennifer Tescher: [00:20:56] Number one is empathy. I think that’s true for all leaders regardless of the sector.

But I think, you know, one could look at banking from a purely clinical and financial perspective, that this business is about taking in deposits and lending them out at a higher rate and making money off the spread. And that’s essentially the basics of banking and  it’s been like that for forever.

But in order to make all that happen, you’ve got to actually engage with real people and real businesses. And if you’re not doing that well, and you’re not doing it with that, those people in mind and solving their problem, then your business is really almost irrelevant to their life. And so I think empathy is one, I think, frankly, technology expertise, and I don’t mean you have to be a coder, but someone who understands where technology is headed and the opportunities that it affords, I think that’s really important.

I think a lot about Greg Carmichael at Fifth Third in this regard, because he’s in a way a technologist, I think, before he became a banker. And I think he’s a really good example of that. And then I think ideally someone who can think across silos, think more horizontally than vertically.

Because I think the future, I think what you just said is there’s ripple effects, right? Everything is interconnected in a way. And banking in a way has often been at the center, right? Because it’s helping make connections and deals between different kinds of companies and industries and people.

And I think that there’s a huge opportunity that bankers have to think beyond the menu that they currently offer. And to think totally out of the box, in terms of the other kind of value they can be delivering, even if it’s in partnership with or leveraging the manufacturing, if you will, of some other entity.

So I think in a way, someone who doesn’t consider themselves a banker may actually be the best next generation of banker.

David Reiling: [00:23:07] Love it. Well, the, the empathy, the tech bend, as well as that, I guess that holistic vision or a realization and again, helping people be resilient and help them thrive. Again helps not only the individual we’re talking about, but the community that they’re in, the bank, and the society as a whole.

And so again, so much at stake here.  And I think it’s important to bring out that in that description that can happen in any size institution. It can happen in a small institution, a midsize, a large one; it’s the individual and the banker that makes the difference ultimately, or raises the hand and says, you know, have we ever thought about this or the impact that this makes?

And that’s the important thing.

Jennifer Tescher: [00:23:50] In a way, David, I think I just described you.

David Reiling: [00:23:52] Well, I’m not so sure about that, but we’re doing our best out here and it is a lot of, of what we do. And again, I think one of the things that is the way that you described that, and again, I do take that to heart from the standpoint of there’s so much joy in being a banker, when you can actually help somebody either be more resilient or help them thrive in, you know, and achieve their goals and be financially healthy. I don’t know, we call it a double paycheck. And so, you know, you get a regular paycheck, but that emotional paycheck is really rewarding I think when you go home at night and say, did I, did I do some good in the world?

How do I feel about myself and where I am in society?

Jennifer Tescher: [00:24:30] And increasingly that’s what your employees want. And particularly younger employees, they want purpose. They want to know that what they’re doing is actually making a positive difference in the world. And so if you want to be able to acquire and retain talent, this is also going to be an important strategy.

David Reiling: [00:24:48] I believe a hundred percent. And so it’s a, it’s a great, maybe good concept to kind of conclude on here. And that is you can do well and do good as a banker. And you can have a meaningful life and career and so forth. So well, Jennifer, thank you so much for being on the NextGen Banker, and if people wish to hear more of you, which I can’t believe they don’t want to, you have your own podcast, Emerge Everywhere. And so, check Jennifer out on her podcast Emerge Everywhere. Jennifer, always great to talk with you and get your insights. Thank you so much for being on the NextGen Banker.

Jennifer Tescher: [00:25:21] Thanks, David. I had a blast.

David Reiling: For this episode’s musical feature, we’re showcasing Arbor.

Arbor is a 4-piece alternative pop rock band based out of Cincinnati, Ohio. Formed in early 2016, the band takes on a unique style combining fun synth-pop melodies with hard rock breakdowns.

Here is “Intuition,” by Arbor.

(Song plays)

That was “Intuition,” by Arbor. You can find Arbor’s music at https://www.arborband.com/ and on Spotify. If you would like your music featured on the NextGen Banker podcast, email Nextgenbankerpodcast@gmail.com with a link to your music and website.

Thanks for listening to the NextGen Banker podcast. We’ll see you soon.