How Technology Can Help Get Everyone on the Right Financial Track

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A 2013 FDIC-sponsored survey found that one in 13 U.S. households, or nearly 9.6 million, is "unbanked," meaning there is no bank account. The survey also found that another 25 million households, referred to as the "underbanked," had a bank account but also used alternative financial services. Unbanked and underbanked households tend to have lower incomes and often are paying far-higher-than-market rates for basic financial services and to borrow money, if they can get a personal or business loan at all.

April is National Financial Literacy Month in the U.S. and we believe there are many ways that our technology-focused clients can play an important role in helping unbanked and underbanked individuals, families and small businesses establish and maintain healthy financial habits. In fact, we think that the entire financial ecosystem will benefit from technology-powered solutions that make managing finances easier, faster and more secure for everyone.

As technology has changed how we shop and consume media, so too it is poised to transform the financial services industry. Consider that U.S. consumers have nearly $12 trillion in debt, according to NerdWallet's recent statistics. Already, financial technology startups have proven that they can bring rapid change through technology and disrupt consumer behavior on a large scale.

For example, LendingClub, a peer-to-peer platform which offers small fixed-rate loans to consumers and small businesses, held Silicon Valley's largest IPO in 2014. Using automated software, LendingClub quickly matches up borrowers and lenders. The company's business has grown as consumers seek to refinance existing debt with cheaper interest rates.

What I find compelling about innovations like these is how banking in the digital age has the opportunity to benefit everyone, including people who have been excluded from traditional financial services.

I was honored to be invited by John Hope Bryant to discuss how to leverage the financial services revolution for the benefit of all at Operation HOPE's Annual Global Forum this year in Atlanta. Operation HOPE aims to educate and empower five million American youths with financial literacy and entrepreneurship skills by 2020. I brought along three Silicon Valley Bank startup clients who are fomenting the revolution, using cloud-based software, social media applications and online education to expand economic opportunity.

One such client is led by James Gutierrez, now at his second startup designed to make the borrowing process easier to navigate and less restrictive. He says that his current company Insikt (pronounced "in-seekt") was borne out of the realization that traditional banks will not be the only lenders of tomorrow – instead it will be media companies, retailers and prominent brands that have deep relationships with their customers. He is launching "lending as a service" cloud-based software that will allow new types of lenders to automate the process, including identifying sources of capital and the most advantageous products for consumers, without having to invest in expensive infrastructure.

Many people are turned away from traditional lenders because they have no credit history, or a less-than-stellar FICO score – the oft-used industry-created creditworthiness measure. Enter Yee Lee, who contends that the FICO score is not a full measure of financial risk. He has built Vouch, an online application that helps consumer pool creditworthiness to get more favorable financial terms. Vouch borrows from the social media concept of information and experience sharing, allowing people to "vouch" for each other.

The next generation of consumers from low- and moderate-income households represents a huge market. Young people's attitudes toward money and banks are developing now, and they are more likely to have a smart phone than a personal computer. Regardless of income level, people need knowledge and tools for managing money. Former tutor Ray Martinez co-founded Everfi to introduce financial literacy in the classroom in low-income communities. The concept is to teach financial literacy to young adults and their families – i.e. understanding student loans, mortgages, saving and investing – using online education tools in an engaging way, including animation and gaming.

These are just a few examples of ways that technical innovations are changing how we live and operate, and they have the potential to improve financial experiences for many. The bank of tomorrow is going to look very different from the bank of today. At SVB, we are excited about the far-reaching implications of new ways to use technology to participate in the economy and spread opportunity.

About the Author

A recognized leader in the innovation economy, Greg Becker heads the only bank dedicated to the global innovation sector.

Greg believes the innovation economy brings together talented people who are passionate about turning great ideas into sustainable businesses to create jobs, grow the economy, and enable more people to unlock opportunity.

Under his leadership for a decade, Silicon Valley Bank has consistently outpaced other banks’ growth rates – enabling SVB to expand the services it provides to thousands of fast-growing companies and their investors. In the US, SVB is among America’s Top 10 Best Banks (Forbes) and Most Responsible Companies (Newsweek) and annually ranks as a Top Corporate Philanthropist, member of the Bloomberg Gender-Equality Index and among the best places to work.

Greg joined SVB in 1993, and has spent his career championing innovation, helping entrepreneurs and their investors scale across the US and globally, building SVB for the long-term and expanding to include nine countries. Working with employees, clients and partners, he has also prioritized investments and initiatives to increase diversity and inclusion at SVB and across the larger technology workforce, foster economic development and support community well-being.

Since 2011, Greg has served as president and CEO of SVB Financial Group and CEO of Silicon Valley Bank. Earlier, he held various senior leadership positions including co-founder and managing director of SVB Capital, chief banking officer and president of Silicon Valley Bank.

Greg holds key positions that enable him to contribute to policymaking and advocate for the innovation economy at the highest levels: In 2019, he was elected a Class A Director for the Federal Reserve Bank of San Francisco and chairman of TechNet. He is a member of the Executive Council of the Silicon Valley Leadership Group, which he chaired from 2014 to 2017. Greg also served as a member of the US Department of Commerce Digital Economy Board of Advisors from 2016 to 2017.

Greg earned a bachelor’s degree in business from Indiana University.