Stacking the Curriculum
By Alex Johnson
3 Fintech News Stories
#1: A Rocketship for Credit Unions?
Rocket Mortgage and Q2 have announced a partnership that enables banks and credit unions to offer customers and members digital access to Rocket Mortgage, integrated on the Q2 digital banking platform. Rocket Mortgage will take care of everything related to the loan and servicing at no cost to the financial institution – including no implementation or subscription fees.
This is a really smart move by Rocket. Individual community banks and credit unions aren’t, for the most part, meaningful competitors to larger banks and established customer-facing fintech companies at this point. Their digital experiences and product design chops just haven’t kept pace.
In the aggregate, however, credit unions and community banks are still incredibly powerful. They control billions of dollars of capital. They have relationships with millions of consumers and businesses. Tapping into that aggregated channel – through partnerships with technology and service providers like Q2 – and being careful to ensure a win-win arrangement (Rocket is prohibited from offering credit unions’ members other, non-mortgage products) is such an obviously good idea I’m surprised we don’t see more of this.
#2: Stacking the Curriculum
Stack, a crypto education and trading app for teens and their parents, raised $2.7 million:
For the price of a cup of coffee, your teen can learn how to invest in cryptocurrency.
Today, Stack released what CEO Will Rush says is “the first crypto education and trading app for teens and their parents.”
The subscription-based app costs $3 per month per user and is available for Android. It was designed with Gen Z in mind, a generation that will grow up with the blockchain and most likely own some kind of digital assets, Rush told TechCrunch.
In curriculum design, sequencing matters. You don’t want to teach the U.S. Constitution until after you’ve taught the American Revolution and the Articles of Confederation.
(My undergraduate degree is in secondary education, so I’ve spent a lot of time thinking about curriculum design for teaching apathetic teenagers.)
This applies to financial literacy as well. If you are sitting down with a blank piece of paper and creating a curriculum for teaching a 13-year old how money works, you might start with deposits and savings. Or maybe credit and lending. It’s unlikely that you are going to start with investing, but if you do, you would absolutely start with the predictable and easy-to-grok stuff like mutual funds and 401Ks.
You wouldn’t start with crypto or NFTs or web3. You just wouldn’t.
And yet, Stack is:
“We need a big lift to make it relevant to teenagers and are looking at educational topics like NFTs, metaverse and web3,” he [Stack CEO Will Rush] said.
Why? Because it’s engaging:
While at Copper, Rush led efforts to teach children about investing, but found that replacing the word “stock” with “crypto” was driving more engagement.
Credit Stack for doing what it can to make crypto investing for teens safe – it doesn’t allow off-platform transfers, which should reduce losses due to scams. I also love how it charges an upfront monthly fee rather than hiding the costs inside the trading transactions.
Still, teaching teens financial literacy by starting with crypto makes about as much sense as teaching teens American History by starting with Dennis Rodman.
#3: A Garden of Pure IDeology
Jason Mikula at Fintech Business Weekly got quite a scoop:
Apple entered into a Cooperative Research and Development Agreement, known as a CRADA, with the TSA, beginning in March, 2019.
The research agreement facilitated Apple and the TSA’s collaboration to develop the technology that would “read” a mobile driver’s license at airport checkpoints when shared from an Apple device.
The government agreement appears to give Apple control over key intellectual property and patents resulting from the research collaboration. While this is a common feature of CRADAs, and the government itself retains rights to the IP, it could put Apple competitors at a disadvantage in the race to develop a digitally-native, mobile-first identity credential.
Additional patent filings suggest the collaboration between Apple and TSA produced intellectual property related to using mobile identity credentials (MICs) as part of “Know Your Customer” checks, in merchant or peer-to-peer transactions, to secure medical records, and even for use in voter identification — all of which could end up controlled by Apple.
Jason breaks down this news in a great deal of detail in his newsletter, so make sure to read his full write-up.
Taking a step back, I think the most intriguing big picture question in this news is this – who should be responsible for building and operating the digital identity infrastructure of the future?
The federal government (and multiple state governments) appear to have decided to outsource that responsibility to Apple (theoretically, they’d probably be willing to do the same for Google, if it could get its act together).
This will likely result in a delightful user experience – a walled garden in which each consumer can bloom, to paraphrase a famous quote – but I’m not sure that’s the future we want.
As Apple continues to quietly sign up more states to add their drivers’ licenses to Apple Wallet and further solidify its advantages around this travel use case (Would Apple consider acquiring Clear, as Jason floated on Twitter? Are there already Apple stores in airports? If not, will there be?) will we see the Justice Department’s Antitrust Division wake up at some point?
2 Fintech Content Recommendations
#1: All the Personal-Finance Books Are Wrong (by Derek Thompson, The Atlantic) 📚
This article by Derek Thompson, which is based on an academic research paper – Popular Personal Financial Advice versus the Professors, gets at an idea that I’ve written about a couple times – most financial advice is terrible.
The core problem is that good financial advice isn’t about maximizing financial return; it’s about maximizing individual happiness. And economists have no better idea of how to be happy than the rest of us.
#2: Foundations for Successful Fintech Infrastructure (and Several Tradeoffs to Consider) (by Marc Andrusko and Angela Strange, a16z) 📚
This is an excellent overview of the success factors for fintech infrastructure companies and the trade-offs that all fintech infrastructure companies must make early in their development.
My biggest takeaway from this piece? Plaid has been really smart about how it has built its business.
1 Question to Ponder
I’ve got a fun one for you this week – if fintech companies were Game of Thrones characters, which companies would be which characters and why?
Visa is Tywin Lannister. This I am sure about.