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On Multiplayer Fintech

Over the past decade, the desire to share and collaborate has fueled the rise of multiplayer software across many markets and industries: files, documents, design projects, software development, photo boards, and more.

Yet, with a few exceptions, finance and fintech have remained stubbornly single-player. We still call it personal finance. Though information sharing is pervasive, truly collaborative, multiplayer experiences have not yet emerged. Instead, we are left with the same stale products that the financial industry has been offering for forever: joint accounts. The problem with joint accounts of all types, for lending, saving, everyday spending, and investing, is that they can be quite difficult to set up, painful to maintain, and don’t accommodate short-term, non-partner or non-family use-cases particularly well.

Traditional banks and financial products are still trying to enforce traditional, normative modes of living. Women had a hard time getting their own credit cards until 1974 (thanks RBG), and as recently as 2012 paid half a percentage point more in credit card interest rates than men (source). Want more than two people on your joint account? Only a handful of banks allow that, and a lot won’t let you sign up for one online.

If the primary tool of one’s financial life is the checking account, what’s missing right now is a layer of collaborative tools that live on top of our primary accounts. These tools could allow us to spend, lend, borrow, save and trade together. This is an area of enormous opportunity.

Banks as both pervasive and invisible

We need more collaborative financial tools. These tools aren’t new banks necessarily, but rather, they live on top of our primary accounts and allow us to transact around money together. In his post this weekend, Mario Gabriele at The Generalist wrote:

“…a bank is not a thing, an entity, so much as a set of behaviors. Already, in our interactions with each other, we act as financial agents — paying one another, lending, saving together — what would it mean to provide tooling to enable that? To make a bank both pervasive and invisible?”

You shouldn’t need to have the same bank as another person to transact with them. Banks haven’t adapted to a world where two people with different primary banks might want to share money for a short project, an investing group or a summer sublet. It’s not in the interest of a bank to offer such a product, so why would they?

Banks decided decades ago which sort of shared experiences around money were permitted, and which ones were not. In that time, technical and regulatory hurdles, along with issues around fraud prevention and AML have served as strong barriers to new entrants.

Finance has lagged behind other industries in facilitating multiplayer experiences, because the banks don’t seem to want these interactions to happen. Most big banks offer a bundled experience, and aim to have an offering for every financial need. Offering a best-in-market product isn’t necessarily when your customers are locked in. It’s so difficult to move away from a primary bank that most people just…don’t. Only 4% of consumers switched their primary bank in 2018.

Cokie Hasiotis, one of the excellent trio of writers at Fintech Today, put it best here:

Sure, this is part of the promise of blockchain technologies, and there were a few responses to this tweet that said something like “but Bitcoin tho.” Fine. But we’re talking about mainstream retail banking. Checking accounts.

That P2P apps like Venmo, Cash App and even Paypal have emerged despite such headwinds shows the massive need for more bank-agnostic, multiplayer financial tools. And none of these apps allow users to create truly shared accounts.

Groups as financial entities

In their essay on the emergence of Squads, called Squad Wealth, Other Internet talks about the rise of groups as financial entities:

“The group is the basic user class for the tools we need today as a society, yet few pieces of software allow the squad as a whole to produce cooperatively and generate wealth together.”

This makes sense especially in 2020. COVID has resulted in the swift destruction of many small businesses, education systems, and social activities. It has shown us the gaps in our healthcare system, and resulted in sky-high unemployment.

Millennials are approaching middle-age and are now left to deal with the reality that our dreams of home ownership, social security or any government safety net, and growing old with dignity are mostly illusions. Our coming-of-age story is one of two massive financial crises, overwhelming student debt, NIMBYs blocking affordable housing in many urban areas, and a global health crisis (and avo toast). Many still live with their parents. As the poster children for “Generation Me,” we have truly found the limits of individuality. Taking a more collective-first approach could provide greater financial opportunities and stability, but the toolset is thin.

Our financial products must adapt, whether the banks want them to or not. The problem is too big, and too important. The emergence of groups as more than a social entity, but a cultural and financial one, will hopefully push demand for these products. From Squad Wealth:

“Group collaboration is now the strong default, putting squads at the center of social, cultural, and economic life.”

To be fair, this issue stretches beyond banks, as there is still pervasive social stigma around sharing money. At some point, talking about money and collaborating around it became scary and gauche. The role of “the money person” in any group is a fraught one. Trust is precarious. Collecting is often a nightmare. Tracking receipts is a time sink.

This is holding all of us back. We live in the world of my money and your money. Our money isn’t quite here yet, except within the confines of romantic partnerships, families and businesses. This is what makes projects like Card V. Card so interesting. It is nearly a satire, except that what they’re pointing out is complete true:

“Spending your own money feels bad. Spending someone else’s money feels good.”

When will we get to a place where our money is a concept that is widespread and accepted?

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credit: Danjo Paluksa (flickr)

What collaborative tools enable

Siloed, individual financial tools make dealing with money inaccessible and opaque, and the greatest promise of collaborative financial tools is transparency. There is a reason why we are so starved for financial savvy and basic personal finance education. Social activity and sharing around money happens on the periphery, but not enough inside the products themselves. We talk about stock trading together, sure, but mostly make those trades alone. Trading clubs are still fairly niche, and I don’t know of any new, great software products that offer group trading accounts, other than joint accounts with a partner or family member.

Even simple, regular shared transactions such as a group of adults supporting their elderly parent are more complicated than they need to be. They usually involve one person collecting and tracking the payments and then sending money to the parent.

Or a creative project like a new podcast. There’s no need for a business bank account necessarily, though having one person track the expenses through their personal account is arduous. Pooling together an initial investment and then spending directly out of the pool allows for effortless tracking and transparency around exactly how much money is left in the budget.

Collaborative financial tools are far more pervasive in other cultures. Tandas in Latin America and Chama groups in Africa are two examples of collective financial habits and practices that exist and are widespread. But for a whole list of reasons, these practices have not become widespread in the U.S.

The power of collective action should extend to borrowing, investing, trading, saving and everyday spending in ways that we have not yet explored. Better tools can solve some of the stress and pain around tracking and collecting, and if done well, can unlock opportunities that are currently unattainable given the current system. We need more of them.

Finance is inherently social, but

Fintech will underdeliver on its promise if we continue to believe that all we need to build is modern infrastructure. We need to build a social layer to the mainstream financial system within the bounds of what people are already using. The blockchain industry is exploring similar ideas, but they are outside the limits of established regulatory frameworks.

Luckily there is a blueprint here. Fintech has a lot to learn from products like Figma and Dropbox. Social financial products will have as much in common with Pinterest as they do with Citibank.

It won’t be easy, though. Social software is messy and complicated because people are messy and complicated. AI won’t fix the awkward kitchen interactions you have with your roommate, who is late paying his rent. That said, there’s room for more tools, and ones that allow for more than bill splitting, joint accounts and shared personal financial management (PFM). We need change at the account level, too.

The part about Braid

This move toward collaborative financial products and tools is bigger than Braid, or any one single company. Our hope is that there will be a flood of these products that help us manage money, our money, in more intuitive, straightforward ways.

To that end, here are a few things we believe in at Braid about shared financial tools:

Build the best group account.

There is real power in pooling, spending, and managing group money together. Group spending already happens in individual silos, reconciled through spreadsheets and P2P apps and bill splitting apps. We think the transparency that comes with spending together is crucial.

We are not looking to re-invent an entire stack of personal finance products. Instead, we want to build the absolute best group account. You should be able to sign up with any bank, and get money into and out of Braid easily. The accounts should be trivial to set up and easy to customize. We should support groups of all shapes and sizes. The accounts should feel lightweight enough to use one for a weekend but trustworthy enough to use one for a decade.

Money movement should be frictionless and instant.

This is the responsibility of the entire financial industry. The fact that it’s still difficult to move money around is an issue, and many articles have been devoted to this topic. We are no exception and try to do our best internally to make money movement frictionless. Moving money in, out and around within Braid should be fast, reliable and safe.

We are building a tool for humans.

There is real social stigma around sharing money, and we are not only building infrastructure to make sharing money easier, we are also building a social product that real humans will use. We’re building tools to support and reinforce safe and friendly financial collaboration. This means we need to be mindful of the social interactions that happen on our platform, take precautions around user safety and privacy, and do our very best to ensure a positive experience for new and ongoing users.

We are really at the very beginning and believe that there is a lot of work to do to make collaborative financial tools accessible to all. We’d love your thoughts on the app or this post, feel free to write to us at hello@braid.co.

Written in San Francisco, CA, September 2020. Special thanks to everyone who read this and provided feedback, I really appreciate it.

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Easy group accounts. Get one for your roommates, creative projects, homeschool pod, family or any other group. We look forward to your feedback.

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