Aug 7, 2015
Episode 9 finds us at the 2015 EMERGE conference in Austin with
the winners of the first Financial
Solutions Lab competition.
The contest is a $30 million, five-year initiative funded by
JPMorgan Chase and run by the Center for Financial Services
Innovation, or CFSI, the conference sponsor (note -- I serve on
CFSI's board). It challenges entrepreneurs to create solutions for
the cash flow difficulties facing millions of American middle and
lower income-households.
Two hundred ninety-eight innovators applied. Nine were chosen.
And -- drum roll - one was Steve Carlson of Ascend
Consumer Finance, our guest for this episode.
Ascend was
recognized for its unique approach to broadening credit access and
affordability for non-prime borrowers. The company wants to
drive a new generation of lending with its Adaptive Risk Pricing
tool, which actively monitors and rewards customers for positive
financial actions throughout the span of their loan, sharply
cutting interest costs.
I've known Ascend's Co-Founder and CEO
Steve Carlson since we both joined the Consumer Advisory
Board of the Consumer Financial Protection Bureau (CFPB) when it
first was formed in 2012. Ascend has benefited - and so does our
podcast - from Steve's double background in banking and technology.
He has held senior executive roles at HSBC and Washington Mutual
and advised global financial services firms as a co-founder of
Sung Carlson Associates. He was also the head of
marketing and business development at Intuit Financial Services
(Mint.com and Quicken).
(A side-note on Intuit: in the recording, Steve relates
its history and I ask if its founder, Scott Cook, got started by
making calls from a phone book. Afterwards, I looked up the story
and found it in The Lean Startup, by Eric Ries (pages 88-89).
He writes that in 1982 Cook "picked up two phone books: one for
Palo Alto, California, where he was living at the time, and the
other for Winnetka, Illinois." He randomly called people to gauge
interest in his idea, and a company was born. For any listeners who
haven't read The Lean Startup, do!)
In our conversation, Steve describes the impetus behind Ascend,
their current status (including
their partnership with Lending Tree), and why he believes
banking should be a value-driven proposition. He thinks both
consumers and the industry can benefit by improving the financial
health of consumers. The company's pioneering product, RateRewards,
enables borrowers to earn up to 50% off their interest expense by
making responsible financial choices throughout the life of their
loan. With Adaptive Risk Pricing, Ascend is able to offer loans at
rates that reflect real-time performance instead of past behavior.
This, Steve says, is reinventing "the
whole concept of underwriting and risk assessment."
Indeed, many "non-prime borrowers" - a group that actually
represents about a third of the U.S. population - are better
candidates than their credit scores would indicate. One-time
financial shocks and "thin" files can greatly diminish a consumer's
chance of getting a reasonable rate on a loan, or even a loan at
all at a traditional institution. Ascend is encouraging borrowers
to bet on themselves and prove -- through their actions, rather
than their credit history -- that they are creditworthy. As Steve
says in the episode: "Everyone today [is] going to be in a
different stage in terms of their financial health ... I might be
in great shape today; tomorrow could be totally different."
Ascend is trying to make the road to financial wellness smoother --
something Steve says he feels good about.
This episode of Barefoot Innovation became a brainstorming session,
as Steve and I tried to think through how innovators, banks and
regulators can move toward better ideas for financial consumers --
including musings on how innovators should interact with the world
of bank charters and regulation.
Enjoy it! And check out more information on
Ascend, and on the
Innovation Lab winners.
You can subscribe to the podcast on iTunes HERE or by opening your favorite podcast app and searching for "Jo Ann Barefoot".