Today’s show is amazing on two levels. First, my guests, Ida Rademacher and Jamie Kalamarides, explain new frontiers of thinking about how financial services, including insurance and retirement funds, can promote real financial health and inclusion.
And second, the whole conversation is permeated by a critical theme, an insight that needs to be elevated from the background to the foreground in every discussion of how to do better for financial consumers. That second theme is that we are going to have to break down the walls -- dismantle the siloes, get rid of the boxes, make connections, graft together hybrids -- across the ecosystem of finance, technology and regulation.
Listening to these experts talk, you can almost see our current world -- labor markets, financial markets, the economy, consumer behaviors -- transforming out from under the rigid structures we now use to organize our industries and regulatory regimes. For decades, we’ve had slow-changing financial products that we regulate through a slow-changing (and ever-growing) set of laws and regulations. We have distinct legal and regulatory frameworks for banking and investment and insurance. We have old definitions of products, each subject to specific rules on how they should be designed and offered. Suddenly, today, many of these old structures are becoming obsolete. And, increasingly, we can see that many of them are actually standing in the way of better solutions for consumers.
My guests were modeling this connection concept themselves, in the very fact that they have teamed up -- a think tank and an insurance company -- to bring fresh ideas to consumer finance. They explored old, intractable problems that have long-plagued consumers, and also about new problems driven by changing technology, itself. We talked about volatility of both income and expenses as a driving factor in many consumer financial problems. We talked about the need to create simple default choices for consumers, so that in areas like setting up a retirement plan, they enroll automatically in the options that will serve them best, and can opt out if they so choose, rather than having to opt in. We talked about how employers can advance consumer financial health by providing easier savings options and income-smoothing tools. We talked about the power of financial offerings that combine both high-touch personal service and great tech. We talked about what to do when private markets and innovation don’t solve the problems of consumers, including the need for public/private problem-solving models. We discussed the need for more diversity in the fintech industry, to be sure that the innovators at the table understand the needs of the consumers who will use their products.
We also talked at length about how both regulations and industry practices should be updated to make things work better for consumers. In one example, we discussed the difficulty faced by employers that want to open savings accounts for employees due to the anti-money laundering know-your-customer requirements. This is an issue I also discussed in my recent Harvard papers on regulation innovation. We talked about the research of Brigitte Madrian, who was my faculty partner at Harvard on my innovation papers and a previous guest on Barefoot Innovation (she was the person who pointed me to the KYC problem). Brigitte is a leading scholar on behavioral economics that “nudges” consumers toward easy, beneficial choices. We also cited the Harvard papers of my friend Todd Baker, who was with me in the Kennedy School CBG Senior Fellows program and did important research on employers’ role in consumer financial health. We also cited the work of, and our past shows with, CFSI -- now rebranded as the Financial Health Network -- and the related work by Rachel Schneider, co-author of the Financial Diaries and expert on the issue of financial volatility.
Ida and Jamie also highlighted the role of Flourish Ventures, formerly the Omidyar Network, in financing extensive work in this space, including most of my efforts. With seed backing from Flourish, I have launched the Alliance for Innovative Regulation, or AIR, to help modernize the regulatory system to solve these problems.
I think that, in nearly every point my guests made, they went back to the basic idea that we need new connections, fewer siloes, more fluidity as technology changes both finance and life. I’ve become convinced that this seemingly “soft” idea is actually the key to speeding up the whole sector, so that we can keep up with the exponential change in technology. It’s the core idea of the Aspen Institute (by the way, don’t miss the next Aspen Ideas Festival, where both of my guests were speakers this year shortly after we recorded this show). It’s also the core idea of my new nonprofit, AIR. And it’s going to be the secret to progress for everyone in the financial world. I have not heard anyone talk about it more eloquently than today’s guests.
I want to share two other two notes. First, the FDIC is recruiting for their first-ever Chief Innovation Officer. The agency’s Chairman, Jelena McWilliams, is a visionary leader who has set the goal of “transforming” how they supervise banks, during her term at the agency’s helm. This is the third time they have posted this position, because they’re looking for a very unusual person, someone who both deeply knows the tech world and, at the same time, is able -- and willing! -- to navigate inside the government. Maybe that’s a unicorn, but if so, they are trying to find one. To our listeners at tech companies and fintech and regtech firms -- the person who takes this job can change the world. And contrary to the stereotype that government is boring, the tech challenges in this role are fascinating. These government processes are a green field, largely untouched by great new technology, human-centered design, and the rest. Here is the job listing and also a cool new video the agency has made. As the saying goes, this is not your father’s FDIC!
Second, I myself am recruiting for an executive assistant. We too are changing the world. It’s a fun job, interacting with fascinating people, making new connections, learning every day, building something impactful. You can work from home. Here is how to apply.
Barefoot Innovation Podcast: Harvard’s Brigitte Madrian on Saving for Retirement: “We are not making it easy”
Barefoot Innovation Podcast: Real Lives: Rachel Schneider and the Financial Diaries
CNBC Article: What the Secure Act Would Mean For You
Prudential Publication: Disability Happens. Protect Your Income.
Prudential Publication: How the Shutdown Affected the Household Finances of Government Workers
More on Ida
Ida Rademacher is Vice President at the Aspen Institute and Executive Director of the Aspen Institute Financial Security Program, a leading national voice on Americans’ financial health. Ida combines her expertise in economic inclusion research and policy with her reputation as a collaborative and creative thinker to raise up a national conversation and solutions set around financial inequality and financial instability. Ida and her team are building a cross-disciplinary community of leaders and change agents who, together, are deeply probing critical financial challenges facing U.S. households and shaping market and policy innovations that can improve the financial security and well-being of all Americans.
Ida was previously Chief Program Officer at Prosperity Now (formerly CFED), where she created the multi-institutional team that led the CFPB’s Consumer Financial Well-Being Metrics Project, and also led the creation of Upside Down, a program examining ways the U.S. income tax code generates disparate wealth-building opportunities and contributes to growing levels of wealth inequality. Earlier in her career Ida led research and evaluation projects at the Aspen Economic Opportunities Program and the Center for Behavioral and Evaluation Research at the Academy for Educational Development.
More on Jamie
Jamie Kalamarides is president of Prudential Group Insurance, a business unit of Prudential Financial, Inc., which manufactures and distributes a full range of group life, long-term and short-term disability and corporate and trust-owned life insurance in the U.S., serving institutional clients primarily for use within employee and membership benefit plans. Previously, Jamie served as head of Full Service Solutions and CEO of Prudential Bank & Trust, FSB, businesses within Prudential Retirement. He also is a director for Prosperity Now, a national not-for-profit that creates economic opportunity to alleviate poverty.
More for our Listeners
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We have great episodes coming up. We got invaluable insights from Nick Cook and Francesca Hopwood Road, who head innovation and regtech at the UK Financial Conduct Authority. They talk about the FCA’s new and greatly expanded innovation program, as well as the AML tech sprint they ran in July, with which we collaborated to run a Washington site via our new nonprofit, AIR. We’ll talk with Vinny Lingham, co-founder and CEO of Civic -- an identity protection and management startup. We will have a show with Greta Bull, who leads C-GAP for the World Bank. And we have two special shows coming up with US regulatory agency heads...among others.
We’re into September, and that means my fall “world tour” has begun, starting with a fascinating trip to Abu Dhabi. I’ll also be in Japan and Singapore, among others. Here are some upcoming events where I’ll hope to see many of you. Remember, if you’re interested in booking me to speak to your group, contact firstname.lastname@example.org.
University of Michigan’s Central Bank of the Future Conference, October 2-3, Ann Arbor, MI
FFIEC Large Bank Supervision Conference, October 10, Washington, DC
Online Lending Policy Summit, October 23, Washington, DC
Money 2020, October 27-30, Las Vegas, NV -- I’ll be chairing the regulatory track again this year and also keynoting the day, which has been moved, happily, to Tuesday. We will have an amazing line up for you in our sessions as well as luminaries on the main stage, including FDIC Chairman Jelena McWilliams.
Honest Conference on AI for Regtech, November 6, Tokyo, Japan
The Fintech Festival of the Monetary Authority of Singapore, November 11-15, Singapore, Asia
Paris Fintech Forum, January 28-29, Paris, France
The views and opinions expressed during the Barefoot Innovation podcast series are solely those of the individuals involved and do not necessarily represent those of Barefoot Innovation Group and its employees. Barefoot Innovation Group does not verify for accuracy the information contained in the podcast series. The primary purpose of this podcast series is to educate and inform.