Holly Fearing
(00:01): Hello everyone. And welcome to the Filene Fill-In. I'm Holly Fearing with Filene. The Filene Fill-In is the podcast where we fill you in on what's been going on here at Filene's home base and out and about in the financial services world. In this episode, we introduce you to our newest Filene Fellow for the Center of Excellence for Consumer Financial Lives in Transition. Dr. Lisa Servon is the Kevin and Erica Penn Presidential Professor and Chair of City and Regional Planning at the University of Pennsylvania Stuart Weitzman School of Design. The Center for Consumer Financial Lives in Transition studies the changing financial lives and livelihoods of consumers, new forms of economic struggle and financial fragility, and how these changes impact the North American credit union system. As Lisa shares in this interview -- "The work from this center will help credit unions serve people facing different kinds of transitions – income volatility, retirement, physical health and inequalities. If we can understand the frequency of these kinds of transitions and when people are going through them, we may be able to help alleviate the financial burdens that have been historically created.” One thing of note about this interview – we recorded this in March, before we knew as much about what would soon unfold with the COVID-19 pandemic, so in a way, it is a bit of a time capsule look at the way things used to be…we recorded together in our small podcast studio, something unlikely to happen as such again for a long time. I was actually working on this podcast the last day we were all in the office together. What a surreal moment to look back on now and unfortunately it got put on hold as we set our focus on other areas for a time. But it's here for you now and still, the ideas and challenges Lisa talks about are only ever more relevant today for having lived through this pandemic and being where we are at with it now. Stick around until the end to hear Lisa’s answer to her provocative question that led her to start one of her main research pursuits -- if alternative financial services are so bad for people, then why are so many people using them? – There’s got to be a better reason than that people are stupid. And now, here's Lisa. All right, so let's get started. And I wanted to thank you for joining us for the podcast today and also just to say welcome to the Filene Fellow family.
Lisa Servon
(00:15): It's wonderful to be a part of the Filene Fellow family. A little hard to say, but I'll master it, I promise.
HF
(00:23): We're really happy to have you. So let's jump right in to talking about what that means to you for being the Filene Fellow for our newest research Center on Consumer Financial Lives in Transition within the credit union space. What does that really mean?
LS
(00:42): Well, first of all, I'm really honored to be the lead fellow, the fellow for this new center. I think very highly of Filene and the research that's coming out of the think tank. And so it's really exciting for me to be a part of it. I think, you know what this really means, this idea of consumer financial lives in transition, it really breaks down into two components. One is that there are a lot of trends happening in the economy right now that are affecting Americans' financial stability and in fact making them less stable, more unstable. And the second is that there are particular kind of areas of life. We will be looking specifically at health, physical health. We'll be looking at incarceration and re-entry and we'll be looking at the changing nature of work. So, you know, it's kind of looking at these larger trends and larger issues and how they're impacting certain groups of people. But there's a lot of crossover and what I hope is that we'll be able to really illuminate some solutions, ideas, practices that can really help financial institutions, especially credit unions serve people better so that those issues have less of a negative impact on them.
HF
(02:06):And Taylor, can you explain a little bit about why this was a topic that Filene landed on as an important research topic to focus on?
Taylor Nelms
(02:16): Absolutely. First of all, it's critical I think for credit unions to understand the shifting environment around them. I mean, they are first and foremost service organizations. They're cooperative financial institutions who have that double bottom line incentive structure, right? They're looking to grow and looking to serve their members the best that they can. In order to do that, they need to understand who their members are. And it's pretty clear looking at, like Lisa said, at some of the big macro level transitions, big structural transformations of the economy that the ways that people are making, managing, saving, borrowing, you know, gifting and, just generally speaking, handling their money is changing and it's changing as a result of longterm trends around wages, longterm trends around income volatility, longterm trends around who's shouldering the risk of participating in the economy. And so credit unions, in order to better serve their members, need to get a grasp on what those big structural transformations are. At the same time, like Lisa said, we all go through life and we face a whole series of expected and unexpected transitions planned and unplanned changes in our livelihoods. And so much of what makes for really strong relationships between members and their financial services providers, their credit unions, is an understanding of what the particular needs of a person at a particular point in time. So that means understanding what those kind of micro transitions, those life cycle and lifestyle transitions are like. And so when we started to plan out the transitions of our research centers, these Centers of Excellence, it was clear that we needed to understand consumer behavior, consumer decision making, but in a kind of broader environment in order to take kind of financial practices out of people's brains and put them out into social life. And no one's really better positioned to that in terms of her past work in terms of her vision for this center than Lisa. So we're really excited to have her lead this project.
HF
(04:41): Yeah, that's what I wanted to talk about next. Because Lisa, you do have a really interesting background and have a lot of experience with this topic and also with financial services and credit unions. So can you talk a little bit about just kind of what led you to doing this type of research and talk a little bit more about your background?
LS
(05:01): Sure. Yeah. I've always studied poverty and community and economic development in the United States, and that's taken a number of forms. I studied micro enterprise programs, I studied technology and the digital divide. And most recently for the past maybe seven or eight years, I've been looking at how and why people, consumers use different forms of financial services. And started really looking at why so many people were using alternative financial services like check cashers and payday lenders. And in the course of that research, I really expected, I started out by working, as a teller in the South Bronx, which is one of the poorest zip codes in the country. Following on my former research which really focused on urban poverty. And one of the things that I found in doing that field work and then later field work at a payday lender in California was that it wasn't just low income people who were using these services and who were experiencing this kind of economic vulnerability and financial instability. And so that really led me to expand. I think, yes, we're interested in understanding the challenges that low income people face in terms of these transitions and trends that Taylor and I just talked about. But we're also seeing the impact of these things on people who you would think of as being middle class, having a college education, owning a home, making $50-60,000 a year. And so it's kind of been like this path where I finish a piece of work but a door opens to do something else. And so the last year or so I've really been thinking a lot about some of the issues that we'll be able to explore a lot more and a lot more deeply with this Center of Excellence. I'm really excited that it'll be going on for four years because that means there's time for us to really dig deep and start projects that lead to other projects and really I hope have an impact in a pretty, in a pretty wide range of topics.
HF
(07:08): You talked at Filene's board chair breakfast at GAC earlier this year. And really that talk started to make this research and this work feel really tangible. And it started to, I think, just give some clarity to the focus of this work. And you talked about how the Center can help credit unions that are serving people facing different types of transitions such as income volatility, retirement, physical health, and other inequalities that they face. Can you talk a little bit more about why are we framing it in this context of a transition and what does that really how is that really different than just a financial situation?
LS
(08:03): Right. That's a really good question. And I think, you know, Taylor talked a little bit a moment ago about the sort of quote unquote natural transitions that all of us go through or many of us do, right? They're part of the life cycle of say, coming out of high school or college and emerging into adulthood. That's a moment where people don't have much money typically, and they're working to build a career and build a credit score. And then there are moments of getting married, retiring, et cetera. Those are things that we know a fair amount about, but we don't really know about them in this moment where these economic trends I mentioned before have made such a big impact. And so, sometimes those larger trends are exacerbating perhaps the anxiety and the consequences of these more, you know, I hesitate to use the word natural, but maybe normal trends. So for example one of the larger macro trends that we see is that people are no longer getting the kinds of benefits from work that they used to be able to rely on in retirement. They have defined contribution retirement plans instead of defined benefits. They may have fewer other kinds of benefits that lead to them having less of a financial cushion. And so that moment of retirement often means for people getting a different kind of job, continuing to work perhaps in the gig economy or doing contract work or consulting work. So that's the kind of the new way I guess that we see people experiencing transition. Perhaps there's a medical issue and the fact that people no longer have medical care or insurance as much as they used to or of the quality they used to from work. So something like that is hitting them harder. People have less savings and are more likely to work paycheck to paycheck, live paycheck to paycheck than they were before. So we're kind of looking at the combination, I'd say, of those normal transitions combined with these larger trends to see what the impact is. You know, we were talking a little bit before we started recording about the Corona virus, right. And I'm very concerned, for example, about how that event will affect people in the categories that we talked about. Right? So for example, we're talking about the effects of medical health or medical care. So what will it mean if people who are, say, working in the travel industry, in tourism and all kinds of other industries that involve human contact, experience a decline in their ability to work or places get closed down. Will they have larger medical issues? Will they not be able to afford their prescriptions? You know, for formerly incarcerated people. They're also working in these jobs typically that are kind of at the margins. So we see this event that seems like it's external and because of these other trends, many of us, particularly vulnerable populations are less prepared to be able to absorb it. So for example, it might make sense for credit unions to offer a small dollar short term loan that they didn't offer before because people need money in an emergency. So that's just an example. I think of, you know, how a current situation could create a situation in which a credit union could respond in a positive way.
TN
(11:47): Yeah. It really strikes me, Lisa, that the current moment with a lot of anxiety and uncertainty around COVID-19 in many ways, at least sort of through an economic window looking at it through an economic lens, it parallels,, what happened, was it last year around the government shutdown. And it seems like these, these big moments of change, all of a sudden reveal these underlying conditions that have weakened household balance sheets and, really put people's financial lives, you know, made them more fragile, made them more precarious. And so I think it behooves credit unions, it behooves all financial services providers to have a really deep understanding of what those underlying trends are. And then to understand the ways that those impact particular life cycle transitions, planned or unplanned, right? As we've talked about. I also think that there's real opportunity for credit unions to understand, right? So it speaks to their mission and it speaks to their differentiation as supporters of people's financial wellbeing. I also think that there's a really important shift in the ways that credit unions can reach their members and reach new members and grow their memberships. I think traditionally we think about that kind of outreach is happening through segmentation and that can be really powerful, especially when it's granular and when it's accurate. What we're talking about here is a kind of a segmentation in reverse. So that instead of starting with a set of homogenous demographic characteristics and then making a set of assumptions that about the financial needs of all the people who share those demographic characteristics, right? Like all people aged 22 to 34 have these needs, right? Instead, what we're doing is we're starting with the need. We're starting with the transition and working our way backwards to construct a membership around those needs, right? So, it's a much more kind of empirical approach really to segmentation. And so I think that even at the very core of what this Center is about, there's a really powerful lesson for credit unions about how to do their marketing, how to do their differentiation, how to do their value proposition.
HF
(14:09):So is part of this work, then kind of going to be helping credit unions better understand either frequency or patterns or recognizing when a member might be entering into a need that would be a transition financially. Is that the angle then that this work might take that credit unions can alleviate financial burdens from their members if they're better at predicting that?
TN
(14:37): I think that the Center really can make two contributions. First, as Lisa and I had been talking about, there's the ability, through this research, to identify real groups of people with real and unique financial needs. To identify sets up transitions that many people share that, you know, introduce needs that would cause them to search out financial services or would allow a credit union to reach them and support them in that time of need. At the same time as with all of the research at Filene, our goal is not just to give credit unions information about themselves, but to give them tools and skills so that they can then go out and do the work, right? So we can teach them to do research and understand their members better. So it really, the work is going to happen I think on both of those levels, right? Being able to actually go out and, you know, do that empirical work, original research, understanding people's financial needs, understanding those transitions, understanding those big macro changes and at the same time providing tools to credit unions so that they can replicate that for themselves.
LS
(15:47): I think that's right. I think that we probably aren't going to be necessarily helping them predict, I don't think financial institutions necessarily have the kind of information to be able to predict that, but they'll know their customers much better and know what the risks are. I think sometimes it's really hard to tell on the surface that people are struggling financially or in that precarious situation. And so hopefully by making these the trends and the categories of people who are using financial institutions more apparent, that will enable credit unions to be able to create better products and services that are better suited to their members' needs.
TN
(16:35): Yeah, there's a real opportunity here for that curb cut effect, right? That sort of classic example from the world of accessibility and design where there's a big movement to make sidewalks and roads more accessible to folks in wheelchairs and by cutting out curbs so they could access more easily those spaces, those sidewalks. And as we have now seen, and this is a classic story, right? Those curb cuts help all sorts of people, not just people in wheelchairs, right? There's a wide societal benefit that comes as a result of making those curb cuts. And I think that in some ways this Center is pushing on a very similar kind of, a very similar set of changes. The goal here is to be able to give credit unions tools to improve their product mix, their service delivery, their value proposition, their ability to differentiate, their ability to reach members. And whether they're designing for, you know, a particular group, the effects will be felt across their membership as the quality of service improves.
HF
(17:46): Right. So essentially the service for everyone when a credit union strives to improve the service for the most vulnerable in their member base.
TN
(17:58): Absolutely.
HF
(17:59): So let's talk about a little bit more specifics on what we're seeing today as those points of financial vulnerability. And then maybe, Lisa, if you can talk to like what you foresee the future might hold to evolve into new forms of financial fragility that we maybe aren't facing today. I think it's important that credit unions recognize and start thinking about what those things are if they don't already know.
LS
(18:34): One thing we're seeing is that families are derailed financially more often than they used to be. In other words, their ability to absorb the need for a car repair, a home repair, dealing with perhaps an illness or an accident. Those kinds of things used to be the families would be more able to absorb them. And we're seeing that that's not so much the case now. You know, the issues are a little bit different for different populations. So I think the three trends that are really creating a very different landscape. One is that wages have been declining since the 1970s, so people just have less money. The second is that income is much more volatile. Income volatility has doubled over the past 30 years, which means that people are less likely to be able to predict how much money is coming in and out of their household, even from week to week sometimes because of the increase in hourly and gig employment. And the third is this lack of a social welfare safety net and lack of or decline in an employer's provision of the kinds of benefits that created that kind of a buffer. And so different groups of people are experiencing the effects of those trends in different ways. I've talked a little bit about medical issues in terms of the folks who are justice involved somehow. We've seen the whole criminal justice system become financialized. So you take all of those trends that have already made it a little bit harder for the average worker to gain financial health and financial stability. And then you add on increased debt that comes from fees and fines, the need to pay for everything from paying your parole officer when you get out to home monitoring systems to restitution and forfeiture and all of these fees that didn't exist a long time ago. And now that has really ratcheted up and we're seeing kind of like a double whammy effect of these larger trends and then these things that are hitting individual groups on the ground. And then, you know, the third category of issue or topics that we'll be looking for is not necessarily person specific, whereas we're talking about medical and incarceration. The third one is the changing nature of work. So just looking at the shift away from stable full-time jobs or salaried labor that came with benefits, less unionization, et cetera, to these more part-time, less stable, more volatile kinds of employment. And we will look at who those hit harder, who are more likely to have those kinds of jobs. And it's, you know, in all of these categories, it's no surprise that low income communities, communities of color are much more vulnerable.
TN
(21:52): And when you think about that changing nature of work, one thing that we've been really interested to explore are the kinds of folks that credit unions might be serving are not just engaging with their credit union as retail consumers, right? As individual members, as consumers, but also as business owners or as entrepreneurs. So we're really interested to really track the changing landscape of self entrepreneurship right, of solo proprietorship and to understand how different groups of people, whether those are, you know, women of color or other vulnerable populations of entrepreneurs, the ways that they're navigating that landscape of the small business landscape and what credit unions can do to serve that. Really growing a group of people better.
HF
(22:47): And I think a lot of this stuff credit unions definitely have in their eyesight around serving their members needs. I think it's really interesting the work that you're doing around the criminal justice system and people coming out of incarceration because I'm not sure that, we definitely see some credit unions providing specific services for people with those needs, but I don't know if it's pervasive or widespread. It's a really interesting look at that in particular, but also it's an analogy for different types of very specific consumer needs. Can you talk a little bit about your research on that?
LS
(23:30): For sure. I did a set of interviews over the summer, with mostly men who were relatively advantaged, I would say are relatively motivated coming out of prison, but there's such a mix. So for example, you have people who were incarcerated when they were teenagers who had very little financial literacy, often come from families where people weren't using mainstream financial institutions. So they come at 10, 20, however many years later and they've got to figure it all out. So that's a piece of it. I think. There's also a huge amount of debt and figuring out how to manage that. And I talked a little bit about this whole financialization of the criminal justice system, which has made it more expensive to be incarcerated and to be justice involved. And then you have people who are coming out who maybe never had a credit score or now they have a very bad credit score because they had debt when they came in that they weren't able to pay. So it's possible that their assets have been seized or they had car payments that they couldn't make or whatever. And you know, the importance of a credit score is a relatively new phenomenon. There's a sociologist at Princeton named Fred Wherry who talks about this new phenomenon of financial citizenship where we all need these credentials in order to participate in the economy and civil society. So that's another piece of it. For people who are coming out of prison is how did you get that? How do you get a credit score? How do you get a good credit score? How do you build credit? When, if you have any data in your in your file, it's probably not very good data. So I think there's a role for financial literacy and financial coaching. There's an organization I'm starting to do a little bit of work with in New York city called the Financial Clinic that's been working with reentry organizations on financial coaching. So I'm curious to see to what extent that might be beneficial and show some results. I'm also really curious about whether we could think about, say, credit unions, opening accounts for people while they're in prison. Is that a way to help people learn about financial literacy, come out with an account, be able to deposit it? As it stands, people come out of prison with a prepaid card, usually that has any money that they've earned while they were in prison or any of the leftover from their commissary card on that card. Many of these cards costs a lot to use. Every transaction costs a few dollars. It costs 45 cents just to check your balance on the card in some cases. So thinking about another way that financial institutions could help ease that transition just from a financial perspective, I think would be enormously beneficial.
HF
(26:25): And how do you see this information potentially impacting or changing the North American credit union system?
LS
(26:45): What I think we're hoping for as a result of the center is that we'll all be more informed about these challenges and opportunities that are provided by the current situation and that the credit union system will change by adapting itself to this new reality. I think in general it takes a long time for financial institutions to, they're not typically very dynamic organizations and it's not necessarily their fault. They have to respond to an awful lot of regulation. It's not very easy to turn on a dime, but I think being able to be responsive to this new information about how these economic trends are affecting people will hopefully spur a whole new range of innovation. That's how I would hope that it could be transformative.
HF
(27:43): Yeah, absolutely. I think that's essentially what we're looking at here is it's not necessarily innovation in the form of something that's never existed before that's new and shiny. But innovation as in an unfulfilled need that we can find a way to make it both beneficial for the consumer, but also credit unions are a business and I think there's huge opportunities here to be strategically smart about how a credit union business is run by better meeting the needs of their communities. So I think there's a huge opportunity there around being innovative in the way that credit unions offer their products and services.
TN
(28:30): Yeah. Innovation starts with human needs. And so, you know, what this Center is really focused on is identifying what those needs are.
LS
(28:42): And I think what's really exciting is that, you know, businesses like credit unions don't necessarily have either the expertise or the capacity to take on this kind of research, but some of them are innovating and thinking about new products. And what this Center allows us to do is to identify really interesting practices or products and say like, Hey, let's find out if this is working, let's find out who it's working for. Let's explore that a little bit more. So I think we'll do some of that sort of evaluative research as part of this too. One of the projects that Taylor and I had been talking about would look at small dollar credit products that are sort of like payday loans, but that are offered through banks and credit unions and say like, are these better? Are they working for people? Are they costing them less? And helping them bridge that gap maybe between the need and when they get their next paycheck. So I think that'll be really cool too, because then we can create a case if it looks positive for expanding those things. And you all have a great network that ideas spread really quickly.
TN
(29:44): Yeah, I'm really excited to be able to source new ideas from our partners in the industry, outside the industry. So if you're listening and you have an idea come talk to us.
HF
(29:58): Taylor, I was going to have you talk a little bit more about some of those initial projects that are in the pipeline for this, for the center. I think that our credit union audiences is probably excited about this. And so what can they expect to see?
TN
(30:12): Well, first of all, with all of our new centers, we're really excited to be able to put out a kind of position paper, something that really outlines the goals and objectives of the center over the course of its four years. Our goal is ultimately to, you know, think forward change lives. And so in order to be able to do that, we need to understand specifically what are we aiming for. So with all of the new Centers of Excellence at Filene, we'll be developing that position paper, that sort of concept paper that lays out our research trajectories. Immediately on the docket, we have a few projects that we're really excited to dig into. The first we'll be looking at the financial costs of reentry building. On some of the work that Lisa has talked about, her interviews with justice involved individuals, incarcerated folks, and we're going to be looking specifically at their financial needs as they transition back into society, out of the criminal justice system or alongside the criminal justice system. The second project we're going to be looking at is at the relationship between healthcare costs and income volatility, right? Do unexpected healthcare costs produce income volatility or cashflow volatility I should say at the unexpected expenditures, right? Do they impact financial wellbeing by exacerbating the cash flow difficulties that households have? The third projects I hope that we'll be starting to look a little bit at the possibilities for credit unions to serve folks affected by trauma of various kinds in different ways. So to try to understand what a trauma informed financial services would look like. Trauma thought really broadly. And this is something that Lisa knows really well, is someone with an urban planning background that trauma is both event driven and also can be more ambient or kind of geographically and historically rooted. So we're thinking very hard about the kinds of trauma that might come out of being a veteran, right? And maybe suffering PTSD or, generally speaking, coming back from war, and spending time again, kind of transition right back into society into a working life. Or the kinds of trauma that might come, building on some work that we've done previously around domestic violence and the unique needs of domestic violence survivors to be more financially stable and financially independent. And then the kinds of trauma that comes from profound kinds of inequality, economic and racial and ethnic inequality from geographic inequities and exclusions. So, maybe more neighborhood kinds of trauma. So we're really interested in opening doors for credit unions to think differently about what they can do through the financial services they offer to make people's lives better. And then the final one, we're really excited to embark on a project to look specifically at vulnerable entrepreneurs. And we'll be doing that work with a researcher at Virginia Commonwealth University, Tressie McMillan Cottom, to look specifically at women of color who are starting their own small businesses and the financial needs that they face as they take on that endeavor.
LS
(33:43): So we have come out of the gate strong.
HF
(33:46): Yeah. Well I was going to say.
LS
(33:50): After Taylor and I talked in January, I'm thinking like, okay, we're going to like think about a little table and each year and three or four projects and bam we're doing it.
TN
(34:00): There's just a lot of need out there and a lot of possibilities. So I think we're all really.
LS
(34:05): And a lot of great ideas!
TN
(34:05): We have a high ceiling.
HF
(34:09): What I'm excited about is that it's also, the nature of this topic is unknowable. So you can have the category of medical debt as a cause of financial vulnerability, but you won't know what people are going to be faced with in two years from now. And so it's a very fluid in the moment, because I think we think of research as being not extremely timely because it takes time to do research, but this is actually like as it's happening kind of research.
LS
(34:45): Yeah, it is. It's very dynamic situation. I mean it's interesting that some of the trends I talked about this sort of, I call them macro trends about declining wages and that sort of thing. You know, they've been happening, it's not like the just started, it's been happening for 30 years, but at some point the combination of these things and the fact that they continue, people get to a breaking point where you really start seeing things show up. So I think, people can kind of adapt for a long time. Another income earner, the second income or earner adult enters the labor force, you cut back on expenses, et cetera. But at some point you really start seeing the consequences. And I think we're in that moment.
HF
(35:28): Lisa, what are you most looking forward to as, as being Filene's Fellow for this research center?
LS
(35:36): I think I'm looking forward to the ability to connect with other people. I think that are both experiencing this on the ground level, so the people who are say working at the credit unions and serving customers, and also this whole range of resource researchers. So for example, Taylor just mentioned Tressie McMillan Cottom, who I'm a big fan of, but I've never met. And I think this is such an interdisciplinary topic and the way that Filene sets up these centers enables reaching out to people in other disciplines who are doing related research, but maybe not people that I would be coming across or working closely with if I wasn't doing this. And so kind of creating this community of researchers that are working on this, that's also very connected to a community on the ground, the credit union community and consumers. I'm very uncomfortable doing research that doesn't have a strong application, whether it's for an institution like a credit union serving its customers or for policy makers. I'm hoping that this body of research that we engage in will do both. That'll have the ability, not only to change practices that are happening in products on the ground, but also in some cases, what we really need is a higher minimum wage or better healthcare for people. So I'm hoping that it has the potential to impact both the way credit unions serve their customers and policy makers who can really see where the impact of these issues is on people's daily lives.
TN
(37:12): Yeah. I think that the opportunities are there for credit unions to serve their members better as service providers, as coaches and as advocates for their particular memberships. So I'm really excited like Lisa, to see what kinds of big structural change we might be able to advance.
HF
(39:05): Lisa, I would love it if we could dig into your life a little bit more now. This is always the fun part of our podcasts. We just want to get our credit union audience to, to know a little bit more about you. So starting with an easier question just about, I'm sure that you do a lot of research on a lot of different topics. So just talk about, a little bit about what you find most interesting. What are you kind of passionate about or driven towards doing research on?
LS
(39:39): These broad topics that I talked about, about poverty and economic development. And I'm also really passionate about the ways in which these issues land on people of color and women. And so that really drives me in many ways. And I guess the way that I do research, I'm always most comfortable when I'm actually talking with people who are experiencing what's going on, who on the front lines. And that's kind of what led me to do this ethnographic work that I did for my last book, working as a teller. I'd never actually done anything like that, but I often really rely on in depth interviews, spending a lot of time in communities. And so I'm always so appreciative of people sharing their stories, and taking the time to help someone like me who is trying to make the situation better, but to really explain what's going on for them. I take it very seriously because I feel like I've been trusted with these stories and I need to take care of them. But that, just hearing people's stories is what kind of motivates me to keep going. And sometimes I feel like what I'm mostly doing is sort of collecting and gathering these stories and then presenting them to the people who can actually do something with them. Sometimes I feel like a glorified middle man, you know? But I think it's really important work and I guess that's what drives me.
HF
(41:03): How did that come to be? I feel like it's a little unusual to see a researcher, like you, go into the field and actually work as a teller. Is that something that you see commonly or you know, what drove you to go ahead and dive in and do it yourself like that?
LS
(41:25): I think a couple things. I mean, one is that I have this sort of, it's more like a hunch or an instinct that I feel like I'm best equipped to talk about something with confidence the closer I've been to it. So, while I feel like some of the best work that I've done or the most powerful work has been in association with scholars who work on large data sets and do regression analysis, and I honestly think that combining the two methods is super powerful. For myself, I feel like I need to get close to it. And the other thing I guess that's relevant to your question is that, when I have a research question and in this case, the case that led me to work as a teller, the question was, thinking about all of the both consumer advocates and policy makers in the media really talking about how bad these alternative financial services work for people and having worked in a lot of poor communities I kind of sat back and I said like, if they're so bad for people, why are so many people using them? Like, there's gotta be a better reason than that people are stupid. And I felt like the best way to answer that question was to get as close as I could. And I, in this case, I kind of felt like it wasn't going to be enough just to interview people. And again, it's a little bit, there's a little bit of like hunch following involved where I kind of go, like I think this is what I have to do. And fortunately I was able to have a couple of business owners let me in. I did not do that research undercover. I was more embedded and I absolutely, you know, I have lots of examples of things that I learned that I would not have understood if I had not been at the teller window. So it confirmed my hunch. Right. And then, and now, you know, I don't know that I need to do that kind of work. Maybe, who knows, maybe I'll work at a credit union before, before it's all over. But usually it's the question that drives the approach, the methodology. So what's the question then? What's the best way for me to answer that question?
HF
(43:28): Did you get your question answered about if, if alternative financial services are so bad, why people are still using them?
LS
(43:37): I did. Do you want to know the answer?
HF
(43:39): Yes.
LS
(43:41): Okay. So it really comes down to three things. And the first is probably surprising because one of the things that people really get down on alternative financial services about as their expense, that they're costly. And that is true. But what so many people told me was that they said banks were more expensive. And so that even seemed, a little bit hard to believe. But then I would see somebody come in to the check cash or with their paycheck, they would cash their checks and would cost usually 2%. That was the state mandated rate, 2% of the base salaries, of the check to cash it and then they would find their bills out in front of them, because we did bill pay too. And I'd see them kind of putting a pile of cash on every bill, some money for the phone bill and the credit card bill and whatever else that they had to pay. And oftentimes I could see that they weren't paying the bill in full. You know, this is something I would not have known if I wasn't standing right there in front of them. So they paid 2% to cash the check. They're now going to pay $1.50 to pay every one of those bills, and it's easy to kind of add that up and go like, wow, they just paid 10 bucks on a relatively small check. And whatever is left, the cash they have left is what they can live on until their next paycheck. But, then when I would talk to people and they would say, well, if I timed this wrong, first off, I have my paycheck, if I deposit in in the bank, I'm not gonna have access to the money for three or four days until it clears and by that time, I may be paying late fees. Or if I timed things wrong and I deposit this check in my account and then I write checks to the creditors that I owe and I don't time it exactly right and my check bounces then I'm gonna have an overdraft fee of $35. And those things have happened to many people already. And so, when I looked at it that way, it was actually, I could see the logic behind what they were doing. So the expense is one thing and connected to that is liquidity. The second thing was transparency. People knew exactly what they were paying for and what they were getting at check cashers and payday lenders, it's written in huge font. Whereas they felt like they were consistently being tricked by banks that were charging different fees, charging for not using their account enough, charging them for using it too much, charging them for certain atms that they didn't realized charged. And they felt like it was not easy to get the information they needed to avoid those fees. And then the third thing is that they often experienced better service at the check casher. And I can tell you, that seems counter intuitive, whenever we see depictions of these businesses in the media, we see them as kind of dark with some blinking neon lights and dirty. And the place I worked were clean and friendly and the tellers all knew every customers name and we got a lot of training, actually, about how to deal with and treat customers. So I came away really understanding the reasons why people were making that choice and understanding that it was not an ignorant choice, it was an informed choice. And often for them, depending on their financial situation, it was a [inaudible] choice.
HF
(44:57): Yeah, it think that very closely aligns with all of our member experience research. So, I mean, it's not surprising but its a little sad to hear it laid out like that but it makes sense, it's a good business model.
TN
(44:57): When you look at the components of trust, what is it that foments trust between a person and an organization or an institution? It's all of these things. It's transparency, it's the relationship, sort of the expectation of a longer term relationship rather than it being one-off and transactional, it's the ease of use, and with that the cost. There are some real shared patterns as to what builds trust, and I think to the detriment of traditional financial services, alternative financial services and institutions, not all of them, but many have recognized and capitalized on those things.
HF
(44:57): We're starting a book club at Filene where we're gonna be reading all of our Fellows' books so yours is definitely at the top of that list.
LS
(44:57): Oh, awesome. Well if you want me to call in and chat, I would love that to answer questions.
HF
(44:57): Oh, yes, definitely. We'll be taking you up on that for sure. I also wanted to ask because I don't know if you have any other time, but besides when you're being a researcher, or a professor or an author or a teller, if there's any left over time, what are you spending your time doing?
LS
(44:57): Oh, gosh. Well I've learned more and more as Ive gotten older how important it is to have balance. So i really prioritize sleep, I like to say it is my drug of choice, I try to get 8 hours a night.
HF
(44:57): Oh thats awesome.
TN
(44:57): That's amazing.
LS
(44:57): It is the best drug, honestly. Like a good nights sleep, and I feel like Wonder Woman, I'm pretty active i do yoga and pilates and I bike, so for me physical activity is really good for my body and my brain. I have a dog and we are a therapy dog team. We go to the Children's Hospital of Philadelphia, and my dog, Friday, who's a cardigan welsh corgi, and she cheers up the kids. which is awesome. I feel like I'm cheating almost because she makes them so happy and I feel so good and it's like, this is volunteer work? And I also have two teenagers, a 15 year old and a 17 year old, so I like to hang out with them as much as they'll allow me these days. Which varies week by week depending on what kind of mood they're in. My daughter is a drummer and my son plays soccer so it's a lot of going to concert and going to gigs and going to games and a lot o that sort of stuff. We also have family meals almost every night of the week. my husband and I really like to cook. We like to hang out at home too.
TN
(44:57): Lisa, do you have a favorite recipe? What's your go to?
LS
(44:57): Oh goodness, well let's see. My kids are pretty picky eaters so my husband and I are constantly fantasizing about all of the fish and other things we'll eat as soon as they go to college, which is in sight, you know. like i'll miss them and.
TN
(44:57): [laughing] You'll finally be able to have salmon.
LS
(44:57): Yes! Totally! The only fish they'll eat is like when we get fresh cod and fry it. Which is delicious but limited. So one of my go to recipes is a meatball recipe from a restaurant in New York City called Franny's, which is a great Italian place in Cobble Hill or Carroll Gardens, right around there which is near where I used to live before I moved to Philadelphia. So thats total go to. I make a good shakshuka, which is kind of a Middle eastern egg recipe.
TN
(44:57): That sounds delicious, thats one of my wife's favorites.
LS
(44:57): That my kids actually like too. The key is finding things that have a lot of flavor and that my kids will eat too.
TN
(44:57): I feel like we do a lot of frozen Trader Joe's meals. That's what my 3 and a half year old can handle at this point.
LS
(44:57): Yeah, I know. My son likes to bake too, my daughter cant boil water, but my son actually likes to cook a fair amount so we watch the Great British Baking show and we make cookies and homemade marshmallows and stuff like that, that's fun too. It's a good way to spend time.
HF
(44:57): That's awesome. And it's a great way to have a silver lining too when they leave the nest.
TN
(44:57): Something to look forward to.
LS
(44:57): We are forcing my daughter, she' s a junior in high school, we're forcing her to learn how to cook like 5 things before she leaves the house so she doesn't live on peanut butter.
TN
(44:57): One of the best things my parents ever did for me is that they made me a cookbook when I went off to college. SO I had like half a dozen recipes that were very easy, mostly from a can but not quite.
LS
(44:57): And these were things that your mom or dad made for you too when you were growing up so they were familiar?
TN
(44:57): Yup, family meals. And now I'm the one who cooks in the family, I couldn't cook at all growing up but now I'm the one who cooks and cleans. All because of that cookbook.
LS
(44:57): That's what happened to my husband. His mom didn't cook at all and then he lived in college with a group of 5 guys and they each took turns making dinner one night a week and they were competitive so you had to bring your A game, so he's a really good cook now.
HF
(44:57): I feel like these podcasts with our fellows too, we secretly uncover all of these hidden skills and I just think we need to bring all of our research center fellows together and I think we'd have amazing dinner party. We'd have a cook, a sommelier, a musician,
LS
(44:57): I've actually been knitting during this call too, I should tell you.
TN
(44:57): That's amazing, what are you knitting?
LS
(44:57): I'm knitting a big sort of heavy cowl, I have different projects depending on whether I'm actually doing something else. It honestly helps me focus. Once I got tenure, i started knitting in meetings I'm so much happier. [background noise] I'm sorry one of my daughter's friends came home, and is getting something out of her room. I guess she has a concert tonight. Anyway sorry about that.
TN
(44:57): Is she in a rock band?
LS
(44:57): She is, she's a punk drummer. She's in one band with her buddy called Snot Hostile. And then she plays with some groups at school too.
HF
(44:57): I don't think I've ever heard of a punk drummer.
TN
(44:57): It's just a drummer in a punk band.
HF
(44:57): Yeah but is there a style of drumming that is ideal, jsut faster?
TN
(44:57): Absolutely.
LS
(44:57): Think of the Ramones. you know, super fast.
HF
(44:57): I mean that's really specific.
LS
(44:57): Yeah, I mean she's learned all kinds of different drumming for different kinds of music too but that's her happy place.
HF
(44:57): That's so cool.
TN
(44:57): That is really cool.
HF
(44:57):Alright, I don't remember what we were talking about.
TN
(44:57): Me neither.
LS
(44:57): Well we were talking about this fabulous dinner party.
TN
(44:57): Oh yeah we were gonna have an awesome dinner party. Quinetta right up the road is a trained sommelier.
LS
(44:57): She is?
TN
(44:57): Yes. Bill can cook a little bit out in California, I've had some family meal with him. We need to be taking about Lisa but he has two big secrets, which we should not be sharing publicly, we have to cut this out of the public version, Holly.
LS
(44:57): Mums the word.
HF
(44:57): Thank you so much for taking time out of your day to help us understand what's going to be happening and getting to know you a little bit more. We really appreciate it.
LS
(44:57): You're very welcome.
TN
(44:57): Thank you, Lisa, we're really excited.
HF
(44:57): Alright, thanks. That's a wrap. Bye!
LS
(44:57): Bye!
TN
(44:57): Bu-bye!
HF
(44:57): Alright, that’s it for the Fill-In folks, thank you for listening. And thank you so very much Lisa, for taking the time to speak with us – I hope your knitting project turned out beautiful! I also want to thank Filene’s credit union partners, without which this work would not be possible. Generous support for the Center of Excellence for Consumer Financial Lives in Transition is provided by CUNA Mutual Group, BCU, Digital Federal Credit Union and PSCU. If you’re listening and feeling inspired and wondering what you can do to get more involved in this work, your organization, too, has an opportunity to get involved as a supporter and partner in our Inner Circle. Visit filene.org/innercircle for more information. Lastly, if you liked this episode, please do rate us on Apple Podcasts so more people can find us! And make sure you’re Subscribed to the Filene Fill-In Podcast so you can keep up with what’s going on at Filene! You’ll find us on APPLE PODCASTS, Stitcher, Soundcloud, Google Podcasts or wherever you get your podcasts! To get in touch about today’s show email me at [email protected] or find us on Twitter at @FileneResearch. Until next time. Thanks everyone!