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Financial Literacy and Wellness


Jennifer: Alex, can you give everyone a quick intro to who you are and what you do?

Alex: Yes, for sure. So, I'm Alex. I'm the CEO of gohenry. I'm French, as probably my accent will tell you, and father of two lovely daughters. I have been the CEO of the company since 2015 and I came in after having invested in the business, on the back of growing businesses and scaling businesses internationally, such as Expedia and Lynda.com; two American companies that probably the audience will know.

Jennifer: Perfect. So, I know today we're talking about financial wellness, financial education, financial literacy, which a lot of people talk about nowadays. I think, in general, it's always been a topic, but even more so recently, given what you do, and given what gohenry does, let's look at the individual family level. What does financial wellness and financial education and literacy mean, at that level?

Alex: Yeah, that's a very good question. And probably the seminal question of the business. Financial education, for us, means if I were to encapsulate that in as few words as possible, be good with money. That's what financial education, financial wellness means, to be good with money. We have two levels towards that, which is the children and their parents. And for each of them, it's a bit different. What be good with money means, if I look at the child level, means building up child's confidence in themselves, in their relations to others in the way they relate to other people. And also in something which for us obvious, but is not for children, which is to become the master of that time.

So, if I break this down into further bits, if you look at what children first need when it comes to the space of financial wellness, it is that they want to buy things. And so when they do so without gohenry, let's say in the cash world, that attitude to money is a big difference. And so what we are here doing with gohenry is really helping them spend responsibly, taking responsibility of their actions, which is something that takes time. And so when you are a seven-year-old, if I take this example, when the money is gone, it's gone. And that's a simple lesson that actually the penny drops when you want to buy something. Then when they want to buy something else, there is no money left.

And another thing that is interesting at all ages is the price of learning from mistakes. As I have been saying, since I joined this company, it's better to make a mistake of $20 when you are seven then a mistake of $2,000 when you are 17, right? I think, relatively speaking, you learn better then. So, that's on the spending side, this concept of being good with money, but spending is only one part of the story. The other one is of course earning, and this is where you start thinking about time and start grasping the future. There are many ways of doing that. Today, we see two ways that parents and children embrace. One is the regular allowance, the weekly allowance, which starts getting children into this space of budgeting - the picture of what they earn is more than what they want to spend. The other way is tasks and chores. So, you do something for others. Typically for your parents, there is an exchange coming, which is your hours, your time, your love, and you get money for that. So this interesting exchange is also something that starts building into children's minds about, again, the future.

But the most important thing, I think, overall, the big one with money, the most important is safe, which is this very difficult concept for children to grasp it particularly, which is delaying instant gratification, right? We live in the world where everything happens now, when you have to consume now. And it's all instant, particularly in the digital world, where time almost disappears. And so when you start building in the habit of children that they can probably wait a bit, they actually have to wait a bit to make a bigger purchase, because their allowance or the task that they earn from is not enough. So, they have to set aside money or they just have to save for a rainy day, who knows what can happen tomorrow. This is where time really comes in. And this is where, all of a sudden, they start looking at time, and then being a part of it, and time evolving.

And one last thing about 'being good with money,' which probably is what I would say most adults would associate being good with money with, and it's part of our mission, is the idea of giving, relating to others and understanding that you are part of the whole. And if you nurture the circle that is around you, which can be as close as your family but can go really way beyond into charities, and you think of others, then we think we're building better future adults. So, this is what we mean by good family, people with money, essentially building better people in the bigger picture.

Now, there is the second level, which is the parents. So, we have this jewel, like two populations, which has its own interesting challenges. When it comes to parents being good with money effectively means let it go at your pace. So, all the parents who are here listening to me will understand that it's difficult for parents to let it go, to find this balance between control and independence that children want and have to get so otherwise they will be with the family their whole life. So they have to build themselves up and for this magic to happen - the magic of taking control, building confidence, etc, - you have to gradually let it go, and you do it at your speed. This is where the flexibility of the tool allows that. Some children mature very early and some children are more mature much later, and some parents are much more controlled than some others. So, this complexity of fine-knitting the tool to the habits of the family, it can be done if you use the tool. So here, 'being good with money' means letting it go at your speed. Let the confidence build in your child and you, as a parent, you will be surprised by the rewards that you will get when you see the confidence building up and when you will see your child becoming a better version of themselves day by day. So, this is what I mean; it's a bit of a long reply to your question about financial wellness, but it has many streams. But this is really what it means.

Jennifer: Thank you, Alex. That's really helpful. Everyone that's listening can fully empathize and understand everything that you're saying. If we double click on your last point, what has been the hardest thing about financial education, in this ecosystem that you described, within a family unit?

Alex: I think the biggest challenge is tailoring. Tailoring financial education to every situation. We have hundreds of thousands of families in the UK and in the in the US, and it is difficult to build a tool because we are essentially a tool, an important tool, but we are too a tool that can cater to the thousands of various diverse situations that we are encountering. So that's the challenge here, right? How do we effectively do more than cash? Cash is the oldest and simplest form of money management, but today we can do better with digital. How do you add to cash by going digital? And that's difficult.

So, let me give you a couple of examples. The tailoring, for instance, I spoke earlier about earning. And there are many ways in which parents, let's say transfer money to their children, we call that earning from the child's point of view. But if I just list the various ways, you will understand the complications. So one way is, with your allowance, or a monthly allowance. So basically, your tool has to be able to handle all the cases. In one of the cases, I have a seven-year-old and I have a 12-year-old. How much do I give to each of them per week? So the tool has to answer the question. And we do simple infographics in which we will explain to the parents. In your community, for this age, this is roughly the range in which you can play and then of course, we will add that up. So that's one case, and then the same question comes with parents who prefer the idea of tasks or rewarding on a particular outcome. And again, here comes what type of tasks, what tools can I can I give my child? There's a whole list here from like, walking your dog, washing the car... the list is extremely long. And there are some payouts attached to them. So again, you have to be able to cater for that. But then there are situations that are completely outside of that. It's neither an allowance, nor a chore; it's just the boy ringing the mother because he is struggling to get back home and has no money left on the card, and needs to receive a payment now to be able to get back home. Okay, so you have to have to allow for instant transfer. So, these are like examples of the very situation which you have to adapt the app.

If I look at the child side, it's even more complicated. And here again, parents will understand that there's nothing in common between their own child when they were seven and when they became 17. They changed so much in 10 years, that you wonder, are you talking to the same person, right? Well, the app has to follow, right? So, the app has to grow and adapt with the child as they age; something that we call internally, 'the app that grows with you.' So basically, our app is different. It's the same code, but it appears different, it behaves differently if you're a seven-year-old, or 12, or a 17-year-old. And these tweaks that you do for each age also entail change of the relationship to the parent. For instance, if you are a younger seven-year-old, you want your parents to receive a notification each time you spend. But if you are a 15-year-old, you don't want your parent to know every time you spend something, right? So, like any subtleties, you have to be able to deal with that. So, the hardest challenge is to tailor - how do you tailor so that it is intuitive and so you're not burdening the parent or the child with complications? It's very hard to be simple in a quite complex environment. 

Jennifer:  And it makes sense that a child requires different things at different stages of their life. It's a journey. What's been the most surprising thing that you've experienced in this gohenry journey?

Alex:  It always come back to the customer. So, what has been the most surprising for me, for us, has been this relationship to customers. It is really both ways. And we are a bit unusual on that. So, the second way will be interesting, I think, for your audience. But let me start with the obvious one, which is the impact that our product, our brand, has on customers. I mean, we receive every day, every week, thousands of stories, either spontaneously or we search them. I'll give you a couple to illustrate what I mean by the surprise element.

One is coming from Houston, Texas. When I was there with Dean, our president of the US, talking to our customers, we met with a mom who had aspirations to help her child. When she was younger, she suffered with credit complex and she didn't want her daughter to repeat the same mistakes. She was a teacher so she had quite a modest household income and was a single parent. And she shared with us how we were saving her money, while building her daughter's confidence. So, gohenry had her stop giving handouts all the time at the whim, and gave her daughter confidence to make her own spending decisions and learn to manage a budget. She was so proud about this and she genuinely felt that using a tool like gohenry would help her daughter avoid expensive mistakes in the future, the mistakes that she had made when she was a bit older. So, that was one of the stories and we have hundreds of them.

Another story came recently from a young boy named Damian from Liverpool in the UK. He was 15 at the time and before becoming a gohenry customer, he kept all his savings in cash. But he spent excessively and he spent unnecessarily hundreds of pounds. So, he one day noticed that his younger cousin had a personally designed gohenry black card - one of the cards that we recently released that his mom applied for him and his sisters to get. The first thing that he told us was that when he got the card, he felt a sense of maturity, which is something we hear often when a child receives the card. But, as he was addicted to shopping, the first thing he did was show off his card and the power of his card to his friends, so he treated them to KFC and paid contactless. So, he was proud of doing that in front of his friends. Then what happened? And this is again, quite common. He realized that probably spending it all was not a good idea. He decided to save, and he forced himself to do that. So, he starts saving and in a couple of months, saves 200 pounds, or $300, and he is very proud of that. Then a month later, his grandmother falls ill to COVID-19. Though she beats COVID-19, shortly after, she suffers from a stroke. That was a very tough time for his mother, both mentally and financially, because she was spending hundreds of pounds on her grandmother's recovery and healthcare. And then what Damian did, thanks to the savings that he accumulated, he gave the money to his mother to help pay for his grandmother's hospitalization. And she actually started recovering. And that $300 he had saved had been used to medicate her. And for him, the fact that he was able to really see the impact that his savings had on helping his grandmother live a little longer, had such a positive impact on his life. He went on to write to us about the story. We kept in touch with Damian and unfortunately, I think a week after we received the story, his grandmother passed away from the stroke that they were unable to manage or cure. But he was so proud of what he had done and he had ended the conversation with gohenry saying "that's how the gohenry bank has taught me to save and learn how to handle money." So, we have hundreds of these stories and for me, that's the most surprising. It's the impact that such a tiny product can have because in the end, it's a small simple tool, right? I mean, we can talk about it like it's complicated, but in the end, it's a very simple tool that we give to customers. And if they can use the tool, if they do embrace the tool, it can have great impact. But the impact it has on concrete lives is amazing.

Now there is a second side, which I think is interesting, because it's peculiar to our capital formation story. So, I said that we were surprised by the impact that we have on our customers. But in reverse, I am surprised by the impact that customers have had on us. And I'll give you one example. In the UK, you can raise money as an entrepreneur through a system called Crowdfunding, which is quite more, I would say, democratically popular than in the US in the sense that there is no threshold of you having to be higher or have like at least $1 million on your bank, and you don't have to be an accredited investor to basically participate in the private industry in the financial fundraising or private company. As little as $10 can be put into to the company in the form of equity. And so what we did a couple of times in 2016 and in 2018, is we went to the Crowdfunding market to raise money, and we were very surprised by the fact that we broke a world record when we did that the first time. We raised the equivalent of $6 million without having any VC backing us, which was not done by any company worldwide, including the US, without any VC backing the round. So, we break this interesting record. The second thing that was even more interesting is that half of the 5,000 investors we got in these two rounds were our customers - parents. So it's interesting that two and a half thousand people who are already paying us for our services (our services are paid through a subscription service where you pay $3.99 per child in the US and two pound 99 in the UK per month). The parents, on top of paying us for delivering the service, wanted to have a stake in the company and the message was: 'Okay this is so good.’ Please disseminate it as quickly as you can to the rest of the world because everyone has to be able to benefit from this innovation.' And that has shaped us because we are listening to our customers, and we integrate them in all our product releases. Now we are working on and we are in the final stage of beta testing our peer-to-peer functionality for teenagers to send money to other teenagers, and they are part of the design effectively. So, it's a two-way shaping - we shape the lives of customers, and they shape us. This is what is really surprising.

Jennifer:  And that's a powerful statement. They're backing you in every single way and you're pulling their feedback in and integrating it into where you are, where you've been, and where you're going. If we took the last couple minutes just to talk a little bit about broader trends that you're seeing in this with the feedback that you're getting from the customers with and with the broader landscape in terms of financial education and literacy, and the family dynamics. What are some of the trends that you're seeing, right now?

Alex: The first trend, which is very clear since COVID-19 hit in March of last year, is a recognition from parents that we can help, we exist and we can help. Cashless is coming faster than anyone expected a year ago. And so the question is, for parents, what does this mean for my child/children? And so that is now so clearly established in everyone and in every parent that had actually said, 'There's got to be a solution' and they seek for it. Up to that day, we were doing more advertising to talk about our product, and now we do a bit less of that and it's more coming natural.

The second trend is on the children side and the demand for children. So today, they live their lives online - they learn online, they entertain themselves online, they build themselves online, and they build their personality online. So, at some stage, you'll get to the point of the money component of that building. As you've heard me saying earlier, money plays an important role in building a child's personality, in forming their relationship to material things, in shaping their sense of time, in gratification and pain, in building their confidence to themselves, and in building their confidence to others. So, money is an ingredient in all these things. Therefore, they need to learn how money works in the digital and in the real world. And they're not demanding this to us directly, because we're not advertising to children, but they demand it through their parents. You start seeing this trend of parents telling us that they heard from their daughter about gohenry because she saw it at school or through other children. So, there is this trend on both sides, where both parents and children are realizing that money is a space for children as well as for adults, and no one can ignore that anymore. If you ignore it, you're not doing yourself good. You're not doing your child good.

Jennifer: That makes perfect sense. I think that's a great place to wrap up. Thank you, Alex. This was fascinating. There's still a lot more to do, but gohenry is one of the leading players in terms of where we can go next.