CFPB FinEx webinar: Managing Spending NWX-CFPB HQ (US) Moderator: Irene Skricki March 23, 2017 1:00 pm CT Coordinator: Welcome and thank you for standing by. At this time, all participants are in a listen only mode. During the question and answer session, please press star 1 on your touch tone phone if you'd like to ask a question. Today's conference is being recorded. If you have any objections, you may disconnect at this time. I'd like to turn the meeting over to Ms. Irene Skricki. Ma'am, you may begin. Irene Skricki: Great. Thank you very much and thank you, everyone, for joining this webinar today on managing spending. We're delighted we have a couple of guest speakers joining us today. In addition to hearing about some CFPB research, you'll hear about an external tool out that is available for folks to use. So you will hear from them later. So let's get started. Here we go. So just a quick disclaimer that this presentation is being made by CFPB representative, but it's not legal interpretation, guidance or advice. Any opinions of the presenters and none of the products or services being discussed on this call are being endorsed by the CFPB. Just need to do our normal disclaimer. So I think probably almost everybody on this call knows who the CFPB is or knows about FinEx but I'll just say a couple words to get everyone up to speed and also let additional people have time to get onto the webinar. CFPB is a federal agency that helps consumer finance markets work by making rules more effective, consistently and fairly enforcing those rules and by empowering consumers to take more control over their economic lives. And, of course, it's that last piece on helping consumers that is really where the FinEx education network fits in. So within the CFPB, on our consumer facing side, there are a number of offices. We sit within the Office of Financial Education, whose mission is to help and empower all consumers make better informed decisions. We also have special populations offices working with older Americans, economically vulnerable consumers, service members, students. And we work together with all of those to make sure we can let folks like you know about all the different resources we have to offer to the finance education field. Probably everybody here knows what FinEx is, but if we have any new folks, I just want to note that this is a way for financial education professionals of any type who are interested in helping consumers navigate their financial decisions can sign up for this and get regular newsletters, updates, webinars and periodic surveys and meetings that we host. And so if anybody here did not get a newsletter called CFPB FinEx News and Updates, you may not be part of FinEx. You can sign up by emailing cfpb_finex@cfpb.gov. We'll show that again later. If you're not receiving those emails or if you have any questions or thoughts about this webinar later, you can use that email address to reach out to FinEx. And I check that box numerous times a day. So again quickly, we've done regional meetings. We've done a number of webinars. This is actually our twenty-third webinar. In fact, it'll be our two-year anniversary of the Finance Education Exchange next month. So we are delighted to have over 2,300 now who are participating. And it's growing every day. And then quickly we have an inventory of our resources available for all of you. I will note this is in the process of being redesigned so there will be an updated version of this inventory soon. Also the Web site, I'm going to just show you a screenshot of the Resources for Financial Educators Web site which is also being redesigned. So within a month or two it'll be easier to navigate, easier to find things. We look forward to letting all of you know about that so that you can see all the different tools, resources and things that you can use in your work with clients. And then one last thing -- and I always mention this so people know about it in these webinars - we also have a LinkedIn discussion group on financial education where we put our stuff up. But you're also welcome to put up your own materials. I encourage you all to join that. There's information about that on our Web site, the consumerfinance.gov/adult-financial-education. That's the screenshot I showed you a minute ago for those of you who are watching the WebEx. So that's my standard intro. And now we will go into our topic of the day, which is managing spending. I'm going to be the presenter on some new research that the CFPB has done on this topic. And then again, we have some special guests who are going to talk about some other resources offered by the Homeownership Preservation Foundation after me. We will get to them after we hear the CFPB research. SWe just put this study out a few weeks ago. It's available online. And we sent out a newsletter about it as well. The study is called Consumer Insights on Managing Spending. And this was part of a project where we were trying to identify financial decision-making challenges faced by consumers, a wide array of those challenges and then design and actually test strategies that would help people address those challenges. We did this through a contractor and also a private sector firm that offered a product, worked with us to design and test what we'll talk about today. The contractor was Behavioral Labs, also known as ideas42. And the private company was NID Security. And we appreciate their help here. We are also, of course, not endorsing any organization or product. I just want to note that. So why is managing spending complex for consumers? I'm sure all of you in your work are very aware of this and the challenges your own clients face. But first of all, it's very intimidating and complex. It involves paperwork, math, tradeoffs, constraints, things that are challenging and time consuming. And it's a hassle. So that's just an initial difficulty that most people probably have in doing that. Secondly, circumstances in which consumers are spending can also make it particularly challenging for them. For example, with small frequent purchases, less expensive items that people buy frequently, people may often pay less attention to how much they're spending and may not realize how much those things add up over time. And I'm sure we've all had moments when we looked at a credit card bill and say, wow, all those little things really added up. A second circumstance is uncommon or infrequent purchases, where consumers consistently underestimate the amount that they spend on infrequent or uncommon purchases and then also tend to overspend on those. So you don't think necessarily at the beginning of the year how many unexpected purchases may come up. And there in fact in our report there are studies in the research literature that have shown these things that I'm mentioning. And those are all available if you want to look at the report. Third, special occasions. Research has shown that consumers are likely to make off-budget purchases in situations they think of as exceptional. For example, a wedding gift, a special meal out, celebrating something and again, if you haven't thought about those ahead of time and put that into your budget, that may create more spending than perhaps someone had intended. And then lastly there's also interesting research about how consumers may overspend in settings such as discount stores or when there's sales where things appear to be inexpensive or a good deal, consumers may let their guard down and end up purchasing more than they had intended to buy. And then a couple more reasons why managing spending is challenging. Again, I'm sure these things are not really surprises to many of you. People often don't know how much money is left in their budget, in their account. It's hard to get feedback on that. About 60 percent of all payments are now made by non-cash methods, like credit cards or debit cards. And there's evidence that shows that consumers spend more with a credit card than they do with cash. And non-cash payments provide less immediate feedback. You don't have the visual look, the shrinking stack of money in your wallet. And then again, also, consumers don't see the results of the card purchase until the end of the month. So there is feedback, again, on spending. It just comes at a time that's not the moment when you're purchasing, right? It comes at the end of the month. It may be hard to comprehend if you're getting multiple bills at different times. And so that type of feedback may actually contribute to a generalized anxiety around finances rather than a clear connection to any individual purchase decisions that people may be facing. And then, another issue is people don't always implement their financial intentions. There's a lot of research showing people have financial goals that they have trouble meeting. They want to do better but find it hard to change behavior, and generally consumers really value financial management and planning and believe they benefit from it. But it can seem again like a large and overwhelming task, leading people in many cases to postpone or just avoid the anxiety and the hassle. And then the last one I'll just mention as a challenge before we get into solutions is a big one. We want to really acknowledge the importance that managing spending if you don't have enough money or if you have an imbalance between income and expenses is a real challenge. And some of the things we'll talk about today are not a solution to those issues. We get that. But we do just want to mention in particular that traps of scarcity when people have limited financial reserves or they're on a very tight budget may cause kind of a tunneling focus just on the immediate challenge, the immediate spending challenge or budgetary challenge. And that can create a lot of stress. It can cause people to focus just on the immediate and not the longer term. And then when that feeling of scarcity grows, people may - the situation may kind of get worse. And that is something that again we can't always fix with financial education. But it is certainly something that we want to acknowledge here. So I'm sure that all of these issues do not come as a surprise to most of you because of your work with clients in facing some of these issues. But what can we do about it? Well, in this research project after looking at some of these challenges, we chose one of them to focus on. And that's the one at the top of the slide here for those watching: Consumers find it hard to know how much money is left. They don't really have real time feedback. And so the solution we looked at with our colleagues is, if you give consumers information about how much they have left to spend in their budget, by their own determination of what their budget is, will that then let them make more informed choices about potential purchases? So if they know where they are in their budget at the moment of purchase, will that help them to make a decision that they know that they're comfortable with, they know it fits in their budget? So how might you do that? We worked with again these outside organizations to test an interesting prototype. I'll tell you a little bit about it. But I don't want to focus too much in on the technology and all that. So I'm happy to answer questions because we really want to pull broader lessons out of this that you can use in your work. But basically we tested a card. It could be either a debit or credit card that actually has a little screen on it, which is kind of cool, which can be set up to display different things. So it can be set up, for example, to display how much money is left in your budget to spend for the day or the week or however you have set it. Or you can set it as like a fuel gauge to say, you know, you're almost on empty. There are a number of ways you could do that. And it gets that information from a flexible budgeting app that allows you to create those budgets by pulling in and aggregating information from different accounts and allowing you with some fairly simple techniques to come up with your amount you want to sort of allow yourself to spend by a day, week or a month. And so that was the prototype. Those two things actually would communicate in the real world through near-field technology so the app would basically tell the card how much was left to spend when you were at the point of purchase. And that would allow the consumer in theory to make a more informed decision about the purchase. So before I go further, I want you to know these technologies they do exist. But the particular combination you see here is not currently available in the market. So, don't rush out and say, I want this today. What we really were doing was testing consumer interest in these. And then, again, learning some lessons about what consumers might want to do with these. And then those of you out in the field and the market can determine ways that some of the principles that we've tested here could be of use. But we did actually try out these two things together. Just quickly on the methodology so you know before we get into results: our partners created low fidelity mock-ups, bascially paper versions of these so that consumers could look at them and say, oh, I like it. I don't like it. And an online panel did user testing and responded to questions about their own budgeting and spending behaviors and then about their interest in this prototype that they were seeing a visual of. Then the private-sector entity did create functional full-fidelity prototypes. Prototypes of the prototype, that's not the best phrased bullet point up there on the slide. But they did create full-fidelity versions of the prototype, and did some in-person, in-depth user testing with nine consumers. And so consumers interacted with these actual prototypes but they used only mock transaction data. They didn't go out and use it in the real world. They didn't use their own data for lots of reasons. We just wanted to see what they thought of it. About the findings we'll present here -- I want to note they are not an impact evaluation. We did not go out there and have people test it and look at the outcomes as opposed to those who didn't have it. This is really more of a first stage type of research that suggests what consumers might like or be interested in. So it's not intended to say this is the solution that will have this sort of measurable impact. It's a starting point. And while we had a diverse group of people testing it, it's not representative. And so the results are not statistically significant data. Again, this is meant to give us a sense of consumer interest and demand and all that. That's a lot of caveats. But basically we've learned some interesting things here. We would love it if others maybe want to go forth and do more rigorous testing at some point on all of this. So what did we find? Now probably this won't surprise you. First, there's some insights on people's own self-reported spending and budgeting behavior. And then there'll be a couple slides on what they thought of the prototype itself. First just something on what people reported. It certainly mirrored what the earlier research we showed, just of the challenges people face. It mirrored that. The people that were part of this user testing said that budgeting was overwhelming or a hassle, as we had noted before. Although note that 40 percent said the primary reason they did not have budgets was due to the uncertainty of their income or expenses, again, suggesting that trap of scarcity, of irregular income or uneven income or unexpected bills, which led to, you know budgeting being difficult. So that was certainly an issue for a lot of folks in this, again, admittedly small sample here. And then 23 percent of respondents never got around to making a budget despite their intention to do so. They didn't get to it. It's a hassle. They were busy. Something I'm sure all of us experience in our daily lives. And so again, people may want to budget, want to do it, but haven't done it for assorted reasons. The second finding, again, mirroring what we expected, that lack of meaningful and timely feedback on spending is, in fact, a challenge. Almost nobody had any kind of tool that could tell them how much money they had left to spend based on actual transactions. That's the problem we're trying to solve here. And then lastly we also found certainly that people were not benchmarking their spending to their budget. If they did have a budget, they were very infrequently actually sitting down and seeing if they were staying within it. Again, that lack of information people have to do kind of real time budgeting and spending. So that mirrored what we kind of expected. Those challenges were real. Then we did the testing showing people the prototype, either the visual depiction or the actual version. And we found again things that I think are not surprising. We found that the card and app, the card-app combination, so those two things together -- the little card and the screen and the online budgeting tool -- provided meaningful feedback. There's a few quotes up here. People told us "The card and app made me aware that it was actually money that I'm spending where a regular card sometimes feels like it's free." That's the same idea that we talked about earlier that sometimes spending on a card doesn't feel like a real thing. Another quote: "The monthly figure lets you know how carefully you need to limit your spending for the month so you don't go over your limit before the end of the month." Another observation people made was that the card and app combination could help curb impulse spending. And again, a quote here was: "I think the card and app would be most useful to control impulse purchases, stuff that you might buy day-to-day, like coffee or things at the drug store, or whatever that you don't account for in a budget or don't realize how fast they add up." Again, that's what's to be expected, I think. So this was good feedback. People like that. Additionally, consumers said they felt that the card would help them to stay within budget. There was actually some part of the testing in which people were given some different scenarios, and again some mock data, and asked if they would buy something that was -- specifically it was concert tickets, something that was not essential to their kind of day-to-day needs, under different scenarios. So if they were seeing, how much they had left to spend on the card, whether they had insufficient or sufficient funds or whether they just got a text only with no screen message saying you don't have money. And those who had the actual prototype reported that just in this mock exercise that they were much more likely to forego the unnecessary expense when they realized they didn't have sufficient funds when they saw it in a visual format. So again, helping people to make decisions to keep themselves within budget. Another finding was that consumers said that the card-app combination helped to reduce uncertainties in their financial situation. So three-quarters of the folks who tested the prototype agreed that the safe-to-spend figure, meaning how much you have left to spend, gave them peace of mind at the moment when they anticipated they would be making a purchase and reduced that uncertainty. Third finding, again, as we would sort of hope, people reported that they felt this would increase the frequency of tracking their budget and checking their spending against their budget. Half of the people who were looking at this prototype said they would use the card and app at least daily to keep up-to-date on their spending status. And then similarly folks said that they thought it would make routine updates and benchmarking easier. They said it would be helpful who haven't been or don't have the time to track their expenses because this really does this automatically and gives you the feedback when you need it. So, all good things. Just a few more observations, if I can get the slide to move. One, I think, interesting note was that some of the participants in the user testing said that they thought the card-app combination could be particularly helpful to younger and older consumers. Some thought it would be useful to use with their kids. A mother of five specifically said that the app would be useful to give to their allowance to her children and then allow her to monitor their expenditures. Some other folks said it might be a valuable tool for older consumers who may have difficulty accessing account balances in other ways. And again, if they could see at the point of purchase, make it really top of mind. My favorite quote from some of the user testing was a college age young person who said, "I think my mom would tell me to get it." So if mom tells you to get it, it's got to be a good thing. Overall we found consumer interest was very high, almost 90 percent. They were interested in using the spending feedback tools, the card and the app. And actually one of the people who said they were not interested said well, not for me, but everybody should have this opportunity. So that's all very positive. I will just note quickly that a couple concerns people raised. One is in using this they said if this was a live product in the real world, they would just want to make sure that the accuracy was very high because you wouldn't want to be spending thinking it was safe to spend when not all your accounts had been inputted or updated. So that kind of accuracy would be really important to have a functional and trustworthy product to use. And then secondly, privacy concerns. I think this is general to any online app where you're giving access to your data. People would want to be sure that it's and their privacy is protected. That's what we learned from the study. Overall, it suggests that there's significant interest among consumers in this set of features or capabilities. Consumers really seem to recognize that this type of feedback would help them in managing their spending in accordance with their own financial goals. So again, this is something people say, I would like it so that I can better stay on top of my situation. So implications. Again, as I mentioned, these products in this particular form are not in the market now. But there are a lot of ways - there are some things out there people can use. And there's ways that you can take these lessons and apply versions of them to your work. And in particular, for consumers, there are other ways to get feedback. There are ways they can get information on their spending and account balances in as close to real time as possible, maybe not in the moment. But there's things like balance alert text messaging services, text messaging services, calling their bank or checking their account in other ways, visiting an ATM to see their account balance, viewing their accounts online or using many of the apps. And we'll hear about one in a little bit that can help them do that. Consumers should be aware in some cases there might be fees, so they should be cognizant of that. But there are ways that they can create some of the type of functionality that we've been discussing today. For financial education professionals, meaning all of your guys on the phone, you can also help consumers in creating budgets generally, managing bills. Again, doing those same things to encourage people to get feedback on their spending and encouraging consumers to really think hard about their budget situation before they spend. So that's something you can assist them with. And then lastly for industry or financial services providers, there's clearly a high consumer demand for this type of product, at least based on the discussions we had with consumers. So this may be the type of product or approach that financial service providers may want to add to their suite of offerings to consumers. I noted at the beginning that everything I've just said, for the most part, is in a report that came out a few weeks ago. And we had links to it that were in the newsletter that many of you would have gotten though FinEx. And it's on our Web site. The one note I'll say is we have a Web site down at the bottom here, the adult-financial-education. Because that's about to be updated, this particular report doesn't fit on that page. It's elsewhere on our site. But if you search managed spending on our site, it will take you to it. So my apologies. It will be on that page once we do the update. There's both the report, with the research findings I just mentioned. There are also two other things associated with it. One is a little how-you-can-help two-pager, Managing Spending: Ideas for Financial Educators. I have a screenshot of it up here on the WebEx. And it runs through some of what I just said. I know you can't probably read it there, but just to show you what the suggestions are, we'll got to next slide. Some of the ideas that are on that sheet are ways that you, as a financial educator, could help a client to make budgeting easier by helping people break budgeting tasks into smaller ones, helping consumers see how small daily decisions can help in reaching larger financial goals. Also plan for special occasions. As we mentioned earlier, special occasions are a place where people often lose track of their spending. And so there's things you can do like have someone set aside a certain amount of money, either physically in an envelope or capturing receipts in an envelope, and looking at where you are in your special occasion spending. And if you're nearing, if you've hit your limit, then at the next special occasion, spend much less. Or order a smaller item at the special lunch or whatever. So there's ways you can encourage people to keep track of those type of things that are often off budget. Then lastly to try to avoid that trap of scarcity: again, if people have real discrepancies between income and expenses, you can't solve that with some of these techniques. But at least the extent to which you can work with consumers to find alternate ways to tackle paying bills or create an emergency fund -- essentially help people prepare ahead of time as much as they can for things that may create strains on the budget. And then, you can help people get feedback on spending. This is what I mentioned earlier. Encouraging people to track spending over the course of a month to know how much you're spending. Brainstorming ways to develop financial goals. Create a budget and track progress against the budget. And, of course, that last piece, what we talked about today, encourage consumers to check account balances periodically through calling the bank, ATM, getting text alerts, other ways using apps so people can work on managing your spending. So that's all written on that little two-pager that I mentioned for financial educators. The last thing is a consumer worksheet on managing spending. Again, a little hard to see here but it's part of the suite of materials related to this study, which gives suggestions on creating a budget, deciding how much to spend. And then keeping track of where you are through looking at your spending against your budget. And then getting feedback in the moment of purchase as much as you can as we talked about today. And a little space on that sheet for creating your own personal plan for managing spending. So this is a one-pager you can give to a client. Encourage them to look at it. Maybe write down a few ideas on how they're going to manage their own spending. Again, the more you write things down the more likely you are to do them. So that worksheet came out with the report. And then quickly, a few other things that have come up from the Bureau recently. We have several rules to live by worksheets. We've had webinars on these in the past. One, again, on helping someone create their own spending rule that they can follow, customized to their own needs. So I just put a screenshot up there on the spending one. And similarly, there's one on credit spending, how to manage how much you spend on a credit card versus cash. We had a webinar on this topic in January. Some of you may have been on that. So those are resources that are available on our Web site. The last couple of things, we have a nice four page budgeting worksheet called My New Money Goal that you can both access and order from our ordering site. And that is something that helps people to track expenses, create a budget. So it's a tool similar to many others out there but it's a nice one if you're interested in using that with clients. The last thing I'm going to show you is just a screen shot of our Behind on Bills toolkit for people who are struggling with bills. This is a little spiral bound notebook that has a number of strategies and worksheets and things on helping people who are struggling to pay bills. There's an so an income tracker, a calendar for when income comes in versus bills need to go out and other things that you can use with your clients and that you can also order off the CFPB Web site. Those are all tools you might want to work with a client if they're interested in this issue of managing spending. That was a lot of information. We are now going to turn to our guest presenters. I'm going to note before I make that transition that if you have questions as we go, we are monitoring the Q&A function on the WebEx. So if I see anything that comes up that we can answer right away, we will. For those who've asked about the PowerPoint slides, we can send them out afterwards if you just email cfpb_finex@cfpb.gov, I will send you the PowerPoint slides. And then we also record these webinars and post them. That usually takes a week or two before we actually get them up. So if you want to hear me talk again, you'll be able to watch that. It's also on the adult FinEd site, the page that I keep mentioning. So that's all interesting hopefully. People want to get this kind of feedback. As I mentioned, the interesting tool that we tested is not available right now in that current form. But there are other things out there. And we wanted to let you know some options there. So we've invited someone to speak. Now, presenters will be Cheryl Cassell from Homeownership Preservation Foundation and Shane Mount from a company called MX that has created a money management app for HPF (or Homeownership Preservation Foundation). So I'm going to turn it over to them. We're always excited to have outside speakers come in. And this is a tool that Homeownership Preservation Foundation has worked with others to create and make available for free to consumers and financial educators. So we thought it was a nice option to show you. Again, there are other options out there. And people interested in this should explore other options. But we thought this would give you an example of a very concrete thing that you could access now for you or your clients if you wanted to. So thank you for listening to me for a long time. And I am going to switch over to the HPF slides. There we go. And turn it over to Cheryl. And again, voice questions we'll take after this section of the presentation. And I will also be monitoring the Q&A functions. Cheryl, go ahead. Cheryl Cassell: Great. Thank you very much, Irene. Can you hear me okay? Irene Skricki: Yes. Cheryl Cassell: Great. Good afternoon and thank you for allowing us to demo the BluePrint technology powered by MX. As Irene has stated, my name is Cheryl Cassell and I am with the Home Ownership Preservation Foundation. So let me just briefly - well, first let me say thank you very much for the information you shared with us, Irene. I thought it was very powerful information. And I think the technology that you will hear about today does offer some solutions to some of the challenges that you posed in your presentation. Let me briefly share with you our mission, how we got involved in financial technology and introduce our fintech partner. The Homeownership Preservation Foundation believes that everyone should have a place to call home and the ability to achieve their financial dreams. To that end, we conducted a listening tour of our consumers, our over 400 coaches and counselors, our financial services partners as we considered how to use today's technology to improve our systems and the consumer experience. I also just want to add that our current platform strategy consists of three components, a state of the art client management system, a consumer portal and what we will focus on today is, as Irene stated, the digital money management tool, BluePrint by HPF. Just a little bit about our fintech partner before I turned it over to Shane. HPF conducted extensive research and conducted a rigorous vetting process of fintech companies. We selected MX. We are very impressed with MX for many reasons, but I will highlight a few. We were impressed with them because of mission alignment. Intuitive, visual, engaging and responsive. Meeting data security requirements. Demonstrated consumer retention. Demonstrated several million users. Solid reputation. And capable of integration in our CMS system that I had mentioned. And I am now going to turn it over to Shane and let him tell us a little bit more about MX and then provide a brief demo of the BluePrint technology. And because we are doing such a brief demo, we also wanted to encourage individuals that they could reach out to us for a more extended demo of the technology. And we could really dig down a little deeper with the technology. You can email me if you are interested in that at ccassell@hpfhome.org. Or you can just send that to Irene and she'll get it to me. Now I'll turn it over to Shane. Irene Skricki: And Shane and Cheryl both, let me know when you want me to advance the slides. I've been guessing. Cheryl Cassell: Okay. So you probably start back at the beginning and Shane, just let her know when you want her to advance them. Shane Mount: Yes. Happy to. So, Irene, if you don't mind going back just two slides. Well, again, thank you, guys. I appreciate you giving me the time today. I'm looking forward to kind of familiarizing you a little bit more with MX and with BluePrint via the HPF, you know, portal, which you guys would have access to. Really excited to tell you a little bit more about us. We're based out in Salt Lake City. And basically one of the things that matters a lot to us is the ability to be agile and make sure that we are providing the right tools to the right people at the right time. So the vision of what we do is really we have a strong feeling that finances are fundamentally broken. I mean, basically, you guys are doing what you're doing because people are struggling today. So our vision is how do we actually put finances as they should be? Finances do not work for so many people period. So our mission is really to empower the world to become financially strong. I won't go through all these values just due to time in detail. But our values are derived from what we feel as a really a moral obligation to advance mankind. So we don't just hope to do our best. We actually feel like if we don't help people to become financially well, if we don't help people meet the realities of their financial aspirations, then frankly we're not doing our job. We feel a strong imperative to do this, that we have to do this. Again, I think one thing that you will learn about MX, I think, and certainly the partnership that we have with HPF, is that we are incredibly passionate about making this work. And that's why we've gone into - we've made tens of millions of dollars in investment into developing these tools. So let's go ahead and step forward to the next slide here. It gives you another little brief overview of MX. At MX we have tremendous funding. But more importantly, we are actually on track to be profitable this July, which obviously is incredibly important because any vision or mission is incredibly difficult to accomplish without being able to keep the lights on. So what I think is actually amazing is that we have more than 1,100 signed clients and partners, the likes of which include, obviously, HPF, banks and credit unions like BBVBA and SunTrust, investment companies like MoneyGuidePro, USA PenFed and others. Now we could have chosen initially to choose a strategy to go direct to consumer. But we felt that the fastest way for us to progress and to really kind of extend our mission out to others would be to leverage the relationships with folks like HPF and financial institutions giving us the ability to use their relationships with the people and ultimately help more people become financially strong. So I think it's important to note that by the end of this year, MX will actually have more than 20 million people relying on our platform, which is fantastic. You know, 20 million people using our tools to become financially stronger and that's very, very exciting for us. Let's step to the next slide. So there are, if you talk to anybody here, I think that they would tell you that advocacy is really key to our success, and key to, frankly, the success that you guys have as coaches. We live in a day and an age where people have the ability to really kind of get access to help at the click of a button, right? So we believe that the winners will be those who genuinely want to be advocates for those whom they serve, namely the folks that you work with. So we look at data - MX is a data company, right? So we look at data in terms of really four things that we do, as you can see here on this slide, enriching the data. So we refine the information that comes into our system. We aggregate the information, which means we pair different - so a user of yours, for example, may have five or six or seven bank accounts. We aggregate all that information into one place. And then we present data in a unique way to reduce friction. That really is a key component going forward to anybody's success, especially if you're coaching them in the financial wellness. And what I mean by that is how quickly and easily can you serve up and present their own data in an appealing and informative way? We've got to get away from Excel spreadsheets and from having to log into multiple different sites to see exactly what's going on. A consumer wants something that's gamified. Something that's just very easy for them digest and then get to move on to do the next thing that they're looking to do. And lastly and most importantly, I think, is how we act on the data. How do we get the people that you work with, how do we get them to act and to change and to improve their current trajectory? Because frankly, if we can't get them to change their behavior, then we're wasting our time. And that's really what the whole point of MX is. We really want to be able to, again, serve up the data in the right way so people can act on it and make better changes. So let's dive into what the look and feel of this looks like. Basically this is kind of a look -- and obviously we're not kind of seeing it move and function -- but basically any accounts that the folks that you work with have can be aggregated into one place. So if you're familiar with mint.com, if you've done any - used that type of technology before, it's very similar. You simply would just click there on add an account and you would aggregate that account. So your consumer or you would work with them to basically type in their user name and password and then aggregate that account. Security on this, just so you guys are aware, is a 256-bit SSL encryption, which means bank level protection is at 128-bit. So we're actually military grade protection. We can dive into security as well. Maybe on a separate demo I would really kind of dive into how important that is to us in the space. We want to make sure that everything is very safe, very secure. The information that your consumers would be seeing, your user would be seeing, is read only. So even if someone were to hack into it, which would be virtually impossible for them to do, they wouldn't be able to actually move money from place to place. Again, so here they're looking at all of their finances in one place, any credit cards that they have, investment accounts that they have, any loans or mortgages, you know, checking, savings accounts, et cetera, all is now in one place. This gives us a way here to basically see where all of our transactions are coming in. So one of the things that's really unique to MX is that we cleanse the data. If you think about your own online banking, right? When you log into maybe Chase or Wells Fargo or, you know, maybe you're a member of PenFed or something like that. When you log in and actually see your transactional data, it reads something like maybe it says Wal2894Mart, you know, then maybe the city that you're in. It's basically - it's not scrubbed. It's not cleansed. So we actually cleanse the date that it comes in so that it reads as Target or McDonalds or Subway so that actually the user knows actually where they spent their money. We categorize our transactions. We're not 100 percent. Frankly, there's nobody else in the industry that is. But we are about 93 percent accurate with respect to our categorization. We feel like, frankly, a computer should be able to recognize transactions that are coming into the system and categorize them the best that they can. And again 93 percent accurate is about 30 percentage points higher than our closest competitor. So we categorize the transactions. We categorize the - and if you move over to the next slide, Irene. You can see how we now separate those transactions into their spending. You want to make sure that you're letting them know how they're doing on a regular basis with respect to their spends. If they want to find out how much am I spending on fast food? How much am I spending on restaurants, et cetera? They'd have the ability to really drill down to get an overview of exactly what's going on with their finances. One of the things that we're quite proud of at MX is our ability to provide a very unique UI. And UI stands for user interface. And UX stands for user experience. I'm not sure if you guys are familiar with a conference called Finovate. Finovate is quite a unique conference. They hold it four times annually, twice here in the U.S. And they hold it once in London and once in Asia. And MX is the only company in the history of that conference to win six consecutive best of shows. Frankly, nobody's ever won five. But we've won six. It's because of our user interface. It's incredibly easy to use. And it's unique. I'll give you an example of what I mean by this. So here if you're looking at this slide, you're seeing - if you guys have ever using mint.com before, you're basically looking at screenshots of kind of how somebody lines up their budget. Okay. So at the top you can read here are two individuals with identical budget limits but with different spending. Which person is in trouble and which is okay? Does it take you a few more seconds to figure that out? So I'm just going to pause for just two or three seconds. And just ask yourself, which of these two budgets, the left or the right, is actually in good shape? Hopefully, you probably don't know. You're probably making a guess. You see maybe, you know, three red lines on the right, three red lines on the left. There's actually two yellow on the left and two yellow on the right as well. So which one's in bad shape? Now if we move over to the next slide, we can see how MX presents the data. So now if I were to ask you that same question, which account is over budget? I am assuming that you'd be able to say, okay, well account 2 is probably in bad shape. You know a three-year-old, a five-year-old could say, hey, this looks like a red stop sign, right, on account two, right? But when you serve it up the appropriate way, you have somebody able to dive in there and immediately see, hey, there's some significant issues going on with my home and with my auto that I need to be aware of. And I need to fix immediately. You also can see that within the bubbles, like of home, for example, on the left hand side, you see some red, yellow, red. Those basically represent subcategories. So for example, within your home spending, you're not just spending dollars on your mortgage. You're spending dollars maybe on rent. You're spending dollars on supplies. You're spending dollars on insurance, whatever it might be. So we can break out those categories, those kind of parent categories into subcategories. You get an overview of that spend. When you actually dive into how it looks inside the product, these actually are gamified in and of themselves. When you click on them, they move and kind of bump into one another and such. But you can dive into each individual budget and see exactly what's going on with your spend. And that's really what we're trying to accomplish here. These are just a few of the services that we offer. Again, time permitting this is all we had the ability to show you today. But certainly there is a whole lot more. There's some debt management features. There's goals and trends, et cetera, that we can dive into at another time if need be. And we'd be happy to do that. So I'm going to pause there and then turn the time back over to either Irene or Cheryl for some closing remarks. Cheryl Cassell: Thanks, Shane. We'll turn it over to you, Irene. Irene Skricki: Okay. Wonderful. So this is very cool. I like the bubbles. Very nice. Nice bubbles. It is very visually interesting. So let me say we'll start to take questions now. I'm going to ask a couple initially just to get us started, but you can either send them in through the Q&A function, if you're on the WebEx or let me ask the operator to tell us how to do voice questions. Coordinator: Again, participants, if you would like to ask a question, please press star 1 and record your name. Please make sure your line is unmuted and record your first and last name clearly with the prompt. To withdraw your request, please press star 2. Again, if you'd like to ask a question, please press star 1 and record your name. Irene Skricki: I'm going to get us started. Again, either email or you can do the star 1 to queue up for voice questions. But let me ask Shane and Cheryl. So this is really cool. And you may have said this at the beginning, Cheryl, but if you would say a little more -- so this is now currently available for people to use for free for either consumers or do you have to go through a financial educator or how might a financial education person actually access this now and help their consumers access it? Cheryl Cassell: Hi. Great question, Irene. So the tool is currently free. And it's available in mobile app stores, the Apple Store and Google Play. An individual does not have to go through a coach or counselor to access the technology. But we do feel that particularly some of the things that you mentioned around spending, the inability to know what you're spending in the credit card environment and the inability to really budget or make budgeting fun, we think that experience with a coach or counselor would really be enhanced with using the technology. But one can access it without a coach or counselor. Irene Skricki: Great. So they just go to... Cheryl Cassell: They would go to the app store and download BluePrint by HPF. And make sure you specifically put in BluePrint by HPF because there are quite a few other BluePrint apps. And so you will need to put in that by HPF. Irene Skricki: Okay. Great. Cheryl, are you - just I'm curious. Tell us some more about the thinking of HPF in making this kind of available to consumers and to housing and foreclosure counselors and others that you work with because it's a very - its' great. So I'd love to just hear maybe a minute about that. Cheryl Cassell: Yes. So a little bit more about HPF. We manage the 995-HOPE hotline. We've received 9 million calls to date and served a little over 2 million callers and provided services to them. So from the work that we've engaged in, we saw that there was a need for individuals to better manage their finances through technology. So as a result of that, HPF made the original investment to bring this technology to the LMI community and to the non-profit community. And as Shane had stated earlier, we are passionate about this. And that is one of the reasons that we selected MX as a fintech partner, the passion that they have in reaching out to this audience and really making individuals financially healthy. Irene Skricki: Great. Thank you. So again, this is something that anyone on this phone line could use - I mean, anyone on the WebEx could use and extend to their clients as well. I assume there's no marketing of products on it, is my guess, Shane and Cheryl? Cheryl Cassell: Yes. And so thanks for bringing that up. That's a great point that we didn't mention until when Shane mentioned it, the technology is similar to Mint. It is dissimilar to Mint, if you will, in that there is no solicitation within the product. And a consumer or client that's trying to attain their goal is not blindsided, if you will, or tempted by constant solicitation so that is another unique feature. Irene Skricki: Right. And again, there are many options out there so we encourage anyone looking into this to look at other things as well. We want to make sure that people know that there's a number of options but this is certainly a terrific one. I'm going to quickly ask one online question and then I'll ask for voice questions. But I'm quite happy to continue talking to Cheryl and Shane myself because I'm really enjoying this conversation and loving seeing the stuff here. Someone did say is this app available for PC as well? Shane? Is it only a mobile app or can you access it on a PC? Or Cheryl? Shane Mount: Cheryl, I'll let you take that. Cheryl Cassell: Yes. It can be accessed on a PC and again, as mobile app. And the way it works when you download the app, you are redirected to the consumer portal that I mentioned earlier that's HPFConnect. It would set up an account there at HPFConnect. And then you could be redirected back to the app to use the mobile device. But not using the mobile device you can go directly to a PC and use the technology as well. Irene Skricki: Great. Thank you. Actually, just one other thing, someone just said that they were looking and do not see it in the Google Chrome Web store. Should it be there? Should it not be there? Cheryl Cassell: Shane, is that the same as Google Play? I know it is available on the Android because one of our MX partners just downloaded it. I'm not sure how to answer that though. Shane Mount: Yes, it should be available through Google Play. I'm not sure why it wouldn't. But we can look into that and see if we can... Irene Skricki: Actually, sorry. An amendment here. Someone says in Google Play, you have to put in BluePrint by HPF to get the app. Someone else is saying - sorry, I'm just reading all these questions here. I don't see it in the iPhone app store either. So I don't know, but... Cheryl Cassell: Yes. So I will say that again you must put in BluePrint by HPF. If you just put in BluePrint, you're not likely to find it or it may be too many pages removed. So you do have to put in BluePrint by HPF and it should pop up right away. Irene Skricki: Okay. Great. Thank you. Repetition is probably the key here. Everybody hears that several times and - okay. Great. So let me ask - I'm going to see if there's any voice questions. Operator, do we have any requests for voice questions? Coordinator: I'm showing no questions in the queue. Again, if you would like to ask a question, please press star 1 and record your name. Irene Skricki: Okay. I will ask something else, taking the moderator's prerogative. So, Shane, this is really helpful and obviously it's a great budgeting tool. Thinking about what we talked about earlier with the kind of real time spending, I assume if this is on your phone and is it updating regularly with your transactions from all your accounts? To what degree could you kind of replicate that almost real time if you, say, looked at it before you went into the store? Or is there enough of a lag that that would be maybe not the best thing to do? Shane Mount: Yes. Great question. So the data is going to depend upon how quickly we are getting it from the financial institutions. So some financial institutions, like, for example, if you have an American Express, when you swipe your card, you almost get an immediate, you know, notification letting you know, hey, something was spent here, you know, something like that. So it really does depend upon the financial institutions. A lot of banks and credit unions are still on the batch system, which means they only update things every night. So we, MX, in and of itself, will go in and we will go in and we will do an automatic update of all the transactional data on a daily basis. So every single day you're going to see new updated information. Now we are also pushed information from financial institutions, which means that when someone does swipe their card that we have the ability to kind of upload that, I guess, into the transactional feed as a pending transaction even if it hasn't posted yet. So it really just depends on the financial institution. And to be frank, banks, you know, here in the U.S., I mean, they work on some very old legacy, antiquated platforms. So, you know, the larger financial institutions do a whole lot better with getting us information faster than some of the smaller ones where we may have to wait 24 hours to get updated information. However, we can post pending transactions. Those will come over. So that when somebody does go into the store and they want to check their balance, it should be updated. Irene Skricki: Okay. Great. Great. And by the way if anyone was looking at the WebEx, I just put up a final slide with resources which has the Web site address for FinEx for the CFPB Financial Educator site and also the email, cfpb_finex@cfpb.gov for those who might want to request the PowerPoint, or if you have any questions after the webinar. And we're just about at time here. So it sounds like people can, again, create some of the conditions as in the prototype we discussed earlier in the CFPB part of the presentation. But one has to be a little wary about that potential time lag or batch processing or all that and maybe be a little more cautious. I assume, Shane, one last question from me is just I assume that some of the - could you set up a budget in the way we talked about having amount "left to spend?" Or is there any way again that some of those ways of thinking about things -- I love your visualizations -- is there any way to think about how much I have allocated to a category by month or week? Shane Mount: Yes. Yes. Great question. So one of the things that's unique to us is when somebody aggregates a card or someone aggregates a checking or savings account, MX will automatically pull in at least 90 days of information. Now, for some financial institutions we'll get more than that. So we'll make sure that that's tied to it. What our platform actually does is it automatically sets up a budget for the user based upon their previous 90 days of spend. So we actually know, hey, that so and so is spending on average over the last 90 days, you know, of $250 on, you know, a month on restaurants, right? So we will pre-populate that into the budget. Now, they can create it separately if they want to. But it's obviously a whole lot easier to work with the data that we currently have. And then we also would be able to say, okay, well, your income, as well, based upon the accounts that you've aggregated, is equal to x, right? So we'd be able to show the delta there between the two. But there's a goals features and debt management features which would allow you to say, okay, with that discretionary income, what do I want to do with that? Do I want to set up a goal? Do I want to be able to maybe put some of that towards my debt and be able to reduce my debt significantly? So, yes, we do pull in all that information. And we make it easy for the user to really just kind of dive in, aggregate their accounts and then from there the system in and of itself is just going to do all the work. And they just have to follow it and start saving money. Irene Skricki: Great. Now I know you have a hard stop two minutes ago, but I'm going to ask one more question because it's a very interesting question. Just real quick and then we will wind down and you can jump off. Somebody emailed in, for consumers who receive government benefits through SNAP, which is food stamps, and TANF, I've noticed that some of those financial aggregators don't connect with those accounts. This makes understanding the budget more complex, particularly for certain consumers who have those benefits. Any chance that BluePrint would do that down the line? That's a really interesting question. Shane, do you have any ideas? Shane Mount: Yes. I think that's a good question. Sorry, I was on mute there. I apologize. But basically... Irene Skricki: I thought you were being very unforthcoming there. Shane Mount: No, no, no, no. I'm sorry. Yes, so it really will depend upon what we receive. So we have more connections to banks and credit unions than any other provider in the space by a multiple of three, right, by three times. So if we are able to get that information then we will absolutely make sure - if someone is able to log in with a user name and password, there's a really good chance that MX or BluePrint would be able to pull that data in to the system. That being said, if they're not able to, we do give them the ability to add manual accounts and then they could basically just set up, you know, the account and, you know, that way. But again, it really will depend upon whether or not we can get user name and password information from that particular organization. Irene Skricki: Right. That's a great question. And I think, especially for those of you who are serving low to moderate income consumers who may have some of these benefit programs, it sounds like it's going to depend on the provider, meaning the state or other government entity. But definitely worth, I think, everyone looking into. Irene Skricki: Sure. Okay. Great. So we're a couple minutes over. And I know that our guest speakers have to go. So I'll just wind down and say thank you very much everybody. We had a lot of material to present today. We had a good group on here. Again, this webinar will be available. It's been recorded. You can access it in a week or two or email. Again, cfpb_finex@cfpb.gov if you have questions. If you want to be connected to the HPF folks or more information about the app, I can forward questions on. Thank you, everybody. All of the material that I presented earlier, all those tools and the research report are on our Web site. We encourage you all to take a look at them and read them and use any of those things that you think are appropriate for your clientele. So thank you very much to Cheryl and Shane and to all of you for being here and we will end. Cheryl Cassell: Thank you. Shane Mount: Thank you all. Have a great afternoon. Coordinator: Thank you. And this does conclude today's conference. You may disconnect at this time. END NWX-CFPB HQ (US) Moderator: Sharon Mobley 3-23-17/1:00 pm CT Confirmation #3313568 Page 1