The document discusses potential financial solutions for underserved customer segments like immigrants, international students, and the underbanked. It outlines several hypotheses for new products and services, including a prepaid loyalty card distributed at retail points of sale, alternative employment services, and payday lender ATMs. Each hypothesis is tested through customer interviews and industry research. Key lessons learned are the importance of truly understanding customer needs, being willing to pivot quickly from unviable ideas, and gaining real-world experience over theoretical models. The document advocates further developing a "Day 1" financial solution tailored for immigrants and international students lacking credit history.
2. CollinWalter is an MBA candidate at the Stanford GSB. He most recently
worked for Hellman & Friedman as a private equity investor specializing in
consumer internet, digital media and software. Prior to H&F, Collin was an
investment banker at Goldman Sachs, where he focused on the aerospace &
defense and automobile sectors.
Collin has co-founded several startups, including WristBrand Media LLC, an
alternative advertising firm (www.wbmbrands.com). Collin graduated summa
cum laude with High Distinction in Economics from Duke University.
Elias Erickson is an MBA candidate at the Stanford GSB. He previously
worked at Dodge & Cox Funds in San Francisco, covering industrial and
medical device companies. Prior to Dodge & Cox, Elias worked at Lehman
Brothers as a member of the global healthcare investment banking team and
as a research associate at LongworthVenture Partners. Elias graduated with
a degree in finance from BrighamYoung University where he was a
presidential scholar.
3. Anish Patel is an MBA candidate at the Stanford GSB. He previously
worked at BarclaysWealth in London, initially as a special adviser to the
CEO and most recently as Chief of Staff for the UK Private Bank, serving
high net worth individuals. He started his career as a strategist at L.E.K.
Consulting and has experience executing projects in continental Europe,
Asia and the Middle East. Anish received a Master's degree from
Cambridge University.
Art Wangperawong is an engineer, avid hiker and traveler. He has
learned many languages, including Cantonese, Mandarin, Korean,
Spanish andThai. He has prior business experiences in the food and
solar industries. At the CampusCapital Network, he is very excited about
helping international students, post-docs, visiting fellows and professors
benefit.
5. •Need: active vs. passive
acquisition channel
•Solution: sell prepaid at
POS with loyalty tie-in
•Incumbents soon to launch
a similar strategy pivot
Prepaid + Loyalty
Card
Alternative
Employment Services
6. Hypothesis
Existing prepaid cards add value
to a subset of the population
Underpenetrated
opportunity
We can find a better channel
to reach this customer
segment and convert them
Existing prepaid cards are
flawed and can be improved
We can do something clever
to shake up the fee structure
and/or build in a new feature
(e.g., rewards)
Solution = prepaid + loyalty card
Distributed at retail POS
Test
Interviewed supermarket
executives, payment
processors, private label card
manufacturers, prepaid
program managers, loyalty
consultants, and data analytic
firms
Results
User acquisition is critical
user engagement is everything
Underpenetrated opportunity
because people:
Don’t understand the value
of the card
Don’t know about the card
Haven’t bought one yet
Potential customers are aware
of and understand prepaid, but:
Hate the fees
Haven’t bought one yet
7. Hypothesis Test
Interviewed end users at
Walmart, food banks, bus
stops, payday lenders, their
homes, and supermarkets
Interviewed execs at Green
Dot, Rush Card, and NetSpend
Results
End Users see value:
More likely to sign up for
prepaid via assisted POS sale
Active vs. passive sale
hypothesis validated
More likely to keep and reload
cards with ongoing cash
rewards
Higher retention via loyalty
hypothesis validated
Retailers see value:
New revenue opportunity is
compelling
Access to purchasing data
outside the store is compelling
IndustryTrends
Loyalty + prepaid programs are
the future
Industry execs like this idea a lot
and are actively exploring it
Existing prepaid cards add value
to a subset of the population
Underpenetrated
opportunity
We can find a better channel
to reach this customer
segment and convert them
Existing prepaid cards are
flawed and can be improved
We can do something clever
to shake up the fee structure
and/or build in a new feature
(e.g., rewards)
Solution = prepaid + loyalty card
Distributed at retail POS
8. Hypothesis
Customer awareness and
education are key obstacles to
customer acquisition and
retention
Channel: Assisted sale at POS
trumps current passive j-hook
sale
Active sale enhances
awareness & education
Product: Combining prepaid +
loyalty
Cash rebates improve
retention and incentive to
reload
Test
$5 for 5 minutes campaign
Speak to as many potential
customers as possible ask
for an actual commitment
Results
20 preliminary signups
Built empathy around customer
prepaid needs
Immediacy
Security fears
Fees
Channels
Discovered other needs
Job-seeking
Saving for kids’ education
Understood observed behaviors
High churn
Lack of reloading
Lack of regular usage
Loyalty component not
required if you can service the
true pain points
9. •Need: active vs. passive
acquisition channel
•Solution: sell prepaid at POS
with loyalty tie-in
•Incumbents soon to launch a
similar strategy pivot
Prepaid + Loyalty
Card
•Need: lack of services for
untraditional employment
•Solution: turn-key day labor
SMS program (TaskRabbit)
•Serious legal and labor code
obstacles pivot
Alternative
Employment Services •Need: immediate, convenient,
and cheap
•Solution: ATM with complete
payday lender functionality
•New enhanced functionality
ATMs to be released pivot
PayDay Lender ATM
10. •Need: Bridge from cash
economy to traditional
banking
•Solution: display card –
touchable, transparent,
trustworthy
•Lack of infrastructure pivot
Prepaid Display Card
•Need: Financial services for
those without credit history
or US identification
•Solution: New risk algorithm
to evaluate creditworthiness
Day 1 Financial
Services for
Immigrants
11. Hypothesis
Day LaborTaskRabbit better
way to find jobs for the
underbanked
ATM check cashing more
convenient way to receive
money
Balance display card faster
way to check balance
Test
Interviews in Sonoma and San
Jose w/ day laborers
Interviews w/ Mastercard &
nagraID to test display card
feasibility
Interviews outside payday
lenders / check cashers
Legality research on
TaskRabbit idea
Results
TaskRabbit idea fraught with
legal issues – unrealistic to get
to market
Display card idea faces two
issues in the US – IP protection
and infrastructure constraints
ATM check cashing already
being pursued
Back to the drawing board
DAY LABOR
$ BALANCE
=
12. •Need: Bridge from cash
economy to traditional
banking
•Solution: display card –
touchable, transparent,
trustworthy
•Lack of infrastructure pivot
Prepaid Display Card
•Need: Financial services for
those without credit history
or US identification
•Solution: New risk algorithm
to evaluate creditworthiness
Day 1 Financial
Services for
Immigrants
13. Hypothesis
Focus in on a sub-segment of
the unbanked
Immigrants / New to US
This segment are underbanked
because of lack of credit
information, not bad credit
In addition to financial
products, this segment needs
myriad services on ‘Day 1’
Test
Interviews with students to
understand
How many have credit
cards
How long it takes
How many would sign up
for our service
Detailed mapping of ‘Day 1’
experience to understand pain
points, costs and potential
value added services
Results
Pain point is real for this
segment.We learned:
Can take 1yr+ to get a
credit card
Many stick with debit
permanently
Can capture 30-40% of ‘Day 1’
wallet share by leading with
credit and providing an
integrated service
14. Hypothesis
Stanford student network is
the best launch market
Current ‘credit builder’
products do not meet user
need
There are sources other than
FICO we could exploit to
provide credit services
Test
Set up trial website and
promote to Stanford network +
international forums
Scan credit card landscape to
ensure no competitors exists
Research metrics for a better
algorithm (new alternative
lending competitors)
Results
10 signups over first weekend –
less than we hoped
Potentially more
reflective of our
marketing efforts vs. our
solution
‘Secured’ credit cards are the
only viable competitor
Target at rebuilding poor
credit
Low limits, high fees
Alternative scores targeted at
other US information, not
international
Anthem report
eFunds Debit report
PRBC
15.
16. Engineering graduate student
Receives financial package to cover tuition,
fees, insurance and living expenses
Chinese 4-2-1 family
No siblings, spoiled by parents
High disposable income
1st time to America
No credit score, SSN, or US address
Strong ties to his community in China
Academically responsible
Completes all homework on time
Financially responsible
Pays all bills on time and in full
Social network is similarly responsible
ArtXing
International Graduate Student at Stanford
24. Lesson#1
Know thy
Customer
• Our key insights
came when we
connected with
real people
• 15 mins with a
customer = 10
hours in the
classroom
Lesson#2
Fail Fast
• Be willing to be
wrong
• Stay flexible
despite
emotional and
time investment
• Encourage and
internalize
criticism
Lesson#3
Beat out
your MBA
• Know the limits
of theoretical
models
• Hit the streets
early and often
• Be humble
25. Viable
business?
• Unearthed a
huge need
• Large market
• Proven model
Next Steps?
• Capital
• Partners
• Legal set-up
• Customer
Acquisition
Post-class?
• Recruit board
of advisors
• Raise angel
capital
• Let’s do this!
26.
27. Retailers
Banks
Technology
Manufacturer
Pilot trial
Channel relations
Technology
Branding
Partnerships
Brand
Data & tech
People
Retailers
Increased foot
traffic
Industry data
Branded card
Relationship with
retailers
Vendor-assisted
relationship
with end user
People
Card Manufacture
Marketing & Sales
Risk & Fraud
Retailers
End User
Manufacturers
Supermarket
point of sale
(POS)
Interchange fees
Prepaid card fees
Data analytics
End User
Discounted
products
Economic
freedom
28. Retailers
Banks
Technology
Pilot trial
Channel relations
Technology
Branding
User education
User retention
Retailers
Increased foot
traffic
Branded card
Cost-effective
data tracking
Relationship with
retailers
Relationship with
end user
Direct end user
awareness +
education
People
Card Manufacture
Marketing & Sales
Risk & Fraud
Processing fees & bank sponsor fees
Data storage
Retailers
End User
Supermarkets
Direct (online)
Payroll
Pyramid Mkting
End User
Discounted
products
Economic
freedom
Personal finance
tools
Partnerships
Brand
Data & tech
People
Interchange fees
Prepaid card fees
Data analytics
29. Channel Partner
Bank Sponsor
Payment
Processor
Technology
Private label
prepaid card
Channel relations
Technology
Branding
User education
User retention
Empathy
mapping
Retailers
Increased foot
traffic
Branded card
Cost-effective
data tracking
Relationship with
channels
Relationship with
end user
Direct end user
awareness +
education
People
Card Manufacture
Marketing & Sales
Risk & Fraud
Processing fees & bank sponsor fees
Data storage
End User
Channel Partners
Retail POS
Direct (online)
Payroll
Other
End User
Discounted
products
Economic
freedom
Personal finance
tools
Interchange fees
Prepaid card fees
Data analytics
Partnerships
Brand
Data & tech
People
End user expertise
30. Channel Partner
Bank Sponsor
Payment
Processor
Technology
Private label
prepaid card
Channel relations
Technology
Branding
User acquisition
and retention
Retailers
Revenue share
New customer
data
Relationship with
channels
Relationship with
end user
Direct end user
awareness +
education
People
Card Manufacture
Marketing & Sales
Risk & Fraud
Processing fees & bank sponsor fees
End User
Channel Partners
Retail POS
Direct (online)
Payroll
Other
End User
Economic
freedom
Personal finance
tools
Free bank
substitute
Partnerships
Brand
Data & tech
People
End user expertise
Interchange fees
Prepaid card fees
Data analytics
Alternative monetization outside
of card fees
31. Channel relations
Technology
Infrastructure
R&D
Relationship with
bank partner
Relationship with
end user
People
Card Manufacture
Marketing & Sales
Risk & Fraud
Tech R&D
Unbanked
Underbanked
Banked
Direct (online)
Retail
Banks
Alternative
End User
Bridging tech:
-Transparent
-Tangible
-Trustworthy
Partnerships
Brand
People
Display cards
Tech license fees
Prepaid card
program
manager
Private label
manufacturer
32. Prepaid card
program
manager
Private label
manufacturer
Channel relations
Prototyping
R&D
Pre-sales
Prepaid card
manager
Channel partners
End user
People
Card manufacture & distribution
Marketing & Sales
Risk & Fraud
Tech R&D
Unbanked
Underbanked
Banked
Prepaid card
manager
Prepaid card
manager
Prepaid Card
Manager
Fraud prevention
Customer service
cost reduction
Premier card
Partnerships
Brand
People
IP
Display cards
License technology
End User
Bridging tech:
-Transparent
-Tangible
-Trustworthy
- Immediate
33. Bank Sponsor
Payment
Processor
Private label or
co-branded
partner
Investors to raise
capital
Customer
acquisition
Non-financial
lender status
Investor relations
Branding
Channel partners
Instill trust and
confidence
Social/community
Processing fees & bank sponsor fees
People
Card manufacture & distribution
Marketing & Sales
Legal & regulatory fees
International
students
H1-BVisa holders
L1-AVisa holders
Immigrants
Lenders and
investors
Schools
Employers
Institutions
Direct (online)
Lender
Better priced
risk/return
Tie to affinity
group
Partnerships
Brand
People
Channels
Interchange fees
Annual fees
Interest
Data analytics & monetization
Borrower
Credit source
Credit builder
Day 1 solution
Better rates