Most people think they’re bad at banking, but they’re not.
People just don’t take the time to develop better financial habits because, well…
Banking is boring.
But Steve Le Roux, Founder & CEO at Envel, thinks he can change that. His company is tapping into behavioral science to reward people for banking better — and not rewarding the bank when they don’t.
In this episode, Steve explains:
- How the broken banking system inspired Envel
- How behavioral science and AI can fix it
- Why user experience is everything
Banking is boring
When the financial crisis hit in 2008, Steve realized something.
His bank was doing a terrible job looking after his money. In fact, they did nothing proactively to protect it.
He had some ideas on how to change that, but the technology wasn’t there yet.
But 10 years later, once technology finally caught up to his vision, he founded Envel to solve the broken banking system and help inexperienced and uninterested users make better financial decisions.
The basic premise of Envel is simple.
Remember how your parents — or maybe even grandparents — used to come home with cash from their paychecks? In order to pay the bills, they’d set aside whatever amount they needed in an envelope so it wouldn’t accidentally get spent.
Envel gets its name by being the digital equivalent of that envelope.
The company allows users to open up to 99 bank accounts at once, at no cost to them, while serving as virtual CFO, financial advisor in their pocket.
What makes Envel so unique is how effectively it bridges the financial literacy gap — particularly for young and low-income users.
The simple fact of the matter is that banking is boring.
“Banking is boring. Very few people like to look at their statements. And if we can help them get over that and engage with their finances, then we’re doing a better job than most.” — Steve Le Roux
Learning to manage finances responsibly is vital, but so few have the interest to do so. Even when they do, the most impacted users don’t have the time — they’re more worried about making enough money to live than learning to manage it.
But Envel does it for you, leaving you with more time to spend on what really matters.
Rewards and behavior
The other key aspect of Envel’s approach to fostering financial literacy is through gamification.
The company’s offering doesn’t just take the confusion out of finances, it encourages users to develop better financial behaviors.
And with 45% of the adult population having less than $400 saved for emergencies, this has the potential to make a huge impact on society.
Banking and the brain
From a neuroscience perspective, the reason we don’t want to spend time developing healthier financial habits is that our brain’s rewards system isn’t well-suited to the task.
In the case of an app, this can be an obstacle that’s difficult to move past when so many of your other apps give you that dopamine hit right away.
Post on social media and get a little dopamine hit with every like. Play a game and get some more when you beat a level. Set aside money for an emergency…
Yeah, no dopamine.
That’s why gamification is the best way to tackle the problem of deferred gratification — it gives the short-term rewards we crave while facilitating the long-term goals we desperately need.
The gamification approach is necessary because even though the company’s core goal is to automate financial health, society will still benefit when more of its population are adept financial decision-makers.
And as of right now, there still are some limits to what AI can effectively.
That said, AI and machine learning are powerful tools that get users most of the way there.
“Because finance isn’t fun, nobody’s dedicating the time needed to do it. So, why not have AI do it for you?” — Steve Le Roux
And that means users with limited time can prioritize their focus on those few areas AI doesn’t cover.
The user experience
Steve’s guiding philosophy to fix the banking system has led Envel to be a company that doesn’t compromise the user experience for the sake of profits.
This is evident in their unwavering commitment to several positions uncommon in the banking industry.
The cost of doing business
Envel wants to overturn the antiquated paradigm of banks relying on penalties and fees for profits.
Drawing upon tech inspiration like Google and Amazon, the vast majority of their services are free. They hope to get users to fall in love with the work they do and offer some premium services down the line to passionate fans.
There are some basic fees — like withdrawing cash abroad — but they are kept to the absolute bare minimum.
A trap many apps fall into is gaining a following through simplicity and ease of use, only to torch that goodwill by succumbing to the inexplicable pressure to add more and more services.
Again drawing inspiration from Google and its virtually unchanging home page, Envel is committed to keeping it simple and avoiding the bloat and complications plaguing others.
A winning form-ula
Everybody hates filling out forms. Usually, they’re filled with questions the company should already know the answer to, draining your time for no reason.
But Envel also gamified the sign-up process. Users compete for the fastest signup — the current record is 52 seconds.
Steve is confident that Envel’s success will be achieved through delivering value and a great experience to its users.
“As long as we focus on the user experience and user’s profit, then I think we’ll be in good stead.” — Steve Le Roux
The goodwill they are gathering should be more than enough to keep the business in great financial shape…
All while making sure customers are, too.
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Until next time!