Elizabeth Dwyer

Managing Editor at Inclusion Hub

Associate Board Officer at Center for Economic Progress

Chicago, Illinois

@ElizDwyer | LinkedIn Profile

Elizabeth Dwyer is a financial inclusion and fintech program director. Currently she manages Inclusion Hub,
produced by the MasterCard Center for Inclusive Growth and News Deeply— but she’s also taken a stab at co-founding a fintech startup. It focused on personal cash management for freelancers. Previously, she was Accion’s Manager of Programs & Impact, where she co-led its national new product development task force with Capital One; she also raised $3MM to fund 35% year-over-year lending growth. Elizabeth is an Associate Board Officer at the Center for Economic Progress (CEP), which provides free tax preparation services and produces innovative programs to help low-income families cut ties with predatory financial services. She began her career in international development, working with CRS in Sri Lanka, Kenya, Peru, and Brazil.

What attracted you to focus on Financial Inclusion?

I love working on program management and impact assessment. I’ve designed tools that solve savings, credit, and cash flow alignment problems for Americans who earn income outside of traditional employment, and lead programs and strategies for companies that seek to improve financial health.

While working at Accion, I saw that even alternative credit didn’t meet the needs of hybrid consumer-small business borrowers. The traditional separation of business and personal finances isn’t the way many people who freelance or do contract work manage their money. Millions of Americans are combining wage work with freelancing or creative side ventures, such as selling on Etsy. Their work doesn’t fit the mold of a small business loan application, and at the same time many don’t qualify for affordable consumer credit.

Another inspiration is our shrinking middle class. I’ve traveled to Brazil every couple of years since the early 1990s. Our growing income inequality here in the U.S. looks very familiar to me: poverty pushed from the city to suburbs, top companies hiring only from certain universities. The expanding lower middle class has improved life for millions but creates new challenges as well, such as an explosion in credit card debt from predatory lending to newly qualified borrowers.

I want to stem that tide. It’s an exciting time use tech to create financial products and services that are affordable for clients, profitable for companies, and promote financial health within the changing frameworks of how Americans live and earn money.

We can learn a lot from financial inclusion strategies in Latin America, Africa, Asia, and Europe, which is why it’s so exciting to convene that conversation through MasterCard’s Inclusion Hub.

There is a famous saying that “It is very expensive to be poor.” Does this ring true in your experience, and how can technology work to change this?

Absolutely. People pay a lot of money for bad products.

Without a bank account or payroll card, workers can spend $900 a year just to cash paychecks. Twelve million Americans spend $7.4 billion each year on payday loans to cover short-term cash flow shortfalls. Yet, research by the Center for Financial Services Innovation (CFSI) shows that many Americans make enough money in a year to cover their annual expenses. It’s just that the timing of income and expenses doesn’t line up. Income volatility affects nearly a third of U.S. households, including many middle-class workers.

What does this mean for fintech? Lower-income consumers are willing and able to pay reasonable amounts for good products that meet their needs.

Tech innovation shows there’s no need for predatory financial products and services. For instance, Even is one of the most exciting new financial inclusion startups of 2015. Clients use Even to stabilize inconsistent paychecks. With Even, someone who used to make $300 one paycheck, $700 the next, then $200 the following pay period, can now count on a steady average paycheck of $400. Even’s tech learns and predicts paycheck patterns. When a client earns more than average, Even holds the money to use to top up future lower-than-average paychecks. The better their algorithm becomes, the lower the company’s risk becomes. Because they’re not “lending,” they avoid state-by-state licensing headaches. It’s genius.

What makes your work unique with respect to FinTech, in your opinion?

At Lendr, we piloted a small short-term consumer credit product for microentrepreneurs. Currently, 35% of the U.S. workforce earns their money through freelancing, side businesses, or contract work; this is expected to rise to 50% by 2020. We quickly found, however, that our target clients were more excited about tools to help them build savings to manage inconsistent income.

We designed the tool Oiivoy in response: it’s like Digit meets PayGoal. Built on the Plaid API, it could monitor clients’ bank account(s) for freelance/contractor income deposits. It would then automatically transfer out 30% for taxes— mimicking the experience of a regular net paycheck. Users could also set goal-oriented automatic savings transfers: for example, 3% of every checking account deposit transferred to an emergency savings bucket and 5% to a condo down-payment savings bucket. Though Lendr wasn’t able to bring Oiivoy to market, we’re proud of designing a simple way for the growing freelance economy (and anyone with volatile income) to access the power of automated savings.

How was your experience raising capital for a startup focused on Financial Inclusion? Does this differ between Non-Profits and VCs?

I found it easier to raise money as a nonprofit. That’s partly because the nonprofits I worked for— Accion, CRS, etc.— were market leaders and established brands; it was also because we had a robust market of buyers (community development funders) for the product we were selling (social good).

Convincing investors is tough. Even social venture investors come to the table struggling to balance investing decisions between profit potential and social return. At Lendr, my co-founder and I both came from the nonprofit world. Since our fintech product had a social mission as well as a profit motive, I got the sense investors might doubt whether we prioritized profit. In fact, we did: proving you can make money by doing good is the best way to scale socially responsible products in the market.

Who do you consider to be strong women leaders in the banking / FinTech space?

I was surprised when I started searching for women leaders at my favorite FinTech startups, I couldn’t find any!

A great anecdote by a female fintech founder has been making the rounds. Her startup is the first to smooth child support payment transactions between parents. Apparently, VCs joked that she should bring a twenty-something guy in a hoodie to investor meetings. She pointed out that that twenty-something guy doesn’t have the problem her tool solve: that’s why this product didn’t exist until a forty-something female founder built it. Diversity in tech creates innovation!

The Center for Financial Services Innovation (CFSI) stands out. Its senior leadership is nearly 100% female: six out of seven VPs, the COO, and the founder and CEO, Jen Tescher, are women. CFSI is driving a lot of the national conversation around fintech for financial inclusion. JPMorgan Chase and CFSI’s new Financial Solutions Lab offers more money than any accelerator, which is really helpful since fintech is a lot more expensive other types of tech startups. More importantly, the Lab’s part of the shift towards accelerators being industry-focused. So many fintech startups, like Lendr, need bank partnerships, and Chase’s sponsorship of the Lab could be transformative for the startups that participate.

What do you see as the 3 leading future trends for FinTech?

The freelance economy and gig work (Uber, etc.) is really catching my interest. In the U.S., this means workers are paid as independent contractors responsible for all work expenses, insurance, and tax withholding. By 2020, 50% of the workforce will earn money this way. It often comes with high income volatility. It’s important to build tools for the new ways people have to manage cash flow, insurance, and credit.

I’m also curious to see which experiments in alternative underwriting end up transforming consumer lending— especially seeing the results of loans that embed financial health prompts into the repayment experience. LendUp, for instance, is amassing a trove of data to figure out how to underwrite payday loan borrowers. If LendUp proves this works, they’ll transform the short-term small-dollar credit industry, forcing (I hope!) the industry to offer fair prices to the millions of payday borrowers who really are good credit risks. Meanwhile, Ascend Consumer Finance is pioneering an exciting approach to larger, longer-term consumer loans: a borrower’s interest rate drops in real time when they reduce debt, increase savings account balances, or take other steps to demonstrate improved financial health.

What’s also really interesting right now is location-based and contextualized interactions within saving and borrowing. Moven‘s the star. They won best in show at Finovate this year for really cool mobile features: when you tap to withdraw savings, for example, your phone screen looks “broken”— visual encouragement to think twice before drawing down savings. Another feature notices that you’re in, say, a grocery store but have less in your transaction account than you usually spend there. It’ll push an emergency cash advance offer to cover it.