Bruce CahanCompassionate Money Briefing 4/6/17 · Bruce CahanCompassionate Money Briefing 4/6/17 ... SBA Treasury Justice ... § 1/27/17 EO 13769 put into effect new immigration screening

BruceCahan CompassionateMoneyBriefing 4/6/17

ConfidentialMaterials 1

Compassionate Money:Credit unions as member parachutesBruce Cahan, Adjunct Professor Stanford University School of EngineeringThought Leadership for Finance Innovators Filene Research Institute at Stanford Program

CONFIDENTIAL MATERIALS

1

© 2012-7 Bruce B. Cahan & Urban Logic, Inc.. All rights reserved.

Presentation not to be copied, posted online or otherwise used without written permission. Image sources available on request, and used under “fair use” exception for academic purposes.

Use of images or logos from Stanford University or other third parties does not imply their endorsement of the projects proposed herein.

April 6, 2017

Bruce Cahan


2

Stanford University Adjunct Professor, School of EngineeringCo-founder, Stanford Science-Based Banking Initiative

Banking and Finance InnovatorAs an Adjunct Professor in the School of Engineering and as an active participant in Stanford’s Computer Science and Law Schools’ Center for Legal Informatics (CodeX), Bruce is reimagining banking and finance. Bruce curated TEDxNewWallStreet and is creating GoodBank™(IO) as a teaching hospital bank to grow a new banker culture. Bruce’s reports for the UK’s Technology Strategy Board (KTN-FS) and other government and industry groups, and his input into bank regulatory policy and practice are sought after insights.

BioRecovering Wall Street lawyer, Hong Kong merchant banker, advised US, NY State & other governments on finance and geospatial innovations, 9/11 emergency responder, Ashoka social entrepreneur & father of 22 year old twin boys…

JD Temple University School of Law Bar Admissions CA, NY & PABS Economics & International Business Wharton School University of Pennsylvania

Google Profile http://www.google.com/profiles/brucebcahan

April 6, 2017

My range is passionately wide§ Teaching to attract a new cohort of Sustainable Bankers and Investment Professionals

§ Sustainable Banking (CEE 244A 2012 – 2017)§ Ethics of Finance & Financial Engineering (MS&E 148 2017)§ Investing on the Buy Side of Wall Street (MS&E 449 2016 & 2017)§ Hacking for Urban Resiliency (MS&E & CEE proposed)§ Let’s Build a Better Bank and Better Banking (GSB proposed)

§ GoodBank™(io) as an independent teaching hospital lab for sustainable bankers (Urban Logic)§ Research to reward Sustainable Finance customers’ impacts

§ Valuing what matters: Periodic Table of Quality of Life§ Real Estate design, construction, use, insurance and financing decisions on the blockchain (RE-OS)§ Banking in Space & computational/smart contracts of insurance to respond to disasters & humanitarian crises§ Parametric Flood and Natural Disaster Insurance§ Repurposing Gift Card Breakage for Good (P125)§ Migration Storytelling Project to go back 5,000 years and see common journeys§ Faith-based traditions of sustainable finance, and how to implement them today§ Three-Layered Map of the World so indigenous peoples use money to match others’ capacities to their

needs§ Cannabis Banking as a legal activity for banks and credit unions

3


©2017 BRUCE CAHAN, URBAN LOGIC & STANFORD UNIVERSITY

April 6, 2017

April 6, 2017CONFIDENTIAL MATERIALS

4

Let’s not throw away our shotI’m not going to throw away my shot


5

2016 Presidential Vote by Income

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Income: $250,000+

Income: $200 - 250,000

Income: $100 - 200,000

Income: $50 - 100,000

Income: $30 - 50,000

Income: Under $30,000

Hillary Clinton Donald Trump Other


6

Source: NY Times 11/8/16


7

2016 Presidential Vote by residence, political & religious beliefs

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Residence: City

Residence: Suburbs

Residence: Small city of rural

Politics: Liberal

Politics: Moderate

Politics: Conservative

Religion: Protestant or Christian

Religion: Catholic

Religion: Jewish

Religion: Other

Religion: None



8



9



2016 Presidential Voteby gender, race, age & education

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Gender: MaleGender: Female

Married: YesMarried: NoRace: WhiteRace: Black

Race: Hispanic/LatinoRace: AsianRace: Other

Age 18-29Age 30-44

Age 45 - 64Age 65+

Education: White College GraduateEducation: White without College

Education: Person of Color College GraduateEducation: Person of Color without College



10


Who will be vulnerable now?

Compassionate money matters more than ever…


11


12

Trump Budget Request March 2017April 6, 2017CONFIDENTIAL MATERIALS

13

-31%

-29%

-21%

-21%

-18%

-16%

-14%

-13%

-13%

-12%

-6%

-5%

-4%

-4%

-1%

6%

7%

9%

-35% -30% -25% -20% -15% -10% -5% 0% 5% 10%

EPAState

AgricultureLabor

HHSCommerce

EducationHUD

TransportationInteriorEnergy

SBATreasury

JusticeNASA

VADHS

Defense

Trump Budget Request March 2017April 6, 2017CONFIDENTIAL MATERIALS

14

Agencies/Departments to be eliminated (zero budget):

• African Development Foundation• Appalachian Regional Commission• Chemical Safety Board• Corporation for National and

Community Service• Corporation for Public Broadcasting• Delta Regional Authority• Denali Commission• Institute of Museum and Library

Services• Inter-American Foundation• U.S. Trade and Development Agency

• Legal Services Corporation• National Endowment for the Arts• National Endowment for the

Humanities• Neighborhood Reinvestment

Corporation• Northern Border Regional Commission• Overseas Private Investment

Corporation• U.S. Institute of Peace• U.S. Interagency Council on

Homelessness• Woodrow Wilson International Center

for Scholars

Laws Passed & Signed so far§ Increases in Personal Accountability

§ GAO Access & Oversight (P.L. 115-3) audits National Directory of New Hires to ensure means-testing for unemployment insurance, food stamps (SNAP), earned income tax credit and welfare (TANF)

§ Decreases in Corporate Accountability§ Repeal of the Disclosure of Payments by Resource Extraction Issuers SEC Rule (P.L. 115-4)

that limited bribery by U.S. corporations abroad§ Repeal of the Stream Protection Rule (P.L. 115-5) to limit waste dumped by coal mining into

local drinking water supplies§ Repeal of the Implementation of the National Instant Criminal Background Check System

(NICS) Improvement Amendments Act of 2007 (P.L. 115–8) allowing gun sales to people with mental illness


15

Trump Executive Orders Timeline§ 1/20/17: EO 13765 Suspended implementation of Obamacare pending

its repeal

§ 1/20/17: HUD Letter 2017-07 Suspended reduction in FHA’s mortgage insurance premiums

§ 1/27/17 EO 13769 put into effect new immigration screening procedures, authorizing deportations and employer fines – restraining order issued by federal courts

§ 2/3/17 Ordered Secretary of Treasury to develop new core principles for US Financial System regulations (repealing Dodd Frank)

§ Threatens to Withdraw from the Paris Accords on Climate Change that limited national and corporate pollution


16

Trump Budget & Tax Reform Debates Could Question/Limit/Unwind Credit Unions’ Tax Exemption § 1934 Federal Credit Union Act created the tax exemption§ 1998 Credit Union Membership Access Act (P.L. 105-219)

reaffirmed tax exemption§ January 24, 2017 - NAFCU sent Congress an independent

study showing the positive impact of credit union tax exemption

§ March 16, 2017 Trump Budget proposes to eliminate CDFI Program


17

Inequality in U.S. is unsustainable

Q: Could bank data analytics + Impacts + FinTech reduce inequality?

18

CONFIDENTIAL MATERIALS April 6, 2017



19

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1947

1948

1949

1950

1951

1952

1953

1954

1955

1956

1957

1958

1959

1960

1961

1962

1963

1964

1965

1966

1967

1968

1969

1970

1971

1972

1973

1974

1975

1976

1977

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

Inequality: 5 Tiers of Household Income 1947 – 2013Source: US Census Table F2

Bottom 20% Second 20% Middle 20% Next 20% Top 20%


20

$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

$400,000

$450,000

$500,000

1967

1968

1969

1970

1971

1972

1973

1974

1975

1976

1977

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

Inequality: Tiers of Household Income 1967 – 2013Source: US Census Table H1

Bottom 20% Second 20% Middle 20% Next 20% Top 5%


21

0%

5%

10%

15%

20%

25%

30%

1917

1919

1921

1923

1925

1927

1929

1931

1933

1935

1937

1939

1941

1943

1945

1947

1949

1951

1953

1955

1957

1959

1961

1963

1965

1967

1969

1971

1973

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

Inequality: Share of Income earned by Top 1%Source: Economic Policy Institute The Increasingly Unequal States of America

Income Inequality by State 1917 to 2011

United States (by Piketty and Saez) Northeast Midwest South West Poly. (United States (by Piketty and Saez))

Early 1900s Early 2000s


US is the land of immigrantsHow are banks meeting or abusing immigrants’ global financial needs?

22

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

1820s1830s1840s1850s1860s1870s1880s1890s1900s1910s1920s1930s1940s1950s1960s1970s1980s1990s2000s 2010 2011 2012 2013

Immigration to US by Continent/Country 1820 - 2013(Source: DHS Yearbook of Immigration Statistics 2013)

Europe Mexico Caribean Canada / Newfoundland South America Central America Asia Africa Oceania


US is the land of immigrantsHow are banks meeting or abusing immigrants’ global financial needs?

23

0%10%20%30%40%50%60%70%80%90%

100%

1820 to

1829

1830 to

1839

1840 to

1849

1850 to

1859

1860 to

1869

1870 to

1879

1880 to

1889

1890 to

1899

1900 to

1909

1910 to

1919

1920 to

1929

1930 to

1939

1940 to

1949

1950 to

1959

1960 to

1969

1970 to

1979

1980 to

1989

1990 to

1999

2000 to

2009

2010 2011 2012 2013

Immigration to US by Continent/Country 1820 - 2013(Source: DHS Yearbook of Immigration Statistics 2013)

Europe Mexico Caribean Canada / Newfoundland South America Central America Asia Africa Oceania


-100,000 0 100,000 200,000 300,000 400,000 500,000 600,000 700,000

Bottom 20%

Second 20%

Middle 20%

Next 20%

Top 20%

Inequality: Tiers of Household Wealth & Debt (2011)Source: US Census Tables 1 and 2

Debt (Mean) Net Wealth (Mean)


3

Is your credit union’s portfolio affected by members’ losing social safety nets, switching jobs, managing change alone?

0% 10% 20% 30% 40% 50% 60% 70%

Credit cards/total loansOther unsecured loans/total loans

New automobile/total loansUsed automobile/total loans

First mortgage/total loansHEL & 2nd Mtg/total loans

Member business loans/total loansShare drafts/total savingsCertificates/total savings

IRAs/total savingsMoney market shares/total savings

Regular shares/total savings

2016 Credit Union Portfolios

All CUS <$20M $20-50M $50-100M $100-250M $250-500M $500M-$1B >$1B


25Source: CUNA 2016 U.S. Credit Union Statistical Profile


26

Members are asking: “Where’s my parachute?”

Joseph Heller, Catch-22 (1970)


27




28

“What is sanity today?”Joseph Heller, Catch-22 (1970)


29

Bankers are not normal personalitiesCONFIDENTIAL MATERIALS

30

Counselor INFJField Marshall ENTJ

Mastermind INTJTeacher ENFJInventor ENTPArchitect INTPPromoter ESTP

Healer INFPOperator ISTP

Champion ENFPPerformer ESFPSupervisor ESTJComposer ISFP

Inspector ISTJProvider ESFJProtector ISFJ

0% 5% 10% 15% 20% 25% 30%

Myers-Briggs Personality Types(% in normal & banker populations)

Normal Population Bankers/Financial Services

April 6, 2017

Bankers stay far away from ImpactsCONFIDENTIAL MATERIALS

31

Impacts(Creating True Value)

Real Assets(Loan Collateral)

Investments(Claims on Real Assets)

Depositors(Cash Sources)

Bank Owes Safety

FixedBonds, CDs,

Leases

People Business

VariableARMs, Credit Cards

City

InterbankCDs, Hedges,

Options, Swaps

Un-invested Reserves

April 6, 2017

FinTech is changing “banking”

FinTech is way beyond Disrupting Banking


32

April 6, 2017 April 6, 2017CONFIDENTIAL MATERIALS

33

Equity Financing

Consumer Banking

Financial Research

Lending Personal Finance

Remittances BankingInfrastructure

Institutional Investments

Payments

BusinessTools

Crowd-funding

Retail Investments FinTech1,071 Companies

Contact [email protected]

to see all companies

1,092 Companies$17.1B Funding

April 2015


34

April 6, 2017 CONFIDENTIAL MATERIALS

35


36

April 2014October 2014November 2014

April 6, 2017




37


587 Companies

November 2014

658 Companies$835M in funding

June 2015

38

April 6, 2017

Banking and finance: Yet to be simpler, cheaper, safer, fairer, impactful


39

Is FinTech more Am. Madness?

April 6, 2017


40

April 6, 2017

20-Year Returns Disappoint Average Investors


41

0%

2%

4%

6%

8%

10%

12%

REIT

s

S&P

500

Bond

s

Gol

d

EAFE

Hom

es Oil

Ave

rage

Inve

stor

Infla

tion

Ann

ualiz

ed R

etur

n

1992 - 2011 1994 - 2013 1996 - 2015

Sources: Multiple


42

April 6, 2017


43


44

Fintech is offering

borderless services

April 6, 2017 April 6, 2017CONFIDENTIAL MATERIALS

45

Simplify my financial life. Heal the mistakes of my learned taboos. Crowd-source breaking us free of debt.




46

If GoPro can unleash the hero in our story, can Stanford work with credit unions to share the heroism of navigating our financial lives?


47

If Google can invent a self-driving car, can Stanford work with credit unions to invent navigating the landscapes of our financial lives?

April 6, 2017

Use “Big Data” to solve shared needs of lenders & borrowersGo beyond “Big Data” for loan approval and marketing


48

April 6, 2017

LifecycleChallengesas“BigData”

Bankswatchusnavigate,alonewithdifferentadvantages/disadvantages…IQ/socialtools,biases,instincts,wealth


49

April6,2017

FearisfakecollateralBanksthattrafficinfear,break

April6,2017CONFIDENTIAL MATERIALS

50

Maximizefeardigital, mobile versions of Banking 1.0 cannot help you here

College savings for the kids?

Find a new Job yet?

Having twins?

Health issue#1?

Health issue#2+?

Need new car

already?

Really, a Divorce so

soon?

New tax rules?

StartupBusiness a

failure?

Your fear is unique

Bank

asK

nowledgeBlockageLayers

Penalizefate&illiteracyinhum

anlifecycle


51

LifethrowsusRubik’sCubes

Twistingusto/fromwhoweare/wanttobe


52

BanksprofitbychangingthegamePreyonseparatingusas“ruggedindividualistproblemsolvers”

Images:CubeTwister

2- LayersofLegalese

3 - LayersofManagerApproval

4- LayersofMergers&newIT

5 - LayersofInterestRates&Fees


53

April6,2017

ThemediacelebrateourruggedindividualismMeanwhilethemiddleclassdeclines,lackingsupports

6/26/15

54



We’renotallruggedindividualistsNoneofustameallfrontiersalone,andnewfrontiersarecomingParanoia,politics,guns,lawyersandlobbyistsdon’tmakeussafer

6/26/15

55

Wedon’thavetobeislands,aloneinfear,lostWecouldbesafeasanetworkofhumanandonlineresources


56

AdjacenciesWeareinsocietyasdiversebeingswithsurvivaltalesIt’sourgifttoteachandrescueeachother


57

BanksasKnowledgeTransferHubs(KTH’s)seekingandofferingourtalentsspeedsmanaginglifecycles,andmakesthebankstronger


58

KTHBankslink&rewardcustomerswhoseek&sharehelpAdjacencies=skills,resources&insightstotriumphlifecycleevents


59

Banking3.0:AltruismthruKTHhubsforlifecyclesrichlyshared

We funded College

We found a new Job

We had twins & survived

We’re Healthy now

We shifted our Industry

We got a fleet price

for our new cars

We mediated our

Divorce

We used the new tax

rules

We’re on our third

VC StartupWe see your

fears everydayKnow

ledgeTran

sferHub

app&re

wardsth

ehu

manto

uch


60

KnowledgeisrealcollateralSolvinglifecycleshealsustofeelgoodagain


61

andthedataaboutothers’survivinglifechallengesmightcomeinhandyonedaywhenCUmembersfindthemselveswithoutaparachute

CONFIDENTIAL MATERIALS April6,2017

Redesigning banking asstorytelling money®

An example of what science-based banking can do…


63

April 6, 2017



FICO ignores human storiesCash flows reveal impacts, beyond historical credit use & repayments


64

April 6, 2017

Environmental

SocialSafetyEconomic

Operating system redesign for Sustainable Banking

65


Small businesses are impact storiesChina Fintech could augment credit scores by transmitting SME stories


66

April 6, 2017

Fair Isaac (FICO) ignores SME storiesCash flows reveal impacts, beyond historical credit use & repayments


67

April 6, 2017

Cash flows reveal impacts, beyond historical credit use & repayments


68

The “Sandbox” is full of SME stories

April 6, 2017

Creating storytelling money®

A process of daily information flows


•Trust goals:•Bank is safe•Funds safe at bank•Bank is fair

•Story to be told:•Belong to groups with

similar values•Culturally identify

•Trust goals same as depositor’s

•Story to be told:•Wants to show impacts to

gain customer loyalty•Already has ISO or other

certified process, a CSR, GIIN or other program validating impacts

•Mission to improve Quality of Life (QoL)

•Trust goals same as depositors•Trust/safety/risk management/pricing

•Due diligence validates borrower story as QoL factors

•Uses depositor’s values to rank QoL impacts achieved by borrower

•Tag money with QoL impacts

•Safety – show how Quality of Life (QoL) underwriting improves bank safety

•Fairness – show how QoL focus causes borrowers to handle money more wisely

•Impacts – Use bank as social media tool for businesses and depositor/customers to connect on shared values

Stories worth telling Stories tagged to be heard

69

April 6, 2017

Means Meter® Mobile ScreensMeans Meter summary bar above recent spending activity gives a high level overview of congruency..

The Means Meter threads throughout the experience, including line items in the transaction activity.

Beyond the summary bar, the Means Metercan convey trending categories which are reflected in the customers financial activity.

70

Storytelling money® tagged toPeriodic Table of ImpactsImpacts we measure, plus space for impacts we’ve yet to measure


71

April 6, 2017

Impact metrics are evolvingSemantically name, translate and combine impact measures


72

April 6, 2017



Periodic Table of Quality of Life (QoL)Every Loan + Customer + Bank produces functional Values at Risk (f-VaRs)


73

Adjacencies

f-VaRsSustainable Resiliency®

(Regional Score)

April 6, 2017

Leverage the power of adjacency to visualize proportional impact.The Periodic Table, as a metaphor, is a powerful one in this context as it conveys the building blocks of my values as indicated through my financial activity. Yet, it takes the metaphor to a different level by infusing proportion and proximity as extra layers of analysis.

74

Users can adjust their view of the Periodic Table from a birds eye to a category.The birds eye view lets me see everything but the category view restricts the lens to show me what is around me from this new vantage point, being on the ground as opposed to high in the air.

75

Quality of Life Elements as Data Analyticsimprove Asset Value OS, Bank OS Safety

§ Leverage Quality of Life intersections: § Health and Water Quality§ Poverty and Education

§ Leverage intersections to reduce Financial risks:§ Knowledge about the dignity of seeking solutions§ Commercial Real Estate adaptable to Climate Change§ Healthier Workers earn more, improving Consumer Credit Scores§ Poverty interventions reduce Consumer Loan Default Contagion


76

April 6, 2017

Safety + Transparency + ImpactsWhy Banks don’t show they are different

Banks are not showing their relevance to customers’ lives


77

April 6, 2017

Trust - Banks need to earn back public trustImpacts can be transparent, building public trust


0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

Overall trust in U.S. banks

Banks and financial services are least trusted industries

Culture of greed and self-dealing created bank scandals

Distrust business if corrupt, wrong incentives drive decisions, perform poorly

Academic and professional experts are most trusted spokespeople for brand

Technology is most trusted industry

Overall trust in Chinese banks

Edelman Global Trust Barometer 2013

78

April 6, 2017


79

REPORT

Choosing Relevance: How Credit Unions Can Harness Transparency and Show ImpactBruce B. Cahan, Founder/CEO, Urban Logic, Inc., and Visiting Scholar, Stanford University

Banks and financial services are navigating a transformative era.

Customers’ needs are evolving and disruptive technologies are influencing service delivery.

The time is now to refocus so that your bank is positioned to deliver measurable impact in the digital age.

April 6, 2017

New Math of Millennials & BoomersBanks’ NPS ≠ Future Relevancy

A new generation of potential bank customers want more


80

April 6, 2017

Millennials distrust banksCONFIDENTIAL MATERIALS

81

Source: Millennial Disruption Study

Of top 10 least favorite brands among U.S. Millennials, four are banks:

§ Bank of America Corp.

§ J.P. Morgan Chase & Co.

§ Citibank

§ Wells Fargo & Co.

April 6, 2017



Millennials in US distrust banksCONFIDENTIAL MATERIALS

82

33%

70%

73%

73%

88%

Think we won't need banks in the future

Banking will be totally different 5 years …

Amazon, Apple, Google, Paypal or Square …

Would rather go to the dentist than their bank

Do banking online

0% 20% 40% 60% 80% 100%

10,000 US Millennials

Source: Millennial Disruption Study

April 6, 2017

Ripe areas for Relevance

Fintech could be proactive engine for improving customer lives


83

WW I & II Veterans 1922 - 1945

Baby Boomers 1946 - 1964

Generation X 1965 - 1980

Generation Y 1981 - 2000

April 6, 2017

Add Financial LiteracyCONFIDENTIAL MATERIALS

84

20% 40% 60% 80%

Have no monthly budget to track spending

Spending more monthly than last year

Don't pay monthly bills on time

Carry credit card debt from month to month

Worry have no rainy day savings for emergencies

Have not reviewed their credit score in last year

Learn about personal finance from parents or home

Know would benefit from more financial coaching & literacy

Receives wages from employer by direct deposit/EFT

Pays bills online

Failing Financial Literacy or Resiliency in the U.S.(Harris Consumer Financial Literacy Survey 2013)

April 6, 2017

Add Financial Literacy at HomeCONFIDENTIAL MATERIALS

85

20% 30% 40% 50% 60% 70% 80%

Fear not having enough money to live comfortably in retirement

Feel confident in their financial future

Have a financial plan

Failing Financial Literacy Starts Early in the U.S.(Genworth Survey of Financial Planning 2013)

Didn’t have parents that set good financial examples Had parents that set good financial examples

April 6, 2017

Add Financial Literacy at SchoolCONFIDENTIAL MATERIALS

86

0% 10% 20% 30% 40% 50% 60% 70%

I plan to start my own business

I will invent something to change the world

My school teaches me about money & banking

My school teaches how to start & run a business

I have a bank or CU account

Financial Literacy & Aspirations of U.S. Youth (Gallup HOPE Index of 2012)

Agree Disagree

April 6, 2017

Reduce Financial Stress at workCONFIDENTIAL MATERIALS

87

0% 20% 40% 60% 80% 100%

Fear will lose home in foreclosureFear won't be able to pay for college

Can't keep up with debtsFear being laid off work

Consistently use credit cards to pay for necessitiesHomeowners whose mortgage balance exceeds …

% of "under-water" homeowners receiving foreclosure …Have investigated costs of college/education

Health Insurance requires high or mid-deductibleSaving to pay education expenses

Spending less than a year ago to save moreHaven't reviewed Life Insurance needs in last year

Have adopted a debt reduction plan/budget% with a debt reduction plan sticking to it consistently

Financial Stress Shows up at Work(PwC Employee Financial Wellness Survey 2013)

All Employees

April 6, 2017

Reduce Financial Stress of Gen X/YCONFIDENTIAL MATERIALS

88

0% 20% 40% 60% 80%

Can't meet monthly expenses

Have had to draw down retirement savings to pay …

Financial stress is a distraction at work & reduces …

Can't retire when I want to

Aren't covered by Disability Insurance

Won't have enough saved for emergencies

Feel uncomfortable making financial investments

Find it difficult to meet monthly expenses

Consistently carry credit card balances month-to-month

Feel stress in dealing with finances

Financial Stress Shows up at Work(PwC Employee Financial Wellness Survey 2013)

Gen Y Gen X All Employees

April 6, 2017

Collaborative Opportunity:Pool Discounts on Consumer Spending


89

0% 5% 10% 15% 20% 25% 30% 35% 40%

ReadingAlcoholic beverages

Tobacco products and smoking suppliesPersonal care products and services

EducationMiscellaneous

Cash contributionsApparel and services

EntertainmentPersonal insurance and pensions

Health careFood

TransportationHousing

U.S. Consumer Spending 2012

$150,000 & above $100-$149,999 $70 - $99,999 $70,000 & less

April 6, 2017

Reduce Unbanked/UnderbankedCONFIDENTIAL MATERIALS

90

0% 5% 10% 15% 20% 25% 30% 35% 40%

Underbanked Hispanic

Underbanked Black

Underbanked

Unbanked Hispanic

Unbanked Black

Unbanked

CA West All US Source: FDIC, 2012 National Survey of Unbanked and Underbanked Households

April 6, 2017



Displace Alternative FinanceCONFIDENTIAL MATERIALS

91

0% 10% 20% 30% 40% 50% 60% 70% 80%

Underbanked used Payday in last year

Unbanked used Payday in last year

Unbanked ever used AFS

Underbanked used AFS in last 30 days

Unbanked used AFS in last 30 days

Have used AFS - Black

Have used AFS - Hispanic

Have ever used AFS

CA West All US Source: FDIC, 2012 National Survey of Unbanked and Underbanked Households

AFS Alternative Financial Services are non-bank check cashing, non-bank money orders and non-bank remittances. AFS credit products are payday loans, pawn shop loans, rent-to-own agreements and refund anticipation loans.

April 6, 2017

Sustainable banking

Simplify three strands: safety, fairness, impacts


92

April 6, 2017

Show Impacts People Care AboutCONFIDENTIAL MATERIALS

93

Protestant (Evangelical)

26.2%

Catholic23.8%

Protestant (Mainline)

18.0%

Unaffiliated/Nothing in Particular12.1%

Historically Black Churches

6.9%Agnostic

2.4%Jewish1.7%Mormon

1.7%Atheist

1.6%Other Faiths1.2%

Don't know0.8%

Jehovah's Witness0.7%

Buddhist0.7%

Orthodox Church0.6%

Muslim0.6%

Hindu0.4%

Other Christian0.3%

Other World Religions0.3%

U.S. Population Religion Survey 2007(Pew Foundation)

April 6, 2017

Sustainable Banking attracts unlikely allies, a movement taking hold

A Jewish boy from Philadelphia meets someone special


94

April 6, 2017

A wonderful synergyWhat if you had 45 seconds with Pope Francis?


95

April 6, 2017

What if you had 45 seconds with Pope Francis?


96

“We need a banking and financial system that helps us make decisions that last as long and stand as tall [for 1,000 years] as this little tree…”

Benchmarks for faith-congruencyStorytelling money® aware of ancient wisdom captured as religion

March 17, 2017

97

Compliance≥ 99%

Prudence≥ 51%

Congruency≥ 25%

Catholic Funds Benchmark Performance Targets by 2020?• Compliance ≥ 99% legally compliant

• Prudence – ROI ≥ 51% of comparable investment funds – keep pace with market

• Congruency – ≥ 25% of managed investments or business operations report their environmental & social impacts


A clear message of Bankers, Impact Investors and others at the Vatican


98

April 6, 2017

Data speak for the poor, the planet Trust - Banks’ social behaviors are keyImpacts could be a brand differentiator for FIntech


0% 10% 20% 30% 40% 50% 60% 70% 80%

Would pay a premium if brand supports good causes

People like me can fix societal issues

Social purpose is most important in choosing between brands offering same quality and price

Trust in brand because it is ethically and socially responsible

Recommend, promote or switch to brands that support a social purpose

Want brands that do good while making money

Edelman Good Purpose Consumer Survey 2012

99

April 6, 2017



Show you help people

Relevance Takeaway: Help people needing financial help


100


101

April 6, 2017

Mapping our focus

Banking as a prelude to science-based finance


102

April 6, 2017

Getting our bearingsGlobal Market Sizing (USD$ Trillions)

§ $87TN Gross Domestic Product (2013) 62% consumed by households & 18% by governments

§ Global Population 7.1BN (July 2014) - 3.3BN in workforce§ Urbanization is a major factor in climate change and poverty, 52% of

humanity lives in cities, producing 75% of energy related CO2 emissions§ Unemployment& Underemployment up to 30% in development countries, with

increasing inequality (38+ GINI)§ Global climate change§ $3TN Global Government Shortfall (Revenues – Expenses) resulting in growing

public debt (63.3% GDP in 2013)§ $10.6 BN Impact Investing (2013) committed, $12.7BN for 2014§ $156TN Global Financial Assets excluding securitized products§ Banks finance 88% of Global GDP


103

April 6, 2017

Why focus on BankingGlobal Market Sizing


104

$77, 88%

$10, 12%Global GDP (Trillions, %)

BanksImpact InvestingOther

$10.6BN = 0.012%


105

April 6, 2017

“Sustainable Banking” defined

A Sustainable Bank is

§ Safe – in good & bad economies

§ Fair/Trustworthy – customer as family

§ Impactful – grow regional quality of life

106

Fair Safe Impactful


Science-based banking

Using science to build trust, safety, profits


107

April 6, 2017

Science-based banking What it is, how it’s different, what it lets us see and do better

Science-based banking…Makes lending and investment decisions based on:§ Fundamental models of the real world, as validated by

§ Physical sciences (chemistry, physics, engineering)§ Natural sciences (biology, ecology, medicine)§ Social sciences (anthropology, economics, psychology)

§ To determine bank assets’ and revenues’§ Intrinsic value to the real economy§ Susceptibility to change§ Underlying reasons for such values to change


108

April 6, 2017



Internet of Things data not yet in bankingHuge resource for managing banks’ safety, profit, trust, impact challenges


109

April 6, 2017

Use your bank as a platform for university research & new designsRelevance Takeaway: Strategically partner with university talent


110

April 6, 2017

Safe fintech innovation spaceat StanfordPlans for Stanford Science-Based Banking Initiative + GoodBank™(IO)


111

April 6, 2017

Three steps for reinventing banking

Science-Based banking affiliatesStep 1

Science-Based banking initiativeStep 2

GoodBank™(IO)

Step 3


112

Prove new bank designs work

Stanford University

April 6, 2017

Stanford Sustainable Banking Seminar CEE 244A Spring 2013 speakers and participants


113

Head of Global Citizenship

Head of Renewables Finance

Head of Global Regulatory Affairs*

Enforcement balanced byInnovation (Project Catalyst)

Banking Commissioners,Current and Former

VC Fund, Founder

Solar Crowdfunding, Founder

Small Business Lending, Founder

Business Finance Writer

Managing Director

Head of Western Region

Major Banks Bank Regulators Banking and Finance Innovators, Journalists & Advisors

* Visited upon hearing of CEE 244A

April 6, 2017


114

Major & Special Banks Bank Regulators Sustainability, NGO & Human Design Factors



115

Innovators in Fintech Bank Regulators Equality, Sustainability, Resiliency & Human Design Factors


Africa’s largest bank

April 6, 2017


116

Innovators in Fintech Banks & Regulators Equality, Sustainability, Resiliency & Human Design Factors

CONFIDENTIAL MATERIALS February 17, 2017

Buy Side Course Speakers (MS&E 449 2016)Date Speaker Organization Buy Side Specialty

January 4 Bruce Cahan Stanford Engineering Wall Street lawyer, HK merchant banker & public financeJanuary 11 Brent Whisenant Medley Partners Private Equity 1, fmr Family OfficeJanuary 22 Katie Hall Hall Capital Partners Hedge Fund 1, fmr Endowment FundJanuary 25 Pooja Malik Nipun Capial Hedge Fund 2, fmr BlackrockFebruary 1 Ben Bisconti Accel-KKR Private Equity 2, fmr CS First BostonFebruary 5 Bill Gurley Benchmark Capital Venture Capital 1February 8 Mike Calbert Kolberg Kravis Roberts (fmr) Private Equity 3February 19 Hayley Boesky Bank of America Capital Markets 1, fmr Federal Reserve

February 19 B. Scott Minerd Guggenheim Partners Global Investment Advisory 1, mbr FRB-NY’s Advisors

February 19 David Demers Summer Road Family Office 1, original quantFebruary 22 Gene Frantz Google Capital Venture Capital 2February 29 Alan Boyce Materra Hedge Fund 3, fmr. Bankers TrustMarch 4 Ben Narasin Canvas.vc Venture Capital 3March 7 Rob Wallace Stanford Management Endowment Fund 2, fmr. Yale Endowment

February 17, 2017CONFIDENTIAL MATERIALS

117




118

0% 10% 20% 30% 40% 50% 60% 70% 80%

No Answer

Other:

Greed - show me the money

Congruency - moving money to meet the real economy's needs

Competition - beating peers' returns and risk performance

Analytics - earning returns that beat the market indexes

What interested Stanford MS&E 449 Students about the Buy Side? (Winter 2016 Quarter - n=22)


119

0 2 4 6 8 10 12

Aeronautics & Astro (MS)Civil & Envir Engr (MS)

Comput & Math Engr (MS)Computer Science (BS)

Economics (BA)Economics (BA)/French (Min)/Political Science (Min)

Materials Science & Engr (PhD)Mechanical Engineer (PhD)

Mgmt Sci & Engineering (BS)Mgmt Sci & Engineering (MS)

Political Science (BA)/History (Min)Symbolic Systems (BS)

Undeclared (B)Science, Tech, & Soc (BS)Science, Tech, & Soc (BA)

Public Policy (MA)

# Students

Buy Side Investing Student Mix (MS&E 449 – Winter 2017)

Freshman Sophomore Junior Senior GradYear1 GradYear2 GradYear3 GradYear4+

Buy Side Course Speakers (MS&E 449 2017)Date Speaker Organization Buy Side Specialty

January 9 Bruce Cahan Stanford Engineering Weil Gotshal & Manges, HK Merchant Bank

Toby Espinosa Stanford Engineering MS&E Family Offices, Alternative Investing Landscape

January 18 Keith Rabois Khosla Ventures Seed & Venture Capital

January 23 Brent Whisenant Medley Partners Family Office & Real Estate

January 30 Mark Stevens Sequoia Capital Venture Capital

February 6 Gene Frantz Google Capital Growth Equity

February 13 Jonathan Coslet TPG Private Equity

February 27 Meridee Moore Watershed Management Hedge Funds

March 3 Ben Bisconti Accel-KKR Value Investing

March 6 Rob Wallace Stanford Management Company Endowment Fund

March 13 Gabe Santos Homestead Capital Agriculture


120

February 17, 2017February 17, 2017

Stanford Centers of Expertise for Science-Based Banking§ Engineering§ Business§ Computer Science§ Law§ Startup Culture Hubs§ Sociology§ Medicine & Wellness


121


122

Engineering: § Stanford Engineering

School and its Departments of Civil and Environmental Engineering (CEE) and Management Science and Engineering (MS&E)

§ Center for Financial and Risk Analytics & Institute for Computational Math

§ Center for Sustainable Development and Global Competition

§ Design School (d.school) & Center for Design Research

§ Global Projects Center§ Woods Institute for the

Environment§ Precourt Institute for

Energy


123

Computer Science & Law: Stanford’s Computer Science Department (CS) and the Law School (Law)§ CodeX Center for Legal

Informatics§ Law School’s Steyer-

Taylor Center for Energy Policy & Finance

Startup Culture Hubs: Stanford startup entrepreneurship incubators, such as MS&E’s Stanford Technology Ventures Program§ StartX§ BASES: Business

Association of Stanford Entrepreneurial Students

April 6, 2017

Sociology: Stanford’s Sociology Department§ Center for Poverty and

Inequality (one of three national poverty centers)

§ Stanford’s Persuasive Technology Lab

Medicine & Wellness: Stanford Medical School (Med)§ Center for Compassion

and Altruism Research

International Studies Freeman Spogli Institute§ Center for International

Security and Cooperation

§ Stanford Cyber Initiative


124


125

Business: Stanford’s Graduate School of Business (GSB) § Public Management

Program § Center for Social

Innovation§ Stanford Institute for

Innovation in Developing Economies (SEED)

Economics§ Institute for Economic

Policy Research (SIEPR)§ Center on Longevity

(jointly with Med School)

April 6, 2017 April 6, 2017

Q: How would you partner with Stanford or other universities – data analytics, AI, IoT, connected cars?

Focus: Making Credit Union Fintech’s Future smarter and impactful


126



Science of Re-engineering Banking

§ Bank Safety OS – Built a CAMELS Ratings Model from Federal Call Report Data (FFIEC)

§ Asset Values OS – Building a Periodic Table of Quality of Life Elements, and calculating their functional Values at Risk (f-VaR ), from Standard Municipal Budget Data (CAFR)

§ User Experience (UX) Designs – Designed Semantic Money®

/ Storytelling Money® used in a Means Meter™ app** Trademarks of Urban Logic, Inc.


127

April 6, 2017

We begin a new journeyAsking “What should banks and financial services be?”


128

April 6, 2017 March 17, 2017

129

Simplify my financial life. Heal the mistakes of my learned taboos. Crowd-source breaking us free of debt.

Contact informationBruce Cahan, Stanford Engineering Adjunct [email protected] / [email protected] / (212) 399-9700

130


Intellectual Property RightsThis material is copyright 2002 – 2015 by its respective owners. All rights reserved.

Bruce Cahan and his nonprofit Urban Logic, Inc. conceived, designed and described GoodBank™(IO) and its constituent technology, user experience design, underwriting and other elements prior to, and through research and funding separate from, his affiliations and appointments at Stanford University. Such copyrighted and patentable intellectual property are and remain solely that of Mr. Cahan and Urban Logic.

Mr. Cahan conceived of establishing a Sustainable Banking Institute at Stanford University during the course of discussions with Stanford Professor Michael Lepech at Stanford. Such copyrighted and patentable intellectual property was created by Mr. Cahan and Dr. Lepech and is governed by the Stanford University Research Policy Handbook.


131

April 6, 2017

Confidential Materials

© 2012-4 Bruce B. Cahan & Urban Logic, Inc. All rights reserved. Presentation not to be copied, posted online or otherwise used without written permission.Image sources available on request, and used under “fair use” exception for academic purposes


132

April 6, 2017

Documents

Bruce CahanCompassionate Money Briefing 4/6/17 · Bruce CahanCompassionate Money Briefing 4/6/17 ... SBA Treasury Justice ... § 1/27/17 EO 13769 put into effect new immigration screening