FinLit — Your personal financial advisor




Nov 2019 — March 2020

FinLit Executive Summary: FinLit Written Narrative

FinLit Pitch Deck: FinLit Pitch Deck


  • Conrad Challenge Innovator and Semi-Finalist
  • Diamond Challenge Semi-Finalist
  • Blue Ocean Competition Top 50


The Problem: Lack of Financial Literacy among Younger Adults

A mere 22% of 18- to 24-year-olds in a recent study conducted through the University of Illinois at Urbana-Champaign were characterized as financially stable, meaning that these students managed their finances and were less likely to use costly alternative services such as payday lenders.

The recent report, “Best Practices for Financial Literacy and Education at Institutions of Higher Education” published by the U.S. Financial Education and Literacy Education Commission (2019) reports that most student debt is in the form of student loans amounting to $1.5 trillion. This student loan “crisis,” as U.S. Secretary of Education Betsy DeVos puts it, cripples 40 million students, 40% of whom may default on their loans by 2023. With the burden of loans, the individual has fewer funds, threatening potential future personal economic growth. The report highlights the following “best practices” to alleviate this crisis: 1) Provide actionable, relevant, and timely information in close proximity to the decision, 2) Improve financial skills: know how to use information to make financial decisions, 3) Build on motivation: align education with individuals’ goals, 4) Make it easy to make decisions and follow through: remove barriers and provide incentives, 5) Provide on-going support: “one on one” coaching to continue to assist in reaching goals and planning for the future.

FinLit: an Unprecedented Behavioral Modification Tool

Targeted for college students and young professionals, FinLit is a comprehensive solution in the convenient form of an app that differentiates itself by focusing on behavioral modification techniques to increase financial literacy and budget adherence. Behavioral change is encouraged through: 1) Overspending “alert” notifications that must be resolved through reallocation of funds or increased income, 2) analysis of historical spending behavior to proactively assist in planned expenditures, 3) allocating funds to investment accounts that can be used for emergency expenses, and 4) better-value spending alternatives and relevant freelance work offers.

In our review of budget management apps, no other apps extensively address the behavioral aspect of spending. The three most popular budget management tools are: “You Need a Budget,” MINT, and Every dollar. Although each has various degrees of budget management, no service offers a functionally-rich behavior modification spending platform. The gap of behavior modification in the marketplace provides an opportunity for FinLit.

The FinLit Concept

Key components of the FinLit ecosystem include: budget set up, transaction management, budget management, and behavior modification (including education).
The budget set up function allows the user to define the budget the monthly budget by user-defined categories. The budget categories include subcategories that are essential to the behavior of the student. Budget categories are traditional, like Food, Clothing, Rent. The sub-categories are reflective of the student lifestyle and states “why you spend.” For example, under Food category, instead of “restaurant,” it could include “socializing with friends.” The intent is for the subcategory to be aligned with the lifestyle. Through these subcategories, the user is encouraged to think about the purpose of the spending that may lead to more alternatives.
The transaction management function receives the matched transactions from the financial institution(s) and matches them to the budget category and subcategory. The app has the intelligence to remember vendors and/or payment details and automatically assign the transaction to the budget category. For example, the Whole Foods transaction is automatically assigned to the category “Food” and subcategory “eating in” (behavior).
The budget management function analyses the status of the current budget for the period. It shows the expenditures to date and remaining balance. It issues notifications based on the status of the budget. It allows the user to modify budgets by moving money between categories in order to maintain the integrity of the budget.
The behavior modification function is the central brain that facilitates the behavior modification of the user. The goal is to help users understand not only what the user spends money on, but why they spend money on certain items. This function includes:
1. Analysis of spending behavior with proactive recommendations. The app looks at historical spending behaviors and suggests modifications, like “try to eat in tonight”

2. Promotion of offers to encourage exploration of alternatives and/or saving money. Offers are found through sites, like “Honey,” or vendor-specific coupons. Partnerships with vendors enables exclusive offers. For instance, along with the “try to eat in tonight” notification could come a “Hello Fresh” offer for 30% off on the first few deliveries.

3. Improvement of financial literacy through educational modules and interaction with chat boxes, financial advisors and firms, and community forums.

4. Suggestions for opportunities within the “gig” economy to make up for financial shortfalls and earn additional income. Opportunities may include employment as an Uber driver, freelance work on platforms like Fiverr, and short-term hires.
5. User-driven “what if” analysis allows the user to play with various budget scenarios. Any budget modifications resulting from this analysis can be promoted for use in the budget management function. This component also tracks the historical progress of budget adherence and understand the motivation behind the expenditures.

Acquiring Users and Revenue Model

FinLit’s revenue model is four-fold. 1) FinLit licenses the product/technology to other entities with an interest in the successful management of the students/young professionals. 2) Students or young professionals will subscribe directly to FinLit. 3) FinLit earns commission on the connection of users to financial advisors/firms. 4) FinLit charges companies for the promotion of relevant, better-value, alternative goods and services.
1) Licensing: The student sector of our target market will be reached through campus financial aid offices. These offices will promote the use of the FinLit ecosystem to help students develop financial responsibility prior to graduating and before they are faced with servicing the debt of their student loans. We will license the FinLit ecosystem to government agencies and financial institutions issuing the loans. The agencies would require students to use the FinLit ecosystem to establish a level of competency as a condition of the student loan. Traditional financial institutions, such as credit card companies, banks, brokerage firms, would promote the ecosystem along with their banking. The FinLit ecosystem will be an add-on service banking to enrich the institution-consumer relationship and enrich the experience of the student or young professional. For an additional fee, the ecosystem could be privately-labeled for each financial institution, promoting brand-unity. The value proposition is that FinLit advanced budget adherence and therefore reduces the probability of default on credit card and other loans.
2) Subscription: Users can also directly subscribe to the FinLit app without going through another institution. We offer a free 6 month trial before one must subscribe to our service and pay a fee of $3/month.
3) Connection: We will earn commissions on successfully connecting users with financial advisors and/or financial firms.
4) Promotion: Exclusive promotions from companies offering better-value financial alternatives will be offered to FinLit users with relevant needs.