An interview with NerdWallet's Thang Troung
Published July 13th
While Americans are well known retail shoppers, the same cannot be said of shopping for financial products. The typical household doesn't compare or shop. Given the range in fees and interest rates for financial products, families are leaving money on the table.
In 2015, the CFPB found that half of borrowers do not shop for a mortgage, representing the most important financial decision many Americans make. Given observed differences common in interest rates across banks, the CFPB found a borrower could save $3,500 in interest on a $200,000 mortgage over the first 5 years of the loan just by shopping around.
Over the last decade, shopping has become more accessible. Consumer reviews, online marketplaces, and comparison websites are now widely available. Fintechs have also entered the market, driving greater competition in favor of pricing transparency for many products.
Thang Truong is a product executive a NerdWallet, a fintech that helps people shop for and find the best financial products for their needs. He joins to discuss his observations on how people's behavior and mindset is shifting in the covid era.
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Mack: Welcome, Thang. The current pandemic has certainly shifted people’s behavior in a short amount of time. What shifts do you foresee as permanent?
Thang: My view is that more and more Americans realize how unstable their future is. Coming out of this, people will realize financial security and financial independence will become ever more important. I think more people will save and plan for the future… they’ll grow less risky and careful in their financial behavior. As a result, they will be a lot more thoughtful and careful about expanding their credit. I also expect people to focus on saving more of their money.
If you remember the 2008-2009, there was a movement towards financial independence. The “FIRE” movement [financial independence, retire early] is one example. I think one of the enablers of the movement was how everyone felt like they had so very little control – though they didn’t do anything wrong, they lost their job, and everything became so dark. Instead, people decided to control their destiny by trying to be financially independent. This pandemic has had an impact on a bigger impact – because everyone will have felt its impact.
I think more people will save and plan for the future. They’ll grow less risky and careful in their financial behavior.
Mack: Great points. In your view, what will this shift towards financial security and financial independence look like in practice?
Thang: We will see people saving more. This is the simplest manifestation. People will be more careful with expanding their credit too. We’ve heard stories in this pandemic about people that make good money and spend with no tomorrow because they know they’ll get their next paycheck next month. Suddenly, that mentality is not sustainable anymore.
People are asking themselves not if there’s going to be a rainy day, but when will the next rainy day come. This is what we are going to see more. Even young people, even college students who don’t make money, they all see this impact.
People are asking themselves not if there’s going to be a rainy day, but when will the next rainy day come.
Mack: Drawing on your varied experiences in fintech, what are you seeing regarding changes in shopping behavior for financial products and services?
Thang: People are becoming a lot more mindful. In the past, it’s been a specific segment of savvy consumers who use the content on websites like Nerdwallet to educate themselves. Many people never shop for financial products and just get the credit card or bank account they can get.
I think we are seeing more and more people being more mindful about the financial products they use. A greater percentage of people have begun questioning whether the account they have is the best, and ‘should I buy a different one?’ They’re asking, ‘what else should I do to save money on the stuff I don’t pay attention to?’ It will become a more mainstream trend and activity to shop for financial products and not just a niche financially savvy group of people.
Mack: Fascinating. What are some specific areas you’re already seeing changes?
Thang: Investing and student loan refinancing are two areas that have been surprised me already during covid.
Remember during March how the market declined significantly? Personally, I wouldn’t do anything with my investments because I know it’s temporary and my investment strategy is for retirement which is 20 years out. Well… our traffic in investing skyrocketed in March. It was the highest in our history. Younger staff members told me that this was the time to jump in and invest because stocks became cheap. When the market declines, people on the sidelines jump in and act.
The other area is student loans. People don’t need to pay interest on their [federal] student loans until September. At the same time, interest in student loan refinancing has stayed strong. Many people are realizing that they can take advantage of and benefit from lower interest rates.
Mack: As you look to the fintech industry more broadly, what gives you optimism about the future of finance even amidst the current environment?
Thang: If you look at the financial markets, especially in the US, the top 10 players become bigger every year. This concentration has been going on for decades. They’ve become so big and dominant that they make new entrants more difficult to come in. You can see this in how their profits have grown significantly. That’s the signal that consumer finance has become stagnant, and competition is not stimulated. This is bad for the consumer.
Changing this by creating a more competitive marketplace is what makes me so excited everyday at Nerdwallet. As an editorial team, we pay attention to the smaller guy with the best product. We always promote the better product. You see this a lot in student loan, mortgages, personal loans, and investing. We promote all of them and compare new entrants on equal footing with established incumbents. This helps the new entrants to be recognize by the consumer to get a toehold into the market. Consumers trust our editorial and helps consumers pick better products for them.
The top 10 banks get bigger every year... and consumer finance has become stagnant and concentrated. Creating a more competitive marketplace is what makes me so excited.
The personal loan market is a great example. It’s almost entirely represented by new entrants. As personal loan grows, credit card declines. Often, people are able to pay lower interest rates and installment payments actually allow them to become debt free, as opposed to the open nature of credit cards. It shifts power and dynamic across verticals and between new entrants and incumbents – benefiting consumers.
Mack: With all these exciting developments in fintech and people’s quest for financial security, what advice would you give to a product manager, or PM, looking to make the switch to fintech?
Thang: I interview a lot. Overall, I don’t look for financial industry experience. A good PM is a good PM is a good PM. To me, financial services is an easy area to become PM because you don’t need to have any hobbies or special interests to understand the consumer and experience the product yourself. I’m not going to become a PM in gaming, or casinos… because it’s hard it’s to become a PM in areas where you don’t have an interest.
I’ve interviewed people who have worked 10+ years in finance, but it doesn’t mean you’ll be a good PM. I recommend any PM interested in fintech to focus on becoming a good PM and learning classic product management skills, not just project management or product owner skills. You need to know how to create value and impact through your product work.
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