Joel Schwartz, Co-CEO and Founder of DoubleCheck Solutions™ On How They Are Helping to Promote Financial Inclusion
An Interview With Orlando Zayas for Authority Magazine
You would want to identify the bottom 10% of your most vulnerable customers who struggle with financial inclusion. To help the most vulnerable customers meet their needs, you need to know who your bottom 10% is and develop an understanding of their profile and needs. Financial inclusion supports needs at the bottom of the pyramid — health, safety, shelter. Identifying these needs is the basis of allowing customers to enter financial conclusions.
Most of us take it for granted that we can open a bank account or credit card. But 1/3 of adults are still unbanked and have no access to an account. About half of unbanked people include women in poor households in rural areas or out of the workforce. What can be done, and what is being done to promote more financial inclusion? To address this, Authority Magazine started a new series about Companies Helping To Promote Financial Inclusion. As part of this series I had the pleasure to interview Joel Schwartz, Co-CEO and Founder of DoubleCheck Solutions.
Joel Schwartz is the Founder & Co-Chief Executive Officer of DoubleCheck Solutions, a financial technology company with an innovative solution that delivers new revenue for Financial Institutions while giving customers and small businesses more transparency and control in the event of Non-Sufficient Funds (NSF) and Overdrafts. Joel spent almost 20 years as a banking executive, enabling him to see the need for empowering customers to make their own financial choices, build a great credit score and protect themselves from fraud. To meet this need, Joel founded DoubleCheck, helping banks and credit unions rethink the industry’s outdated overdraft and NSF practices in the face of unprecedented economic, regulatory and legal challenges.
Thank you so much for doing this with us! Before we dig in, our readers would like to ‘get to know you’. Can you tell us a bit about how you grew up?
I grew up in a house where discipline and having a strong work ethic were role modeled daily, and frankly, it was just expected of me. While at the time I may not have always valued it that much, as an adult I’m so thankful that my parents, especially my father, drilled that into me. It gave me the confidence and courage I needed to eventually start my own company when I saw a problem that no one seemed to be solving.
I was always really interested in – and good at – marketing and sales, but finance wasn’t my strong suit so when I went to college, I decided to focus more on finance to fill that gap. That’s when I found my love for numbers and I realized I could help make finance more relatable to other people who may struggle with it the way I previously did. Let’s be honest, this is a widespread issue across all socioeconomic groups, but it’s heightened in those that have a more limited income.
After receiving my bachelor’s degree in business administration and finance from San Diego State University, I entered the banking world. I spent almost 20 years as a banking executive before founding DoubleCheck Solutions. Previously, I served as Senior Vice President and Regional Manager at First Bank and a Branch and Cluster Manager for Downey Savings. I taught Niche Marketing and Market Share Growth for over a decade at UCLA Extension.
Going into banking, one of the first things I realized is that with the rise of the debit card, came the elimination of the check register, meaning people were no longer keeping track of their detailed expenses and how much was left in their account. This “zero budgeting” mentality has led to a significant increase in the use of overdraft and in payments being returned due to insufficient funds.
My experience in the banking industry also enabled me to see the need for a company that creates more transparency for customers that may be living paycheck to paycheck, one that understands that an unexpected expense like a prescription, could lead to a negative balance temporarily, one that empowers customers to make their own decisions on what gets paid when they have insufficient funds and one that gives them more options to avoid bouncing a payment. Not only that, but I wanted my company to help these financially vulnerable customers to build up their credit score and protect them from fraud rather than penalize them in ways that only made their financial situation worse. That’s why I founded DoubleCheck Solutions back in 2013. It took me a while to get it started, but I never gave up and I like to think this is what my parents were preparing me for all along.
Is there a particular book that made a significant impact on you? Can you share a story or explain why it resonated with you so much?
“How to Win Friends and Influence People” by Dale Carnegie has had the most significant impact on my life ever since I was a kid. Every year around my birthday, my father required me to read the book until I was 18 years old. He told me, “No matter what business you are in, no matter what world you are in, no matter what part of the country you are in, it always comes down to people and how you relate to people.” From my father’s perspective, that book played a huge role in helping him feed his family, build relationships, and build his business. The book had a significant impact on my life, and I make my kids read it almost every year to pass on the invaluable insights I learned reading this book. My father and I permanently bonded over self-improvement and business, and how to make yourself better, so the lessons in this book really overlap with our relationship. That book was a foundation to my success in the business world, and it’s still one of the biggest influences in my life today because it provided simple tools to succeed and form meaningful relationships with people – in both personal and professional life.
Do you have a favorite “Life Lesson Quote”? Do you have a story about how that was relevant in your life or your work?
I have a couple of them, but the one I always try to live by is, “always treat people the way that you would want to be treated.” That quote extends into the purpose of DoubleCheck as well. I like to put myself in consumer’s shoes to understand how I would want to be treated, how I would want to be handled, and how I would like to be respected, and I apply that to how we operate DoubleCheck. If I were a consumer struggling with overdraft fees and non-sufficient funds (NSF), I would want more transparency and choice when faced with the possibility of bounced payments. I would want an opportunity and tools to fix it before any of the negative consequences kicked in. Bottom line, if I didn’t have enough money in my account to cover my transactions, I would want to know that and be given the opportunity to prioritize my transactions to make sure the most critical bills, like rent and utilities are covered, and if there were additional ways to pay for transactions so nothing got returned, even better. And that’s what we help people with.
Another quote that has always stuck by me comes from my father. My father always told me, “A smart man always learns from his own mistakes, a wise man learns from other people’s mistakes.” This lesson has taught me to be more observant and tuned into what others in my industry are doing – to learn what has already been done, what was done wrong, and how I can solve the issue at hand.
How do you define “Leadership”? Can you explain what you mean or give an example?
I define leadership as empathy with a common goal or objective. I have experienced both good and bad leadership when working for other people. From my experience with bad leaders, I realized they never understood how I felt. From these experiences, I learned how crucial it was to commit myself to understanding how others feel and think. Just as important is where we want to end up. If two, 10, or 100 people are rowing a boat, we all need to propel in the same direction and head to the same harbor. If even one person is rowing in a different direction, we may never arrive or achieve the needed objective. However, if you are empathetic and can put yourself in another person’s shoes, it will help the process of reaching common goals and objectives. I’ll never forget this example of bad leadership: When I was working as a branch manager, my first day on the job also landed on the opening of the bank branch. That day, my assistant manager never showed up. I contacted my supervisor to see what I should do, and he said, “what do you want me to do about it? Figure it out.” It was my first day on the job, fresh out of training, I needed help, and he made me feel alone and did not understand my position. After that happened, I promised myself I would never make anyone who worked for me ever feel that way. I promised myself I would listen to, understand, and be there for my employees.
Can you share the most interesting story that happened to you since you began your career?
My dad used to bank at the same bank where I worked. After working at the bank for a little over a year, I became number one in my company. A branch manager my father knew well told him about my success. The Branch Manager said, “You must be very proud of your son; he’s going to be just like you.” My dad responded by saying, “My son will be more than I ever was…” My father passed away a few years ago from Alzheimer’s. Last year, my mother went through his closet and found his wallet, which I had not seen in 9 or 10 years. I took the wallet to see if anything was in it. I found a few pictures of my brothers and me, but in the cash section, the only thing that was left behind was an NSF check from 1985. That check was virtually the only thing my father had in his wallet. The check has a long history.
Every year, my family would go to Disneyland. One time, my father went to a police auction that had old tickets from Disneyland, and if you had one of those ticket packets, you could exchange it for a full one-day pass at Disneyland. Before we went to Disneyland that year, my father was out selling the packets to earn some extra money and pay for our meals while in the park. Unfortunately, my dad sold the packet to someone who wrote him a check that ended up bouncing. My father held onto that bounced check for decades.
There are two standout lessons from that check. First, my father, a frugal man, felt so violated that he ended up holding onto the check for that long to figure out how to recoup it. The bounced check highlighted the two ends of NSF that impact both the person doing the paying and the person being paid. What’s discussed more is helping the customer who has non-sufficient funds manage their finances. But we don’t talk about the person to whom the check was written to, the person who didn’t receive the funds. Finding that check is still one of the most heartfelt moments I have experienced to this day. Not only did finding that over 35-year-old bounced check remind me of my father, but it instilled the importance of DoubleCheck’s solution.
Ok, thank you for all that. Now let’s move to the main focus of our interview. Let’s start with a basic definition so that all of our readers are on the same page. What exactly is Financial Inclusion?
True financial inclusion ensures that everyone is able to access the same opportunities and services across the financial industry. The industry has become fragmented; it tries to make boxes to put people into. Financial inclusion addresses the needs and wants of different cultures, nationalities, age brackets, and classes. Financial inclusion addresses being inclusive to whatever your credit score or financial history might look like. It’s about creating a place for everyone and providing the resources people need to be successful.
DoubleCheck’s role in promoting financial inclusion stems from outdated overdraft fees and non-sufficient funds that lead to bounced payments or late fees, which can ruin credit scores and financial reputations, thereby making some people “unbankable”. Only financial inclusion can lead to positive, long-lasting change in the world of overdraft. The best way for the industry to be fully inclusive is to ensure an accessible solution that provides transparency and control to everyone. If we want to keep people in mainstream banking, and away from payday loan companies that charge exorbitant fees, we need to be more transparent when their account is going negative and, again, provide them with options to rectify the situation so they never become unbankable.
What does it mean to be “unbanked”?
Unbanked adults do not use banks or banking institutions in any capacity, making most payments in cash, by purchasing money orders, or with pre-paid debit cards. They frequently turn to check cashing services or payday loan companies, both of which charge astronomical fees and / or interest rates. For example, if someone is unbanked and they use a check cashing company to cash their $1,500 paycheck every two weeks, assuming the company charges a 4% fee, they are paying $1,560 in fees over the course of a year, which is a little more than two weeks’ worth of salary.
In 2019, 6% of US Households, or 14.1 million adults, were unbanked. But if you look at vulnerable communities, this percentage more than doubles. 19% of households making less than $30,000 annually were unbanked, compared to 2.4% of households making more than $30,000 annually. As more households stare down the proverbial economic cliff, we could see a considerable spike in the population of unbanked and underbanked Americans. Seeing as the average financially underserved household spends 9.5% of its annual income on fees, change is necessary.
For the benefit of our readers, can you explain some of the typical reasons why a person might be unbanked? Why can’t they just walk into the local bank and open an account? Why can’t they simply open an account online?
There are several reasons why adults are unbanked or underbanked. Some people may be unbanked due to past financial mistakes, such as too many bounced or late payments without bringing their account positive in a timely manner. This in turn hurts their reputation and has a negative impact on their credit score. In fact, in these situations they may be placed on the banking deny list, preventing them from getting back into mainstream banking in the foreseeable future.
In other cases, with past due bills piling up and income dwindling, many Americans may no longer be able to afford traditional banking services. Many financial institutions have minimum balance requirements and high fees just to have an account, not to mention the fees charged for overdraft and returned payments.
Someone can also be unbanked because their bank or credit union didn’t offer them the financial tools or services needed to manage day-to-day finances. Financial institutions typically offer very similar services and assume “one size fits all”. In reality, they need a toolbox that is far more versatile, offering services specifically focused on keeping people in banking and helping them through their daily lives and challenging times alike.
People can also be unbanked due to crimes or violations, and they cannot open an account because they are on Chex Systems, and therefore cannot open an account in the entire country.
Banks were built on a pre-depression philosophy, banks now need to progress to adhere to all financial needs.
Can you tell our readers a bit about your work to promote Financial Inclusion? Without saying names, can you share a story about a person who was helped by your initiative?
Consumers deserve transparency and control when it comes to their finances. They need the option to rectify their insufficient balance before any funds are returned. By enabling consumers to review transactions and adjust declined and returned items, financial institutions can help minimize the damaging ripple effect of declined payments and truly take up the regulatory cause of consumer empowerment.
At DoubleCheck, we’ve spent years developing the technology that financial institutions need to offer this service. We’ve made our solution scalable and easy to implement, so financial institutions can quickly reach the populations that need this service most.
DoubleCheck’s solution protects consumers and promotes financial inclusion in real-time, let’s take John, for example. John is 35 years old and works as an auto mechanic. He married Jane, his high school sweetheart. She works part-time as a receptionist in a doctor’s office. John and Jane have three kids and are constantly shuffling them around to soccer games or ballet classes.
John and his family live paycheck to paycheck, but they always manage to get by. Jane pays most of the bills and manages their day-to-day finances. Like most people today, she doesn’t keep a check register or a running balance of her account. She generally knows what bills hit her account at what time of the month, but she doesn’t always keep track of her gym membership and which streaming subscriptions they have.
A few months ago, their Netflix bill and their mortgage bill came in at the same time and there wasn’t enough money in their account to cover both of the items. John was furious when he found out His Netflix bill was paid but that his mortgage payment had been returned, not to mention the fee he was charged for having non-sufficient funds. Jane, called the bank and asked, “why didn’t you call us and tell us we had a problem. Why didn’t you give us a chance to fix it?”
Let’s fast forward… six months after the “timing mishap” with his mortgage payment. John’s youngest son got sick with COVID and Jane had to take several days off work, so expenses were extra tight that month. Shortly after that when john was at work, he got a text message from his bank telling him he had insufficient funds in his account to pay for all his transactions. The text included a link to his online banking account with a note that he had until 10 am the next day to resolve the situation.
John logged into his online banking account and was presented with a list of transactions that had insufficient funds – he saw that his electric bill, mortgage payment, Netflix subscription and gym membership were all about to be returned. Not only was John notified before those payments were returned, his bank gave him options to re-prioritize which payments to make, and which to return. They also offered him multiple payment options to make up the deficit so nothing would be returned.
As much as John considered his gym membership and Netflix necessary for survival, he marked those items for return, which freed up enough money to pay his electric bill instead. But he still didn’t have enough money to cover his mortgage. He didn’t have the cash available to deposit at the moment, but knew his wife was getting a paycheck the following week. So, he decided to use his credit card to cover his mortgage payment, and when his wife’s paycheck came in, he paid off the credit card.
This bought John the time he needed to avoid approximately $175 in late fees, damage to his credit, and more importantly, kept his power on. Without Doublecheck, these transactions would have bounced and could have eventually led to him becoming unbankable. DoubleCheck provided him with the transparency and control he needed when he was struggling financially.
This may be obvious to you, but it will be helpful to spell this out. Can you articulate to our readers a few reasons why it is so important for businesses to promote financial inclusion?
Relationships. Whether the touchpoint is digital or in-person, relationships are the bedrock of any business. Providing the right tools for your customer’s unique needs ensures a mutually successful, long, and prosperous relationship. Second, It’s good business. Where your customers have unmet needs are opportunities for innovation and growth within your industry. Financial inclusion could catapult your business into a new untapped market segment. Lastly, and probably the most important reason, as Shanon Mclachlan, the president of Jack Henry Symitar, so eloquently said, “It’s just the right thing to do.” We all live on the same rock in the middle of this massive universe. Doing the right thing by our fellow man or woman makes our world that much of a better place to live.
Ok. Here is the main question of our discussion. You are an influential business leader. Can you please share your “5 Steps Business Should Take To Promote Financial Inclusion”? Kindly share a story or example for each.
There are several steps businesses can take to promote financial inclusion in their institution. First off, you would want to identify the bottom 10% of your most vulnerable customers who struggle with financial inclusion. To help the most vulnerable customers meet their needs, you need to know who your bottom 10% is and develop an understanding of their profile and needs. Financial inclusion supports needs at the bottom of the pyramid – health, safety, shelter. Identifying these needs is the basis of allowing customers to enter financial conclusions. The next step would be to identify and remove the roadblocks that stop those three needs from being provided by your financial institution. Step four will be understanding what it will take to get to your solution, and not looking at those roadblocks and thinking that they are impossible but figuring out how you can achieve your goal. Sometimes, it may require knocking down the whole wall to rebuild it to be more inclusive and allow more customers to get access. It’s essential to identify how you can build your business to make yourself more financially accessible. Step five would be tracking KPIs with built-in re-evaluators. Every time you re-evaluate, you go back to step one. You always need to circle back to ensure that you are constantly re-evaluating and moving forward to increase the number of people you’re including and helping from that bottom 10%. Organizations must balance constant constraints with constant improvements.
You are a person of enormous influence. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 🙂
I would love to see a true revolution in banking with a significant focus on overhauling outdated practices that are aimed at penalizing consumers and small businesses, especially those that are more vulnerable, and instead offer more visibility, insight, tools, and options to help them be successful. What if banks and credit unions were actually incentivized to eliminate or reduce the number of payments returned? What if their success was dependent on their customers success?
I created DoubleCheck as a stepping-stone focused on outdated overdraft & NSF practices that place an unnecessary burden on consumers, small businesses, and financial institutions alike. When the Consumer Financial Protection Bureau conducted a significant study of overdraft practices in 2017, it found that most overdrafts occur because of timing or inattention issues, not from financial emergencies. This suggests that overdraft services may be targeted most at vulnerable populations.
All customers deserve visibility into how their institution addresses their account shortage and control over what gets paid – we need to fully empower both consumers and small businesses to take control of their finances in the most upfront, transparent and fair way possible. It’s my goal to continue working with financial institutions to implement scalable and efficient solutions that reach the populations that need them the most. Through innovative, practical solutions that give consumers more transparency and control over their finances, we can take significant steps towards a complete overhaul of overdraft and NSF.
Addressing these issues is just the start and we welcome the opportunity to work in coordination with financial institutions to further the revolution with solutions that benefit consumers and businesses alike.
Is there a person in the world, or in the US, with whom you would like to have a private breakfast or lunch, and why? He or she might just see this, especially if we tag them. 🙂
Bob Iger, the former CEO of Disney. My admiration for Bob as a leader, risk-taker, and just overall good person is beyond words. Many of his attributes and philosophies I have incorporated into my leadership style. He built an incredibly successful career and legacy by being his authentic self and maintaining the highest level of integrity. He made himself accountable to all the stakeholders, from the consumer to his board. When he finally was given the helm of one of the world’s largest, most influential companies, he took it to the next level. Considering where he is and where I am in my career, breaking bread with Bob, and learning just a tad of what I can expect from the next chapter of my journey would be priceless.
How can our readers further follow your work online?
This was very meaningful, thank you so much. We wish you only continued success on your great work!