Secrets of FinTech products & services — ProductTank July

ProductTank’s latest meetup was on the subject of the FinTech scene. Specifically, what it’s like to go about building products in one of the most exciting digital spaces of the moment. Here’s what we learned:

Scott Eblen — Fintech & Shotguns

Ex Nutmeg Chief Product Officer who’s just moved to Director of Product Management at Twitter

TL:DR — don’t be afraid to do things that are different to the ways that a traditional industry has approached it but you have to work with the regulators to do it. Make sure you take as many different perspectives as possible from your company. You can also learn a lot from pre-existing companies or historical lessons.

1. Don’t be burdened by tradition:

Focus on the future when describing financial investments as that’s what people care about and understand. WealthFront do this heavily.

For Nutmeg, if people are checking on their investments every day, then it’s pretty likely they’re about to churn. Hence Daily Active Users are not a good metric of success.

Logging in to financial services on your mobile phone can be a risky business as it’s not always possible to see all the information you need to make a good decision.

2. Look to nature:

On average investors are 20% behind the funds that they invest in, because of people’s natural behaviour.

An example of this is loss aversion — people feel loss almost 2.5x more than they feel gaining. When designing a product that deals with financial loss, you need to take this into real consideration.

Anchoring changes peoples’ decision making depending on the first value that they see, hence default values are crictical.

Social proof for Nutmeg helped increase conversion by 6% just by showing a map of people investing.

3. Wrangling with Regulation

Regulators can be highly irrational eg not allowing capital and money to be swapped in warning statements.

Nutmeg were able to teach regulators new ways of understanding how consumers were interacting with their product eg HeatMaps to show that advice was valued and safe online

4. Take advantage of diverse employees

Bankers + Tech people could equal disaster. There are very clear differences in culture and experience. Once you get those diverse perspectives working together though they will become a competitive advantage.

Tracy Abraham — Marketplace banking and the Uberisation of Financial Services

Previously acting CMO of FinTech darling Mondo.com

TL:DR — mistrust in banks and a reduction in regulation have allowed consumers to adopt new products for their banking needs. In particular they are using certain start-up, nimble products for individual financial services, rather than banks that aggregate numerous services.
Mondo’s new way of banking

Elements that have driven all of these new FinTech startups:

  • Banks are mistrusted and aren’t felt as the most reliable and safe place to leave money
  • Very low interest rates have reduced value of banks’ offerings
  • Reduction in regulation surrounding banking licenses (still not easy!!)
  • Different business models are being opened up by a lack of infrastructure / legacy that established institutions have
  • Technology and processes required to run a bank are vastly reduced — and startups don’t have the legacy systems that high street banks do
  • Tech people are now starting companies with bankers rather than bankers employing heads of IT

Established banks are saddled with huge overheads for cross selling products against current accounts. The challengers in this market are focusing on one particular specialism rather than aggregating all of these services.

How HSBC’s business is being eaten by startups

Solve a single minded problem:

  • Osper — focussed on banking for young people (8 year olds +)
  • Pocket — people who have traditionally struggled to open any kind of account
  • Monese — focus on people in foreign countries who need to open an account

Tandem are leading the way in building their product with their customers — they are looking for partners.

Mondo did the same with CrowdCube — getting people to invest in building the company with them, to generate engaged, core customers from the start.

Atom have created a high end, branded, heavily designed bank.

Bunq target young audiences (lots of animated gifs!) and present a message of fun.

TDBank is not a startup — one of the biggest in Canada. But they created TD MySpend to give people more intricate understanding of their spending habits and to warn them if they’re about to exceed their means. Became no 1 app in Canada despite significant barriers to entry.

Tactics FinTech’s are using to drive adoption:

  • Limit supply by creating only a certain number of invites and so generate demand
  • Getting customers to acquire other customers (driving the viral co-efficient) saving money and generating revenue
  • TransferWise used a campaign approach to generate interest and get customers to sign up (against transfer fees in their case)
  • Integrating technology people from the beginning of product development
  • Funding Circle are publishing all their data in an attempt to be 100% transparent. Mondo have made their Product RoadMap public as well.

Lars Krüger — The block chain — opportunities and challenges

TL:DR — Blockchain are looking to remove the middle man and allow people to act as their own bank, conducting financial services for themselves. Blockchain and BitCoin allow this to happen by decentralising the concept of value and attaching it to people’s identity rather than property ownership.

Blockchain is a bank for BitCoin, which has hyper transparency, publishing every transaction that’s ever been made through it. The network also sees all of the financial transactions that take place and verify independently.

BitCoin is often referred to as a currency.

2 Billion people in the world don’t have access to banks — usually because they are declined or aren’t able to prove their ID. Solution is for people to ‘be their own bank’.

Challenge is that when giving people more control, you need to make sure your product doesn’t overwhelm them. Also need to protect users from themselves and make sure they can’t accidentally lose or give up control to their account.

One of the benefits of BlockChain is that every single transaction has identity attached to it, making it much more resilient to fraud. At the same time, identities can be protected by the users if needs be.

Smart contracts can automate the transfer of value dependent on certain events — meaning that you don’t have to rely on people’s finance teams to pay you when an invoice is due for example.