The Fintech Second Wave: Unlocking our Digital Financial Lifestyles

Alex McKay - Soldo •

Interview with Edoardo Moreni

Edoardo Moreni is co-founder and CEO of Emma, the financial management app. With a first-class engineering Masters in Computer Science, he leads a product- and data-driven team to “empower millions of people to live a better and more fulfilling financial life.”

People have been happy with their banks for years. So what’s the problem?

When I was at university, I managed my own finances every month. I’m not sure how I learned it, because my bank certainly never told me how to do it. If I went overdrawn, again, my bank might charge me, but they didn’t particularly take an interest in my situation. 

The truth is, banks don’t care that much about the financial circumstances of their customers – whether your balance is going up or down, or for more sophisticated customers, whether you’ve just made an investment with the help of a financial advisor or done it by yourself with no sensible advice at all (which, of course, you shouldn’t!).

And the thing is, that makes perfect sense. 

First, free consumer banking, which is the default in the UK, is not profitable. So banks have to make their money from fees. Second, in the past we have stuck with our banks – especially as financial products can be complicated to understand. So there has always been plenty of room for traditional banks to make money selling us their own products, like loans and insurance; even though they aren’t often particularly good. So we shouldn’t be surprised that traditional banks don’t much care for our all-round financial health.

I simply don’t think it’s the job of a bank to care about your financial wellbeing. And that has led to the concept of Emma: a third entity between the customer and their financial product providers, with the goal of improving people’s financial lives.

When I was at university, I managed my own finances every month. I’m not sure how I learned it, because my bank certainly never told me how to do it… I simply don’t think it’s the job of a bank to care about your financial wellbeing.

How does Emma fill the gap?

The best way I can describe Emma is that if you look at history, every generation has had its tracker for money. 700 years ago, it was the abacus. Fifty years ago, it was the calculator. We just want Emma to be the money tracker for the modern generation. It’s a mobile app which tracks budgets, spending and money, on the basis of three principles:

There are plenty of other account aggregators, but Emma’s USP is the product itself. Everyone will let you see multiple balances, but we want to help people do something useful with that information. So with Emma, you can sync all your budgets to payday. You can check all your subscriptions and understand your credit cards.

We think that fintech today has an opportunity to move from just recording transactions to boosting people’s financial lives. I mentioned being “the financial tracker for today’s generation”: a typical customer for us might be 23 years old and getting their first regular salary. She needs help managing bills and saving money. She also needs a credit card, not just for the flexibility, but to establish a credit history so that she can get a mortgage in seven to ten years’ time. These are all big financial decisions which deserve to be considered together in a financial strategy – decisions which many people don’t get good enough advice to make. And they’re the sorts of decisions that transactional banking just can’t help with. So most of our product roadmap decisions today are about building that continuity and strength in people’s financial lives.

How do you decide what to develop?

There are two priorities. Firstly, the customer-facing experience is everything to us. We’ve been building our product for three years, so we know how to make it work properly for users. For example, in any other app, if you connect five different accounts and you start to shuffle money between them, it looks like you’re spending money via bank transfers. We’ve made all that work properly. Everything we develop is focused on the user experience – making it easier to manage money – and I’m certain that’s why we’re growing successfully by word of mouth alone.

Secondly, we’ve built most of the Emma product by listening to our users. We’re not innovators. We’re not doing something especially new. We just react to our users’ feedback as fast as possible; and in the past 12 months we’ve been able to launch pretty much one new feature every week. 80% of those features have come from our users, the other 20% from our experiments and our creativity – but we’re never far from user feedback. Always talking to users is the key.

Of course, there’s also an opportunity in the community itself. We originally built the community because we wanted to listen to product feedback and develop new features, but long term we also see it as a place where people can encourage each other financially and come up with ideas or share experiences. Remember, Emma is not about financial products, it’s about our financial lifestyles. That’s truly powerful because in the past people haven’t been able to get those sorts of questions answered.

You’ve helped people to connect multiple bank accounts. Has the UK’s Open Banking project helped get that across the line?

I think that Open Banking certainly helps fintech companies, but from Emma’s point of view, it’s not core. It’s been a way to facilitate access to bank accounts; it makes connecting to information easier, but I think we can – and must – exceed what Open Banking offers. 

The most important thing for us is, and always will be, the product. It’s what our customers see every day when they open the app. If it doesn’t work, if it doesn’t do the right things for them, they’ll leave. Open Banking is a great innovation in terms of logging in and connecting to bank accounts, but product and experience are our absolute priority, and I think every fintech needs to think that way.

The most important thing for us is, and always will be, the product. It’s what our customers see every day when they open the app. If it doesn’t work, if it doesn’t do the right things for them, they’ll leave.

Emma is not a bank – where do you fit into a growing fintech ecosystem?

Interestingly, I think we are part of a second wave of fintech which is establishing itself much faster and more effectively than before. The first wave was in banking – the branchless, digital challenger banks. They were innovative and they served to break down the barriers between digital and traditional financial services, but they fundamentally replicated the old banks in most ways. 

The beauty of the second wave is that we’re not banks. We’re not building a single vertical; we’re building a smart, thin layer to sit on top of everything. And thanks to Open Banking and other better APIs worldwide, we can expand globally much faster. We don’t have to be regulated in every territory or even every US state. We don’t need to have a banking license. So when we want to expand into a new country, we can just do it. At the moment, we’re focused on rolling Emma out to other English-speaking countries. We’ve actually been live in Canada and the US for a few weeks now, and that expansion is going to continue. We’re also currently working on integrating payments for the US market.

But again, not being a bank isn’t just about regulatory convenience. Again, I come back to fintech moving beyond transactional services. Fintech in general has the opportunity to improve people’s financial lives on every front and for every financial product. So I don’t even think of Emma as a fintech company: I see it more as a consumer product like Snapchat, Facebook, or Instagram. We genuinely want to achieve that level of engagement and virality. It feels like a big ambition, but that’s because banks have always been transactional and never encouraged true engagement; whereas it makes perfect sense to be truly engaged with your financial lifestyle.

Emma is resolutely targeted at younger consumers – not because of a generational divide, but because our financial habits seem to get baked in early. Moreni says that his ideal new sign-up is someone getting their first paycheck – and Emma’s backers agree: the business has closed a seed round with stellar venture firms Kima Ventures (Transferwise) and Aglaé Ventures, early stage fund of Groupe Arnault (Netflix, Airbnb). Those “first paycheckers” face more choice in the market, less advice and consumer protection, and more financial pressure than any previous generation. By putting data to work, Emma’s plan is to become the sort of “financial advocate” that modern consumers need and traditional banks won’t provide.