User-focused Fintech: The Consumer is the Winner

Alex McKay - Soldo •

Interview with Maximilian Rofagha

Maximilian Rofagha, a Forbes ’30 under 30’ entrepreneur, is the founder and CEO of Finimize, a set of resources designed to empower ordinary people to take control of their financial decisions without needing a financial advisor. What started as a simple, jargon-free email newsletter (which remains hugely popular with a 300,000 circulation) is now well on the way to being “The TripAdvisor of Finance”, with consumer-generated rankings, bitesize educational “Packs” and face-to-face meetups all over the world.

People have more information available to them than ever before. Does that make it harder for people to run their financial lives?

We think so. We think there is a choice paralysis problem specifically when it comes to financial products and financial platforms. Our job is to digest all of the information out there and boil it down to the essentials and the most important pieces of information that the consumer needs to have to enable them to make an informed financial decision.

With the features that Apple and other fintech innovators are releasing now, we’re starting to see real budgeting and real financial management features that make an appreciable difference to people’s lives.

But whilst there is more information there than ever, hasn’t that paralysis always been there? Financial products are not physical – I think our judgement has always been pretty weak, no?

I’m not sure I’d agree. If you think about the landscape of financial products today, on the one hand you have incumbents constantly bringing out new financial products – Goldman Sachs is a great recent example with their Marcus savings account; a new product which increases choice for the end consumer, which is good.

But then you have all these new fintech upstarts that add even further propositions to the market to the product landscape and I think that is a trend that feels like it’s accelerated over the last decade or so, and then amplified the choice paralysis problem.

You’re really impressed with the new Apple credit card. Why is it important?

So, Apple and Goldman Sachs have announced their credit card in the US. People have interpreted this as a threat to Amex or Diner’s Club etc., but in my view this is a really big stepping stone not just for Apple, but for fintech in general. They’re using a credit card as a means to an end. In Apple’s case, it is to drive further integration with Apple Wallet. But with the features that Apple and other fintech innovators are releasing now, we’re starting to see real budgeting and real financial management features that make an appreciable difference to people’s lives.

Apple’s brand reach means it will be really interesting to see their functionality as a stress test to all the new fintech propositions, whether that be in the budgeting space, the personal banking space, the account aggregation space or the business banking space – testing how strong those propositions really are.

Is functionality now more important than rates of interest, then? After all, we buy from Amazon – even when they’re not the cheapest, because of the convenience and functionality. Is that the case in finance, too?

I don’t think so. Goldman’s savings account – now in the UK too – is all about offering a much higher interest rate on your savings than any other account out there. And don’t forget, Amazon established its beachhead by offering low prices. So the numbers still matter.

But also, the market doesn’t stay still. As consumers become more informed and educated, which naturally happens as any market matures, they will then seek the optimal solution, not necessarily the shiniest one.

For example, many consumers in the UK migrated away from financial advisors to robo-advisors. But then they found out that robo-advisors invest in, say, ten ETFs. Consumers realised that they could do that themselves and save themselves the management fee.

This will keep on happening: products and services evolve to meet customer needs, and customers become more articulate in understanding what they want and what will help them.

That’s why one of the things we’ve done is to ask our community which financial products they use and why they picked them? Why a Nutmeg over a Moneyfarm? What do you like about them? Would you recommend them to a friend. We’re trying to crowd-source all of that information from the communities, so that you can consult other people’s experiences before making a big financial decision. It’s bizarre to think that if you go on a trip, its almost second nature to check TripAdvisor, yet when you make financial decisions, you don’t consult the experiences of other people.

Can communities also be dangerous? This is not professional advice, this is experiential advice. So is there a risk that charlatans can get involved and hawk lousy products?

Yes. And it’s our job is to create an environment where that kind of toxic behaviour doesn’t find its place. We enforce strict community guidelines, so with our user-generated reviews, it’s not like Trustpilot where anyone can post anything. We have a team of experts who review every single post and check whether the person actually used the product and whether there is any promotion that they’re trying to make. Every platform needs to set its ground rules.

What’s round the corner in fintech? The sector has exploded dramatically in the past 3-5 years, but I sense that we are still only scratching the surface. What are the hottest trends at the moment?

I think the obvious one is that all experiences today are designed for a mobile purse. Banking, investing, saving or business, the new generation of products is mobile-first.

I think it’s also an interesting time for business-focused fintech services. We’re starting to see an insurgence of B2B or B2B2C propositions. Starling is a great example: it started off as a B2C product but is now more B2B2C. I read recently also that Nutmeg is going to do another crowdfunding event and will use the money they raise to develop a B2B proposition.

There was a time when consumers followed behind business. Innovations would propagate through the enterprise first – at great expense – before being consumerised at a fraction of the price at scale. But technology has changed the game. Consumers bring the same user experience expectations to their workplace as they demand at home; and fintech is a prime example of B2B services catching up. Expect B2B financial services to get the same glamour, flexibility and choice in the market as the white-hot B2C fintech market shows today.