Forget fintech. No really. Forget it. As a descriptor (a conflation of the words finance and tech) it’s an industry-insider term that’s unfamiliar and alienating. Or so it would seem. According to a recent poll, 90 per cent of fintech’s target audience – the young, who according to legend would rather visit their dentist than their bank – have never heard of it. But strip away the tech speak and they may well be familiar with its user-friendly innovations. The app + card combo that allows you to send or spend money abroad at little or no cost. The online service that provides access to the best interest rates across Europe. Smartphone Banking. Student Finance. This is not, to use a popular fintech trope, money’s Uber moment – whatever that actually means. Managing other people’s money will always require their trust, but none of the services featured here are high-risk financial instruments. They are simple to use, fresh-faced financial services designed for people who want easier access to their money and the opportunity to waste less on fees. They might not allow you to outsmart the market, and we may only be talking modest amounts, but at this uncertain moment in time every little helps.
A smart new bank
“Today’s money is digital,” says Anthony Thomson, founder of Atom Bank, a key player in the new wave of ‘smartphone’ banks. None has a branch (their customers are unlikely to use them), but their ambitions are every bit as big as their physical counterparts. Mondo, with no shortage of aspiration, wants to build “the best bank in the world” and hopes to get a full banking licence later this year. Then there is Starling and Tandem and, in Germany, Number26. Confused? You possibly will be. But if a superabundance of choice is the problem, new app on the block, Bud, is setting out to sort it. The independent, universal financial app store (sign up for early access) wants to help people build their own banking experience by matchmaking their financial “problem” with a solution. It might be aimed at ‘young people’, but the new democratised finance is not just for the 18-35s. One digital bank planning to launch later this year, Dublin-based Cogni, is aimed squarely at small to mid-sized enterprises. The ‘data-driven smart business bank’ will provide services such as multiple currencies, integrated payment solutions, financial and business insights and an AI-driven marketplace – potentially the power of your branch on a smartphone.
Nutmeg kick-started it, in 2011, with its belief that everyone who wanted to invest should have access to a good quality service: a professional investment team; a diversified, regularly rebalanced portfolio. The online investment manager now offers investors the ability to buy fractions of funds, and as a result has lowered its minimum investment from £1,000 to £500. If your portfolio is smaller than £5,000 you may have to make a monthly contribution of at least £100. Wealthify uses algorithms based on a proven investment theory called the Sharpe Ratio (check the website). Like Nutmeg, it invites investors to create a personal investment plan by deciding how much you want to invest, how long you want to invest it for and by choosing an investment style. Five levels range from ‘cautious’ to ‘adventurous’. Minimum investment is £250 and investors can cut fees further by persuading friends to invest with the platform. Get one person to join your ‘circle’ and you’ll get a 5 per cent discount on your fees. The discount increases to 20 per cent if you get 50 people to sign up. MoneyFarm, the fast-growing Italian digital wealth adviser that launched in the UK earlier this year, offers a minimum investment of just £100. Keep an eye out, too, for yet-to-launch Moo.la. Founded by a former investment head for an AIM-listed wealth management firm, Gemma Godfrey, Moo.la’s mission is accessible investing regardless of wealth or expertise.
Dollars wrapped in love
One field visibly targeted by the financial pioneers is sending and spending money globally. I don’t care if my bank delivers cash to my door by unicorn express: I do not want to lose money on the transfer. Revolut’s founder Nikolay Storonsky didn’t want to do that either. His solution, a multicurrency prepaid card and app combination, lets its customers load money from their domestic bank account, at no cost, and spend it in over 90 currencies around the world at the best exchange rate available. Right now it’s free, to sign up and to transfer money via the app. Fees of 2 per cent apply to ATM withdrawals over £500 per month, and there is 3 per cent to pay for USD debit card top-ups. Both are charged only to cover third party costs. You can check live currency rates on your phone, and if you lose your Revolut card you can block and unblock it from the app. Centtrip is aimed at the higher-end individual traveller and business market. It offers access to the live currency market at the true interbank rate and its multi-currency prepaid cards have exceptionally high limits – it claims to have had real success in the luxury yachting, HNW and Global Music touring sectors. Centtrip’s set load fee on the way in is 0.5 per cent, which can reduce dependence upon annual volume. But this is not just a mini-break thing. The global remittances market, where people working overseas send money home to their families, is currently worth over $500bn. See also top brands WorldRemit, TransferWise, CurrencyFair, WorldFirst. Economist Dilip Ratha called this phenomenon “dollars wrapped with love”, and rightly so. The extra savings from low (or non-existent) fees translates into more opportunities for those receiving these monies.
Raisin (RAIS + INterest) is the first pan-European marketplace for savings, making the best interest rates across Europe accessible to over 500 million savers. Customers use a fully online process to deposit money in accounts with higher interest rates than those available in their home country. Interest rates of up to 1.5 per cent p.a. AER on a fixed term deposit [fixed-rate bond] compare well to average interest rates of just 0.6 per cent across the Eurozone. All deposits offered via Raisin are 100 per cent guaranteed up to 100,000 euros per saver and bank by each national Deposit Guarantee Scheme, in accordance with EU Directives. With interest rates likely to stay low, Raisin allows customers to make the most out of their savings, be it savers wanting to secure higher interest rates or savers wishing to move towards euro rather than sterling investments. Raisin’s 45,000+ customers have invested over 1.2bn euros with Raisin’s 19 partner banks from 14 countries in the past 2.5 years. Raisin is accessible across Europe with localised platforms in Germany and Austria (under the brand WeltSparen) as well as France (raisin.fr).
So, what next? Are banks now all technology companies, or are technology companies becoming banks?
There is no space here to look at the way technologies are about to transform financial services and our experiences with it – for a truly visionary take on the future, read Chris Skinner’s ValueWeb – but here is one final example. Digibank is an Indian online bank staffed entirely by chatbots – a computer programme that can answer thousands of questions submitted via chat.
The machine-learning-based technology is the product of New York start-up, Kasisto, which trained its artificial-intelligence platform with millions of questions asked by customers during their banking experiences.
If you’re not yet ready to trust your hard-earneds to a bot, there is one area where this technology is delivering real saving – to the significant tune of $4m.
Chatbot lawyer, DoNotPay – a free online service available in London and New York – has helped appeal that amount in parking fines in just 21 months. The world may well be its oyster.