OBSERVATIONS FROM THE FINTECH SNARK TANK
Thank you for pulling yourself away from your Facebook feed, your Twitter feed, your LinkedIn feed, your Instagram feed, your Snapchat feed, and your [what-else-am-I-missing?] feed in order to spend the three minutes it will take to read this.
But I’ve got great news for you. You’ve got a new feed coming to you: your financial feed.
The Financial Feed: Why Do We Need It?
According to a survey of US consumers from Cornerstone advisors, nearly three-quarters of Millennials consider their financial lives to be somewhat to very complex (versus 43% of Baby Boomers, as a point of comparison).
It’s not surprising. There are so many things that happen—both quantitatively and qualitatively—that impact our financial lives and our financial health that we just can’t keep track of them all.
And we can’t just check a bunch of boxes and tell an app to give us all the news that relates to the financial topics that impact us. It produces too much noise, it’s too generic, and it’s not actionable.
Account aggregation promised to give us a consolidated view of our financial lives, but that static view provides no insights, guidance, or direction.
The financial feed will be different.
The Financial Feed: What’s In It?
The financial feed isn’t a transactional scroll or a “snapshot” of our account balances.
It’s not a list of all the purchases we made during the day (or week). We can get that by logging in to our checking or credit card accounts.
And few of us need a minute-by-minute—or hourly or even daily—listing of how our investments are doing (um, except for right now). For those who do, there are apps for that.
The financial feed will be a series of personalized messages—conversations—from (and with) financial institutions, fintechs, other financial-related providers, and individuals that include:
- News that impacts our financial lives and health;
- Account-related alerts (like balances or upcoming expirations);
- Insights into how market shifts impact our investment portfolio;
- Reviews of incoming monthly bills that alert us to anomalies;
- Analyses of spending patterns to identify deviations in trends;
- Notifications about services with better rates or lower fees than we currently have;
- Advice about what to do with various accounts; and
- Who knows what else.
Giving someone or something—e.g., financial institutions, fintechs, insurance agent, financial advisor, friend—access to your financial feed isn’t giving them “read-access,” it’s giving them “write-access.”
It’s giving them access to a specified set of your account data and data points associated with you. It’s giving them authority to access that data and post something (a message, an alert, advice) to your feed.
To enable better collaboration, you may give read-access to your feed to your significant other, advisor, parent, etc. (”hey, can you look into why the phone bill got flagged as abnormal?”).
The Financial Feed: Why Will Consumers Adopt It?
Digital personal financial management (PFM) tools and account aggregation services have been around for a while, but haven’t caught on with most consumers. So why will a financial feed take hold?
- It’s an already established behavior. We already log into Facebook, Twitter, LinkedIn, etc. and check our feed—constantly (by the way, thanks for continuing to read this and not bailing to check all your feeds).
- There’s value provided. To date, PFM has focused on budgeting and expense categorization. Helpful for some consumers, but most have little interest in those things. The financial feed will tell us things we don’t already know, tell us what we should know, and tell us what we should do about it.
- There’s no work involved. The great paradox of our society is that while money is really really important to us, we really really hate spending any time or effort managing it. The financial feed is available with minimal effort on the part of consumers.
The Financial Feed: Who’s Going To Provide This?
Why don’t we already have a financial feed?
Because the things that are happening that impact our financial lives impact a wide range of the accounts we have—and there is currently no mechanism to bring that all together into a single feed.
Providing a financial feed requires:
- Access to the full range of financial accounts someone has;
- A network of specialists with the ability to track and analyze the “things that are happening;” and
- A technology platform to integrate the specialists and consumers, and gather and deliver the feed.
No single financial institution—bank, brokerage, whatever—is in a position to deliver the financial feed. None of the Big Tech firms meet all three criteria.
The best candidate in the market to deliver on a financial feed is MX, the source of this concept.
Brett Allred, the company’s Chief Product Officer, announced the concept at the firm’s recent Fintech Data Festival.
I’m waiting on more information from the firm to see if what I’m envisioning the financial feed to be is in line with what MX is planning to build (or has already built).
Financial planning firm eMoney Advisor has something it calls a financial feed but it’s targeted at a relatively narrow set of consumers and comes nowhere close to what I’ve described above.
The Financial Feed: A Do-or-Die Proposition For Banks
If there’s one thing that banks struggle with—and deceive themselves about—it’s the quantity and quality of their customer engagement.
A customer that checks his account balance 15 times a week doesn’t mean he’s “engaged” with his bank (it probably means he’s on the verge of having no money).Paragraph
Consumers that follow their bank on Twitter or Facebook aren’t necessarily engaged, either. The content is generic and often irrelevant.
And since so few consumers engage with the budgeting and expense categorization (i.e., PFM) tools that banks and credit unions offer, an important mechanism for meaningful engagement goes lacking.
The financial feed will be the key to customer engagement.
It won’t be a public posting of messages—it will be more akin to direct messages on Twitter. As such, it will provide a mechanism for more insightful, impactful, and personalized messaging.
But there’s a downside for banks: They become one of any number of providers feeding the feed.
Today, banks and fintechs are looking for dance partners to link up their services to provide to banks’ customers. With the financial feed, fintechs will have a more effective way of reaching consumers directly—and integrating their services, bypassing the banks altogether.
The financial feed will become the battlefield for reaching and serving consumers—in effect, becoming a financial “super app.” The financial feed will become the de facto data permission mechanism.
With many fintech startups providing specialized services—e.g., automated savings, bill analysis, smart payment routing, etc.—what role will the bank play other than being the “holder of the account”?Paragraph
In today’s highly regulated environment, the role of the bank is protected.
In the world of the financial feed, regulations may ensure that banks have a seat at the table (or more accurately, a position in the feed), but they risk being at the kiddie table.
The Financial Feed: What’s Next?
The recent acquisition of Plaid by Visa ticked off a lot of financial institutions, and has shone a new light on MX as an alternative to Plaid’s screen-scraping approach.
The firm has done a great job over the past few years of transitioning from a provider of PFM tools to a data services company (not just account aggregation).
With its financial institution client base, account and data aggregation capabilities, and technology platform—and the vision for it—MX is in the pole position to deliver on the reality of a financial feed.
This also makes MX a prime candidate for acquisition. The company would fill a big gap that the Big Tech firms have in providing a financial feed—making the GAFA quadrumvirate potential acquirers.
It’s also interesting to speculate how MX would fit with the new Intuit/Credit Karma organization.Paragraph
Or MX could remain independent and we’ll see how big this financial feed thing can get.
