Podcast August 12, 2020

Why Fintechs are rebundling everything they unbundled

Debundling has a huge role in fintech’s rise.

But that era is over…

Welcome, everyone, to the era of rebundling.

In today’s episode, Ben Soppitt , Founder of Unifimoney, explains why the time has come for Fintechs to start rebundling everything they’ve unbundled.

He goes over:

  • Why Fintechs debundled in the first place
  • Why it’s time to rebundle
  • Why Unifimoney caters to the affluent

“I felt that that it really wasn’t going far enough. Solving for credit cards, but not everything else, is a bit like a doctor fixing your feet, but not your hands.” — Ben Soppitt

How unbundling began

Twenty years ago, it would have been unusual to have more than one or two banking relationships.

And every financial product you used would be bought from a bank.

Now, it’s not at all unusual to have 10 to 15 financial apps on your phone — even if you don’t use most of them regularly.

This is thanks to the big push in fintech to unbundle services sold by the large legacy banks.

And these Fintechs were solving a very obvious problem with buying these products from gargantuan banks…

They just weren’t that great.

“The problem with the old model is that one company can’t be good at everything. And yet, banks were developing everything in-house.” — Ben Soppitt

That’s why, these days, most of us have around 8 apps on our phone we never use — even if they are gathering digital-dust, they are the best at whatever service they provide. Certainly better than the legacy banks.

But this has given rise to new a challenge: In the process of optimizing each individual service, we’ve complicated our own finances.

With so much of our financial tools spread across these disparate apps, it’s no surprise that many have trouble managing our finances.

Which means we are missing hidden and explicit costs and losing money.

That’s the problem Ben is trying to solve.

Why it’s time to rebundle

Debundling is actually what inspired Ben to leave his career in the credit card industry.

After spending years trying — and failing — to convince big incumbent banks to be more innovative, seeing how small fintechs were upending various slices of the industry came as a revelation.

And his first idea?

Unbundling and innovating credit cards.

There were huge possibilities with the latent innovations swirling around in the industry that he could put into action.

But eventually, he needed to think bigger.

“I felt that that it really wasn’t going far enough. Solving for credit cards, but not everything else, is a bit like a doctor fixing your feet, but not your hands.” — Ben Soppitt

So, what Unifimoney is doing is jumping to the end-game.

True to their name, they are trying to unify the best technology out there — Betterment, Wealthfront, Robin Hood and so on — into a singular customer experience.

Of course, there are problems to solve in managing across multiple regulatory and compliance regimes. These are hard problems to solve, but they aren’t impossible.

A fully integrated platform, where all the products are dynamically linked and not just sitting beside each other is coming. It’s inevitable.

Ben’s hoping the Unifimoney will be the first to get there.

Why Unifimoney is targeting the affluent market

Ben has also approached segmentation differently than the vast majority of Fintechs out there.

Unifimoney is going after the affluent segment.

Most Fintechs see the need for financial tools for those earning less than $50k a year — Unifimoney is targeting those making around $150k per year.

There are two reasons for this.

First, there are no Fintechs in that space.

Ben would rather compete with the top-10 banks out there than go toe-to-toe with 80 Fintechs in a lower-earning segment.

Second, the affluent actually surprisingly underserved, despite its very real needs.

“We fundamentally believe that affluent, highly-paid individuals need just as much — if not more — help than those who are not earning as much.” — Ben Soppitt

To illustrate the point, think about a young doctor coming into the workforce.

A doctor is a great example for several reasons that aren’t just the fact they garner more from people than, say, a lawyer.

Doctors enter the workforce 10 years later than most people, with, on average, around $200k in debt. They go from student-level economics to high-earners almost immediately.

They have demanding careers taking up all their time and are usually at the age most people have kids and buy a house.

With all of these things happening at the same time, the financial decisions they make at this point can have consequences on the rest of their lives.

They need help.

With COVID-19 raging, everybody should be more acutely aware of the fact that bad things happen to good people. Just because someone is a high-earner does not guarantee they will be rich.

And their success is good for society, too.

They pay the most in taxes and they contribute to the economy more than other segments. But if all their money is instead going to the big banks, it’s to society’s detriment.

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Until next time!

If you’re interested in finding out more about the elastic bundling and unbundling of financial services, check out our research report here.

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