The future of fintech is mobile wealth

 Simon Taylor photo
Simon Taylor Co-founder 11:FS & CPO 11:FS Foundry
5min read

Did you know Acorns and Robinhood have more customers than the entire "Robo Advisor" market?

Wealth is everything. I said it in my last blog, but look at the customer numbers Robinhood and Acorns have. Mobile wealth is the next big thing. It’s no longer just for the wealthy, and it’s not about mobile as another distribution channel.

If your wealth platform isn’t mobile-first, you’re doing it wrong.

I view this shift akin to Kobe and Shaq, Yorke and Cole, Spongebob and Patrick. That once in a generation, slap your friend in the face, sit up and pay attention change. Acorns have 4.5m customers and raised $105m, Robinhood has more than 4m customers and just raised $200m+.

They're just mobile Robo Advisors, right?

I can hear people shouting "they’re just mobile robo advisors." It makes sense because on the face of it, sure, they’re both mobile-first. But using ‘mobile’ as a modifier dismisses it as a channel. It isn’t, it’s everything and frankly, if your wealth platform isn’t mobile-first, you’re doing it wrong.

The term ‘Robo Advisor’ gets thrown around and conflates all sorts of different things. In 2008, post-financial crisis, Betterment launched, followed by a bunch of copycats. They took the traditional 'wealth' management paradigm that meant you sat with an advisor who helped you pick your investments and gave you reports on a daily basis with an online platform.

I'd argue this isn't really ‘robo’ since essentially you, the human, are doing the work of the bank staff. You're inputting all the data about your approach to risk, your home address, your shoe size, that sort of thing.

Zooming in on the numbers

In the USA the ‘robo’ industry is managing just under $750bn in assets (and $1 trillion globally), with average assets under management of $21k and a total number of customers across the entire market in the USA 2019 of 8.2m. That's not bad, right?

Actually, put another way, the entire US robo market has fewer customers than Acorns and Robinhood. They've been in the market nearly a decade longer and they have fewer customers. Two companies gained more users in 18 months than every other player in the market.

Why? I believe being mobile-first (and in some cases mobile-only) and built around a clean, logical and intuitive user experiences are critical factors in that success.

Digital R.I.C.H.E.S are a great benchmark to understand if you’re being truly digital, not digitised.

Mobile is not a distribution channel

Mobile-first is a buzz phrase that gets thrown around a lot, but it treats mobile as just a distribution channel, as if it’s somehow just another place to put the same old products. The difference between the robo numbers and the mobile-first wealth platforms is how they approach the product they’re selling.

In a robo platform, you’re essentially going through the same process someone would have 50 years ago. You’re buying a basket of pre-selected 'funds' based on your answers to some questions about your risk appetite, with the assumption being that the job you’re trying to do is save for retirement or the long term.

Mobile is full of R.I.C.H.E.S

Being truly digital means being:

  • Real Time
  • Intelligent
  • Contextual
  • Human
  • Extendible
  • Social

Now we can test the robo-advisors against this and see how they do.

Real-time? Well sure, you’re getting through the account opening at your laptop pretty quickly, but the process is quite long-winded and it doesn’t 'feel' real-time. You’re seeing an estimate of your portfolio in pretty graphs, but it’s not got that immediate, everyday impact. 6/10

Intelligent? This is where robo falls down. You answer some predefined questions and fall into an existing risk bucket. Yes, there are some exceptions to this, but usually it’s you doing the work, not the product doing the work for you. 3/10

Contextual? Right now there is no contextual offering available with traditional robo-advisors. Nothing is geared towards customers accomplishing their goals, your age is available to the advisor but there is no return on that information. Age doesn’t prompt a discussion on whether a customer is saving to buy a home or for retirement. Customers jobs are not being addressed.

That should give you a good idea of where the traditional players digital RICHES offering stands.So how does a service such as Acorns or Robinhood stack up?

Real-time? Yes, it’s an everyday savings hack rounding up your debit card purchases for a small subscription and then nudging you towards savings and investments. You’re getting that real-time feedback. 11/10

Intelligent? Per the above, the behavioural psychology of providing everyday value by being associated with everyday spend is a killer feature. It’s solving for something highly painful, helping your money go further and work harder, with relatively little effort and then dropping that into a place it can become savings or an investment. From here, Acorns can deepen their relationship with the customer. 11/10

I could list numerous examples of where they’re being Contextual, Human or Extendable, but that would take us an age. But as an example, what is it about your context (like your location, or brands you like) that we could use to help you identify savings or investment opportunities? Email me with your own!

There’s so much more to it

Digital R.I.C.H.E.S are a great benchmark to understand if you’re being truly digital, not digitised. Mobile is just the beginning.

Last time I wrote an overview of why wealth is the next big fintech game-changer. Mobile is just one reason, but we also need to understand the impact of:

  1. New business models (subscriptions and zero fees)
  2. A change in product approach (hacking everyday spend)
  3. ESG at the core of the offering
  4. Helping clients with long-term cash flow

It’s only when you put these ingredients together you’ll have something truly compelling.

Contact us here to talk about mobile, wealth and how to drive your digital RICHES offering forwards.