Robo-Advisors, Open Banking and the Future of Finance; Abba Newbury, CMO, Habito
5 questions with Abba Newbery, Chief Marketing Officer, Habito
Abba is CMO at proptech start-up Habito. She is a seasoned marketing consultant working with both Google and Youtube on their accelerator programmes. She has worked on both sides of the marketing industry, as a Managing Partner of Media Strategy at McCann and Director of Advertising Strategy at News UK.
What is your perspective on the shifting landscape of banking and financial services?
A fragmented and confusing market, plodding incumbent players, rising consumer expectations: all of these factors have ensured that financial services became ripe for disruption. The result has been to propel fintech from the margins right to the centre of the industry.
The explosion of fintech in the past decade has brought deep innovation and change, and in particular, a commitment to services focused on customer experience. Agile, tech-powered, financial start-ups like ourselves, alongside consumer banking, business lending and invoicing have nibbled away at the large institutional incumbents. And this competition has forced the behemoths to change too. There is a lot more innovation to come.
Where do you see the greatest opportunity?
Open Banking. With open APIs there is a real opportunity to make our vision of “push button get mortgage" a reality. The days of long-form filling should be well and truly behind us. Most importantly, it will enable many to potentially save thousands per year, for example by simply switching from their standard variable rate mortgage, to a fixed rate product. It has the potential to transform the relationship consumers have with their finances by expanding product choice and access to better-priced deals - all aligned to their individual circumstances.
Open Banking will bring many and far-reaching user benefits, but privacy concerns need to be taken seriously. Consumers should be educated on the benefits of Open Banking, at the same time being informed on the methods of safe and consent-based data-sharing. The onus is on us as an industry to get privacy right, and to earn and keep re-earning the trust of consumers. But this opportunity is also a double-edged sword.
Habito seeks to rebuild trust in the sector through simplicity and accessibility
Not all players will succeed - often for valid reasons like funding, pace of innovation and the need to constantly iterate the customer experience as the wider technology-scape builds around us. In my own market I have seen 3 strong and well-backed mortgage businesses depart our sector in the last 12 months.
Trust in this sector is as fragile as it is an opportunity, and we need to be cognisant of our role not just for our businesses but also for the categories in which we operate.
In short, the 3 levers we need to continue to innovate around are:
- Objectivity: driven by smart innovation and technology
- Speed: driven by reactive, customer-centric decision-making
- Purpose: driven by empathy and an acute desire to solve problems
What do you feel is the greatest innovation of 2018?
There is so much innovation across finance - Alexa and voice-based banking feel like the latest emergent game changer as the industry starts to rebuild itself around technology that consumers are embracing. GDPR, putting consumer privacy into the spotlight, feels like it will have long-reaching positive consequences. Personally, I am loving my new Starling and HSBC banking apps - it’s good to see real innovation from the old and the new.
Where do you see the future of financial services?
I believe we will see a hyper-efficient price race to the bottom. As the robot advisors take over there become diminished need for splashy brand building campaigns, marketing budgets would be reduced to zero. This would allow these savings to be passed directly to the consumer, in the form of lower rates.
Next, operational efficiency will become the battleground between finance providers of all stripes, competing to create the largest OpEx savings to pass on to consumers and win the game of market-share.
The final answer to our future is that of eligibility. The quality of credit scoring carried out by these new robots-led institutions becomes the third lever they can use to compete for custom. All of this means we go from having one size fits all, off-the-shelf financial products that the majority of people get shoehorned into fitting - to individual personalised and ‘perfect’ products that we get access to in seconds - not days, weeks or months.
In short, the future is a low priced rate on a suite of products that are actually of use to us. No-one overpays. No-one gets mis-sold.
We put the service back into Financial Service and we’ve optimized our financial lives.
How do you envisage the future of robo-advisors and the applications of this technology?
As a society, we have issues with trusting machines, and those anxieties still have some distance to run. Researchers from UCL found that regardless of what decisions a robot made, the way robots make decisions - by making calculations and assessing ideal consequences – is something people find inherently untrustworthy. As Humans we build trust based on moral rules - not consequentialism. However, it is now widely acknowledged that these reservations around trust (particularly personal data sharing) tend to be undermined very quickly by the power of convenience. We see this every day in how much information people are willing to share online.
Whether it’s tapping your smartphone and minutes later jumping into a stranger’s car, or booking a bed to sleep in, in a city you’ve never visited via an app - we are happy to sell our data, for our convenience.
We share our personal finance data for the convenience of having an artificially-intelligent financial adviser look after our entire financial lives. If soon, all of our respective ‘AI advisers’ - which aren’t influenced by teaser rates, advertising, or commission - are both managing and shopping for products on our behalf, what is left for the credit card and loans companies of tomorrow to compete on?
In my own market, mortgages, we are observing an increasing number of people asking to take out longer fixed rate deals e.g. more 5-year fixes than 2-year. This is in response to people wanting more stability for the foreseeable future while the market slows, we navigate Brexit etc., and we are reacting to this to meet that demand.
But how many traditional mortgage brokers out there would be willing to respond to this trend and potentially forego their commissions for longer?
This is one of the many ways that, through robo advice and human expertise, the new fintechs are putting the customer back in the driving seat.