Nium Podcast: Simplifying Money Management With Unifimoney

Unifimoney is a neobank for high-earning professionals that is on a mission to make saving and investing as easy as paying for an Uber. In this episode of The Nium Podcast, founder and CEO Ben Soppitt chats with host Taneia Bhardwaj on how Unifimoney achieved product-market fit and the unconventional approach the startup is taking to reach customers.

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Full Transcript:

Taneia Bhardwaj: I read a blogpost you authored, and it was titled, “nobody needs another neobank, so why are we starting one?”. Let’s start with that. What had you and your co-founder convinced and what’s the specific problem that you set out to solve?

Ben Soppitt: One of the most frequent things that we heard from market commentators was that the neobank sector is completely saturated. It became almost a ubiquitous piece of feedback that we heard from people. And when we looked at the market, we just didn’t see that. So, if you say something is saturated, it sounds like, you know, FinTech has really reached its optimum, it’s done. It’s just a matter of scaling what’s already there. But when you look at the market, it’s very, very clearly not the case. There are just under 5,000 FDIC member banks in the US that’s down from 11,000, only 10-12 years ago. There were only about 90 challenger banks. If you look at those challenger banks and the well-known ones, they really constitute about 95% of all the challenger banks.

These are banks that have typically got a virtual checking account, debit card and an app, and more recently moved into payday lending salary advance. And they’re very much focused on the underbanked or the unbanked. And that’s now a very competitive market for a challenger bank space for sure, but it completely ignores the fact that there are hundreds of millions of people in the US who are not underbanked or unbanked but are very poorly served by the existing banking infrastructure. And that’s where we really saw the opportunity, to serve the needs of young, high-earning professional millennials, who are banking with the top 10 banks, the big brand banks, but being very poorly served by them. There’s less than a handful of those FinTech challenger brands in the market, so we felt that was really the opportunity that was unmet and provided the greatest ability or the greatest opportunity for us to serve an entirely new consumer segment through FinTech.

TB: Let’s dig a little deeper, Unifimoney is a full service, neo banking solution that caters to high earners, driven by the conviction that technology can really change the way money is managed. Tell me a little bit about your offerings, your feature set, and how would you say that’s different from a conventional bank?

BS: If you look at the statistics in the market, a recent report by lending tree and the Magnify Money team found that over 95% of people keep most of their money in some form of cash deposit. Less than a third of millennials, even fewer below the age of 30, are actually invested in the stock market. Money left in any form of cash account is dead money. It’s losing value. So, there’s not a single cash account of any form, high interest savings, CDs, checking, whatever it might be that is actually paying greater than inflation. And in fact, most of them, the top 10 banks typically, are checking rates of 0.01% they’re saving rates. Rates are a little better at 0.02% are paying a fraction of what inflation is eroding from that money every single day. So, money kept in cash is money that’s dead. It’s not an asset it’s slowly over time losing value. And the stock market has demonstrated itself to be the greatest mass wealth creation engine ever in history. And yet the vast majority of millennials are not participating in that wealth creation. It means that over their lifetime, if you look at all millennials and those who are not invested in the stock market, they are losing several trillion dollars over their lifetime in income and earnings that should be there. But instead of going to the big banks, now, the question is why have the big banks not solved for this? And the answer lies in, where are their economic benefits best served? So, if you look at payments, for example, we know that the easier it is to pay for something, the more people do it.

Its why Amazon is so successful. Its why Apple pay is increasingly successful. It’s why the industry has really solved for friction and payments because their economic incentives are such that they want to encourage people to spend more, but saving and investing has barely changed in decades. And the question is why, well, when money is left in a low or no interest checking or saving account, it’s essentially an interest free loan to the banks, the banks then go and invest that and can earn anything up to and beyond 24% on that money, which is profitability that they keep and don’t hand that back to the consumer. So, the economic incentives of the big banks are not to encourage people to save and invest because they lose money when that happens. Money sitting in an ETF for the next 40 years is money that the bank is not profiting from. It starts with that fundamental principle that our belief and intent is to help people earn more from their money. And what we want to solve for is the manual labor, the friction, and saving and investing. So, we want to make saving and investing as easy, if not easier, than paying for an Uber.

TB: Well, that’s interesting you bring that up because I think through the pandemic, you did see what’s come to be called the gamification of investing. I just wanted to spend a little more time talking about the whole new approach to managing money that you sort of touched upon. To be perfectly honest, it’s a little hard to imagine wealth management without human interaction. At least for me sitting here in India, because for a lot of us, money is a sort of an emotional matter. I’m interested to know how consumer behavior has evolved in your addressable market, which is the United States.

BS: We’ve seen the explosion of online commerce. It was already growing at an incredible rate, but COVID-19 has really accelerated that. If you look at Robin Hood’s performance, the amount of people that are actively trading, is increasing extraordinarily highly. I think there’s also something quite subtle happening, which is there’s a change in how people are thinking about things like credit cards. So credit cards haven’t really evolved from how they were marketed in the seventies and the eighties. They were affluence signaling, they were lifestyle signals. And you see this in the metal card phenomenon, and you see this in credit card advertising. They promise you’ll be more successful and better looking and have a more attractive partner, when they’re really just tools. They’re just utilities and these high affluent cards, Chase Sapphire Reserve, the travel cards, their entire point has completely disappeared overnight with COVID. Nobody sees your metal cards when you’re shopping online. So, I think we’re seeing and young people questioning why they’re paying $550 for a metal Chase Sapphire rewards card where those points are completely pointless. It’s all meaningless when you’re sitting at home. And I think what we’re going to see is a normalization of people’s perceptions around things like credit cards. They need to become financial tools. They are not jewelry or sports cars. They shouldn’t be there for affluent signaling. They should be there to be an important component of your overall money management, saving, spending, and investing.

So, I think we’re at the early stages. We’ll know for sure in a few years, but that’s certainly what we see is that people have got more time. People are changing the way they think about money. I don’t think anybody is taking financial security for granted anymore. A lot of jobs have been lost, people who 12 months ago were working in very successful companies, which had a positive outlook ahead of them and then this black swan event happening, and everything changed. So the message about developing your financial resilience, even when you’re a successful high earner in a great job, is much more of a priority for most people, whereas 12 months ago, I think people were a little bit laissez-faire about it and assumed it could never happen to them. If there’s one good thing coming out of COVID, it’s an entire generation of people that realize that bad things happen to good people and managing your money in the good times is extremely important because at some point the bad times might come and being financially resilient and having financial security is something that doesn’t happen in a day, a week, or a month. It happens over years and decades, and that takes a lot of effort and that effort is what we’re looking to automate.

TB: Talk to me a little bit about what’s the response been like so far. We have a lot of first-time entrepreneurs or FinTech who listen to the show. And I think they’d like to know about how you went about sort of validating your product market fit, and also what’s the approach Unifimoney is taking to scale.

BS: Great question. If you look at what’s been successful amongst affluent consumers, investing has probably been the most successful category with Robinhood, Coinbase, a whole slew of alternative investing apps. Everything from wine to fractional farm ownership, have captured people’s imagination and brought an entire new group of people into financial services for the first time. We know that many of these components have been very successful in the market, but we also know that optimizing for one or other element for your financial life is suboptimal. Your money is a very holistic ecosystem and you need everything working together to get optimal return. That’s how we really approached it. We looked at the successful components, but they were only partially solving the problem. What they weren’t solving for was this holistic simplicity that we know consumers crave, particularly in complex markets like personal finance. We really took the best from the market and put into an integrated, holistic platform and we are solving for that simplicity and ease of use. Having a differentiated product is necessary, but insufficient for success.

We are taking an approach that is different from the financial services industry. Typically, players trick the consumers into adopting behavior that is beneficial to the bank – so it’s the free toasters, the 10x points, incentive offers. Very, very focused on acquisition, rather than the ongoing value to the customer. What we want to do, is rather than tricking people into adopting behavior that benefits that bank, we want to promote behavior that benefits them – so saving, spending and investing as easy as paying for an Uber. That it undoubtedly harder, it will take longer, but we think it will ultimately lead to a better-quality customer base and a more sustainable business. The question then becomes how can we do that? We know we cannot compete with the big brand banks. Chase alone spends $2.6 billion on advertising every year. You can’t compete with that kind of money with conventional means, we need to be atypical, we need to conduct asynchronous marketing warfare against these big-brand banks. We also know that most people are not going to move their banks. It doesn’t matter how much evidence or data you present to them, it’s not a rationale decision. We are talking to natural contrarians. They are going to be our customers. The first 50 or 100 independent minded spirits. We are taking unconventional approaches to reach our customer base. We are getting known to be the only bank in the world with an in-house comedy sketch team. We are using comedy as a way to engage with people and sow the seeds of doubt about the way they are managing money and maybe there is a different way. Do we have the answer? Absolutely not. Do we have a defined approach where we are doing constant experiments, low-cost experiments into understanding what messages, what channels what experiences are going to help the right type of people to become our customers? Yes, that’s the approach we are pursuing. The focus is very much on quality, rather than quantity.

TB: I want to just finish off on a personal note of when you are a first-time founder. I think a lot of our listeners would like to sort of hear about what motivated you to strike out on your own. When did you know that you sort of wanted to walk down that path and any learnings that you’d like to share with us that you’ve had along the way?

BS: I felt compelled to follow this path. It’s not the easiest path by any means, but you know, I’ve worked in financial services in Asia, in Europe, and then in the US and I’ve launched a digital bank in Indonesia for the underbanked. I came into the market looking at where I saw the biggest opportunities and I felt that I was surprised that nobody was really focusing on affluent young millennials, given that affluent young millennials have really led the digital adoption of every major digital innovation in the last 20 years or so. Yet curiously, this group was being almost singularly ignored by FinTech challenger banks. I felt that was a really compelling opportunity to bring a differentiated proposition to those consumers and make a difference.

It was a compulsion as much as anything else to do what I thought the market needed and something that would serve consumers really well that nobody else seemed to be taking advantage of. It’s been an amazing experience. I’ve met some of the most interesting, stimulating people of my entire career. I’ve been amazed by the help that you can get in the founding community of FinTech founders and beyond. It’s been an amazing experience, it’s extraordinary. The people you meet along the way, some are temporary, and some become core supporters and join the mission and the journey. It’s a very intensive experience, 30 years in corporate life. I’d say the last 18 months or so has been the most stimulating intensive work of my career. It’s hard for sure, there are a lot of ups and downs as everyone knows. Feeling those ups and downs and putting your head down and just getting on with it is I think 90% of the battle.

TB: Thank you so much, Ben, for taking the time out and really sharing some of those hard-won insights. Good luck with Unifimoney.

BS: Thank you. It’s been great talking to you.

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