THE FUTURE OF FINANCE: ‘Financial services can’t afford to let the tech giants steal a march’
In the second of our Future of Finance series, Sam Seaton, chief executive of Moneyhub, explains how Open Banking is financial services’ best weapon against the threat of Big Tech and why the Cambridge Analytica scandal won’t halt the new age of data sharing.
Before the internet, the world was a simpler place: banks lent money and technology firms wrote software and built computers. You knew where you stood.
That was then. These days, the lines are blurring – the giants of Silicon Valley are trying to muscle their way into financial services, leaving the sector facing an existential crisis of the kind it has never faced before.
Sam Seaton, chief executive of Open Banking pioneer Moneyhub, believes the sector is running out of time before it loses ground that it will never again make up.
“I have said for some time, once the retail world – Apple, Amazon etc – get hold, it will be hard for any of us to come back,” she warns.
“We need to give the tech giants a run for their money and I say: don’t let them steal a march on you, come on, step up.”
While still bit-part players at present, the likes of Apple and Amazon are beginning to cast large shadows over the financial services sector.
Apple has already launched its own credit card, while rumours Amazon is planning to launch its own mortgages have been doing the rounds across the pond for quite a while.
But Seaton believes traditional financial services players have a weapon to fight off the threat of Big Tech: Open Banking.
“We need to give the tech giants a run for their money and I say: don’t let them steal a march on you, come on, step up.”
“If we don’t start having our customers’ backs then it’s just a race to the bottom,” Seaton says. “The real concern is that the whole of financial services becomes commoditised – and I’m not sure anyone has really thought that through.
“The good thing about Open Banking is that it will finally force everyone to focus on their customers. These days it’s vital to know what your customers are doing and what they want. A lot of firms say they know but they don’t really.”
Seaton’s desire to empower consumers is the reason she has ended up in financial services, a sector most people would not necessarily associate with putting the customer first.
Back in her native Australia, Seaton grew up dreaming of riding horses for a living. But in the end, she heeded the words of her father and uncle and went to university to study computer science.
“I felt like a fish out of water,” she says. “I think there were only three girls out of 120 people on the course.
“They were all so obsessed with computers. I wasn’t, although I was always impressed with what they could do.”
After leaving university, Seaton moved to the UK, where her obsession with horses continued. In fact, she only just missed out on qualification to represent Australia at the Sydney 2000 Olympics.
“I decided then that it wasn’t what I wanted to do full-time. I was working part-time for a firm called Towers Perrin (which would later become Towers Watson) and decided to go full-time.”
There she rose to chief executive of eValue, a forecasting suite of products under the firm’s Tillinghast brand.
But in 2016, Seaton felt she wanted to “get closer to the consumer”, so she left to join Momentum, a South Africa-based asset manager that had been developing a FinTech platform to help people make more of their money – Moneyhub.
The following year she and a small group of colleagues bought the platform off Momentum.
“Since buying the business with the management team in 2017 we have done exactly what we’d always planned to, which was to use the platform to help businesses understand their customers better and to get closer to them than they had before.”
“…I think we are heading to a world where you have to do a lot more for the customer rather than simply transacting.”
Moneyhub allows users to view all of their accounts in one place, get greater insight into their spending and has powerful forecasting tools to show people how their finances may look in the future.
The real magic underpinning the platform, however, is the nudge store. Here subscribers, which tend to be companies – or enterprises as Seaton refers to them – can create bespoke code to nudge people into action when their financial situation changes.
For example, a firm could develop a nudge to notify a homeowner once they have paid enough off their loan to qualify for a cheaper deal or to flag if they are able to get a better energy deal.
It is these nudges, Seaton believes, that will revolutionise financial services and finally help firms “have their customers’ backs”.
However, many consumers are sceptical about Open Banking, particularly since the Facebook/Cambridge Analytica data sharing scandal, meaning it could be some time before its full potential is realised.
“I genuinely think Open Banking will be transformational,” Seaton says. “Why have we not seen much traction yet? It’s a little like 4G/5G – I don’t know what any of it means, but I do know I like watching movies on my phone.
“In the same way, the consumer does not care about Open Banking. Are they going to like the services and enrichments it brings? Yes, of course they are.
“Naturally, we are not very good at dealing with change. But that will change once people get their heads around Open Banking and see its benefits.”
Has the Facebook scandal permanently stunted the growth of Open Banking? Not according to Seaton.
“There will always be a certain segment of the market that worries about their data,” Seaton concedes. “But having said that, this group is small. For example, British Airways has just lost a load of customer data and people are still flying with them.
“Unless we see people losing their identities and being scammed regularly as a result of Open Banking, which is unlikely to happen, then I don’t think people will be too bothered. For most people, the service they get will be the most important thing.”
But for Open Banking to be truly successful, Seaton believes it needs to be embraced from all corners of financial services, which may take some time.
Seaton says: “A lot of financial services think that business will never dry up because people need the services they offer.
“But I think we are heading to a world where you have to do a lot more for the customer rather than simply transacting.
“I think we are at the early stages but we have seen a big shift. I think now IFAs are genuinely starting to see the benefits of Open Banking for their clients. For example, nobody likes doing fact-finds, so who wouldn’t welcome a way of making it less painful?”
“I genuinely think Open Banking will be transformational”
So what does the future hold for Open Banking? Seaton believes it will help financial services firms conquer new markets.
“I think in the next five years we will see some really good advances on what I call the mass market shift,” she explains.
“So businesses that are currently constrained by resources, to service a certain segment of the market. Whether that is servicing people in debt or ultra-high-net-worth, I don’t think that really matters. I think what Open Banking can do is let firms broaden what they do now to more people.
“By automating the time-consuming and painful elements of providing a service, it may mean they can service a greater number of clients, and from different parts of the market. Beyond that, Open Banking will give us all much more insight into our money and it will be very exciting.”
And indeed, it could finally ensure financial services finally has its customers’ backs.
Paul Thomas, News and Content Senior Consultant, MRM