1048. News - After Dark: Robinhood's family plan, Irish banks team up to take on fintechs, and did Year in Monzo go too far?

0:14From 11FS, this is FinTech Insider News live from the village underground in Shoreditch. I am Ross Gallagher, the head of consulting at 11FS, and tonight we're covering Robinhood wants to become a super app for family finance. The big three Irish banks have a new plan to fight off the fintechs. And did year in Monzo go too far? To discuss these and some more of the biggest stories in fintech this week, I'm joined by a quite frankly brilliant panel of fintech experts. First up, we have my very beautiful co-host, Jamie Campbell, Deputy CEO at 11FS Holdings. Such good compliments. Thank you so much.

0:56Lovely to see you as always. I very rarely get called beautiful. I know, we should stop flirting. I know. This is the unscripted bit where we have like little banter between the two of us. This is cleaner than what we came up with in the... Yeah, you give me a compliment and I'll respond positively to it. And then, yeah, we'll keep going like that. I'm going to defer back to the show notes to like save us and get us back on track. How are you doing, Jamie? me? Yeah, good, good, really good. Yeah, it's exciting to be here. I was satellited in quite late due to David's absence, but I'm really excited to be here.

1:27It's always nice to turn up and see the community turning out. So thanks for turning up on a Tuesday to talk about FinTech. It's always great to see so many people. Already doing a wonderful job. Thanks. All right. Next, we have Helen Beerton, Chief Digital Officer, Consumer Relationships at Lloyd's Banking Group. Helen, great to have you on Vintech Insider. Obviously, you're bravely representing the established banks. Maybe you can just give everyone here a little bit more information about yourself and your role at Lloyd's. Absolutely. First of all, thank you for inviting me on St. Patrick's Day, which is very green.

2:02And for those that are listening, I'm in green for Lloyd's and St. Patrick's Day. This is a podcast, obviously. There's no video, but I appreciate the effort nonetheless. We did stipulate no prop comedy in the green room. Oh, there we go. So yeah, I have a super privilege of helping 23 million customers connect their finances through technology to lead better financial lives. And it's a super privilege. I am, for my sins, a banker. I've worked in the industry for too long. But I'm super proud of it, actually. It plays a really critical role. And I'm proud of what we do. but I am also a fintecher and I think the power of digital and tech to help customers is just incredibly powerful.

2:52So super excited to be here. Yeah, great to have you, Helen. Thanks so much. Next, we have Clem Salon, CTO and co-founder of Formance. Clem, great to have you. Welcome to After Dark. Maybe again, you can just introduce yourself to everyone in the room and everyone listening at home. Yeah, thanks for having me. So I'm Clem, co-founder of CTO at Formance and we task ourselves with building the most programmable, solid core ledger. So essentially work with FinTech in investing, lending, insurance, and make sure they can essentially keep track of their balances, users' balances. So you should have been an engineer writing code that tops up a balance for a user and have been afraid of doing so, of making a critical mistake.

3:39that's kind of the problem points that you address. So yeah, happy to be with you tonight. Thanks for having me. Love that, Clem. Glad to have you. Thank you. And last but by no means least, Marisha Naidoo, Global Head of Partnerships at Paymentology. Thanks so much for joining us. Great to have you. Again, maybe you can just introduce yourself and a little bit of background around what you do at Paymentology. Yeah, absolutely. Thank you so much for having me. We're so excited to be here on St. Patrick's Day. And of course, I'm from Paymentology, so to be one of the sponsors is really special.

4:12Like they said, I am Mirosh and I am the Global Head of Partnerships at Paymentology. We are a global next-gen ishural processor. And my role is really to put together the strategy for partners. Partners is such an important role in what we do as fintechs because it's all about how we build and grow together. No one can do it alone. and so I have the exciting role of looking after partnerships, building those ecosystems and really creating solid foundations for our customers and our customers' customers. So really excited to be here and to go through the exciting articles. Awesome. I was going to say, great panel.

4:49Thanks everyone for being here. Let's crack on. Yeah. Okay. But yeah, you're right. It is an amazing panel. I don't think we're disappointed. All right. Well, look, I think then all we need really is some news. So let's get into the show. Thank you for that. Really useful prompt. our fresh story we want to cover today comes from fin extra with a headline robin hood bids to become super app for family finance super apps a neat idea sounds like a great idea all right the family hub which is a quote will let users view and manage accounts across different family members in one place the platform will allow parents to open custodial investment accounts for their children set up recurring investments and even let friends and relatives contribute to a child's portfolio for birthdays or milestones.

5:34The company's CEO, Vlad Tenev, says the ambition is to help families invest, plan, and grow wealth across generations, all within the Robinhood app. I mean, the heart of this is managing money for someone else in your family, so I'm kind of curious to know, maybe we can just start with a show of hands. Who sort of in tonight is kind of managing money for someone else in their family? Yeah, quite a lot. It's not an insignificant amount of people, is it? No, it's not. Maybe like a sixth? Yeah. Quarter, maybe? Which kind of points to this being a relevant use case, right? Yeah, for sure. And I think the concept of creating a structure that can appeal to a family unit and can be relevant for a family unit, I think is really important.

6:24And I think will be an ever-increasing frontier of wealth services. It's well known that when wealth changes hands, the inheritor of the wealth has a completely different view and opinion of what to do with that money. And so they'll change their advisor, they'll put it somewhere else. And so it is quite a good strategic decision to start building a relationship deeper into the lineage of a family, just from a business perspective, but also giving younger audiences more exposure to good practice when it comes to wealth building and education. So I think on a number of fronts, this is a really sensible move.

7:10And I think it's going to come down to nailing how they structure this. In the article, it goes into a little bit of detail around how they're kind of creating these accounts, which are managed on behalf of others. But I think, yeah, we'll see, we're probably going to see a lot more of this as other players start to catch up and look into that space. Helen, one of the things that Jamie mentioned that I think will resonate is this idea of giving people the relevant tools, the education, the context to sort of achieve better financial outcomes. That in itself maybe feels like a bit of a shift from how we've thought about maybe financial products for a really long time.

7:52Yeah, I think this is a super smart move and actually really, really exciting to see. I agree with everything Jamie said. I think that the hands up in the room shows, you know, financial services are super connected when it comes to your families and your life. In real life, the connection with your family is there. But when it comes to the products, it's actually quite fragmented still. you know there are a couple of thoughts on on this article for me the first was around your point around opening it up in education and support but there's many forms of that support um that that are needed there are many circumstances i can think of families and carers or you know me and my kids i want to i want to teach my kids how to so the concept of connection i think is really super important and and if we can unlock technology to create visibility and transparency does that open up a conversation that perhaps hasn't has been an as easy a conversation as it perhaps should have been to get the right financial outcome and then the second thing that's really interesting about this you touched on it is it's really important that people start investing and start building long-term savings and if we if through technology we can open that open the conversation up make it easier and start creating those habits I mean one of the things we found more than one product starts to get complex but you could make it really simple and put like ready-made investments into into an existing app experience and actually more people engage with it and then more people benefit from it.

9:36This is a really important topic and it's great to see this is happening more and more. I think the main thing that you said that sort of resonates with me is it's starting up a conversation about good financial behaviors and managing finances in family units. So it's doing it in context, but we all know that like trying to teach someone something conceptually is very different to actually sort of working through it with them and kind of them seeing the outcomes off the back of that. Yeah, I completely agree. And one of the specific things they're talking about is like the gifting, you know, the gifting of like an investment into an account that's managed by the primary account holder, but on behalf of, you know, a child or a dependent or, you know, or someone else.

10:18And, you know, providing a product and technology and infrastructure to support that flow that kind of happens in some cases quite casually, but providing like a real wrapper around it, which is productized and is accessible, I think is really interesting. And yeah, I totally agree. I think moving this forward, I think there's going to be much more interesting innovations on this frontier of how do we take a view of a group of individuals who have interconnected relationships rather than just like one person who's earning the money and we're kind of not really bothered about everything else that's kind of happening.

10:56I like your point on interconnected relationships as well. The big thing about this is we know, and it has been proven in financial services, the number one reason somebody chooses a financial services provider is recommendation. And the super smart thing about this is it not only does it open up the conversation, it opens up that, you know, again, like recommendation. We've been able to reward customers for introducing it, but it's built on a foundation of trust. It's built on a connection. It's built on recommendation. there's so much to unpick about the connecting component. Clem, I think we all sort of agree that there are real benefits and sort of good probably long-term consumer outcomes of this type of proposition.

11:46But I'm guessing from a technology perspective delivering these types of propositions are non-trivial, right? Because I think if it was easy we'd have probably nailed it a long time ago, right? Yeah, definitely. So coming from the perspective of a ledger builder, yeah, for sure, this is one of the things where things can get pretty nasty pretty fast. Like you're not only tracking a balance of a user, but the whole context around it and the actual people behind it making the decision. So this is one of the things where I think building this kind of products, it gets super important to dissociate the level of ownership via decision-making and try to structure something at the fundamental level where you can really fine-grained the whole authorization and permissioning and granting of permission of actions doing over funds, and then try to translate that into all the local regulatory framework that you're going to deploy in, and make sure that you really dissociate the beneficiary from the one acting on it.

12:51And yeah, this is like something where you're all going to end up with a quite sophisticated structure for sure. But yeah, I'm quite excited to see this kind of products appearing as well. Like this is one of the upgrades that you get from being the computer person to the finance person in a company maybe. And you want to be able to change hats, act in the best interest of the person you're investing on behalf of. and this needs to translate into visible audit trails that everyone can understand. So there's no doubt. So yeah. Yeah, so it kind of requires like non-traditional sort of product constructs and definitions and all of that sort of stuff that I think, but it feels like progress insofar as actually, I think you break outside of some of those constraints and then maybe some of the outcomes that you can deliver for consumers, you can start to rethink some of those as well.

13:44Yeah, you don't want it to be a hot pot of things going on, but for sure, making it super visible to the people being managed in their money on behalf of what is the level of control. And building this whole framework is going to be interesting to see all the different apps approach this level of delegation. So excited to see more companies doing this and see how to approach this kind of permissioning. because for all you know, it could be a different kind of relationship. Maybe it's a friend, maybe it's your family person. And if you want to go creative and let friends manage money for other friends, it's not the same thing as the same direct family relationship.

14:26So quite a lot of building to do to get there. Marishi, do you think this is like the beginning of a trend? I mean, are we going to start to maybe just break out beyond just sort of individual products, maybe joint sort of products and sort of maybe something that's a little bit more tailored towards the different types of family constructs and all of that sort of stuff. Yeah, absolutely. I think it's, if you look at how we as human beings live and evolve, right, it's all about families, it's about relationships, it's about parent to child, or it's about, you know, looking after even your parents.

14:59I think you mentioned it, even caregivers. So when you look at how we evolve as people, you have to make sure that you have the financial tools to also serve us that same kind of lifestyle. And so we're seeing a lot of these kind of family apps come up and Robinhood is not the first. So we've seen the likes of Wheelbank in the UAE come out with UAE Family Card. And I think it speaks a lot to the evolution of how we as people operate, right? It used to be cash. Now, as we evolved to a cashless society, we have to make sure that we have those tools for our family. So creating a virtual card so your child can buy V-Bucks is a real thing.

15:39Being able to restrict that and saying, okay, you've reached your limit for the day and that's about it. That has become the norm. But I think what Robinhood have done is they've taken it to the next level and saying, okay, how do we really build financial literacy from a really young age? How do we make investment normal? How do we make the gifting aspect something like, I don't need to buy you Lego, I'll buy you shares in this. sell by. And it's a completely different way of managing funds and, you know, interacting with funds. And I think it's so important for that to be embedded from a very young age.

16:16I think there was a study done that said most people in the UK actually don't know how to invest. And when they do want to start investing, they have no idea where to start or how. And so now we're building, we're teaching the younger generation to say, actually, this is how you do it. And it becomes are part of their everyday lives. And so I think it's absolutely critical. We also see the Monzo card where they have the parent to child card. So a lot of these digital banks are really taking up the challenge to say, yes, this is important to individuals and families and households. And we have to make sure that we have the tools, the mechanisms and controls to make it relevant, but also the balance of control versus flexibility.

16:58And I think that's really important. Yeah, I think that there's a kind of a, a macro or like a top of this trend, which is like more empathetic FS that comes from the institutions that can, you know, provide products on a level that mirror the lives of the clients, which is the point you're kind of making. Exactly. And, you know, I don't know where the AI gong is, but I'm about to ring it. But like it all kind of, you know, that specific technology advancement, you know, drives this, you know, this trend of, you know, FS businesses, whether it's banking, whether it's wealth, being more and being able to be more empathetic with their clients, building products and, you know, delivering a service that can be more empathetic to fit the lives of their clients in a way that is, you know, is going to be more complex, as you say, but it is, you know, it really is this newer, this frontier of financial services.

17:59It's just going to feel more personal, it's going to feel more tailored to you, but it's going to be kind of built around the actual lives and mirror the lives of their clients. I think it's an excellent point. And to that point, it's, you know, that hyper-personalization is what customers are after. And so when you look at it, it's not about just having one customer equals one account. It's one household, which means multiple wallets, multiple cards, multiple controls. And so it's really about saying, you know, how do we make sure that those tools are accessible but understanding that family model, which is so critical to all of our daylights.

18:34And the dynamic. Exactly. Yeah. I like that it feels very appropriate for St. Patrick's Day that we're sort of off on a very optimistic note. Also, our next story is just so perfect for St. Patrick's Day, so I am going to move us on. This is a story that comes from Finextra. The headline is, Irish banks launch P2P service. That felt seamless. That was very seamless. That was good. That was good. So Ireland's three biggest banks, AIB Bank of Ireland and Permanent TSB are launching a new peer-to-peer payments service called, it looks like ZipPay, but it's also one word, so maybe ZipPay. The service will let customers send and request money using just a phone number directly inside their banking apps with a potential reach of over 5 million customers.

19:19The goal is pretty clear to take on challenger bank competitors, particularly Revolut, which has built a huge presence in Ireland. And Jamie, I'll come to you first on this one. I mean, look, on the face of it, this feels like, you know, Big Bang's launched new products. But I think when you dig below the surface, maybe it feels a little bit more cynical. I don't get this. I don't get the, like, it feels very mafioso. Like, this is our playground, keep out. You know, we're going to build a little thing. You're not invited. You know, you don't get the party bag on the way out. Like, you know, you're not in the group.

19:56You're not in the cool group. but also it's on a it's on a battlefield that's like sort of who cares you know like peer-to-peer payment like isn't it's not it's not market defining it's not like a you know a huge like product that people are looking for an incredibly simple and easy way to kind of make those payments it doesn't feel differentiated enough to have a pull factor to prevent the flow of clients to something like Revolu. It's not massively differentiating or protectionist in that respect, but it's going to take capital and it's going to take investment and collegiate effort from all of these banks.

20:36And so there's a couple of frontiers I just don't really kind of get as a concept. I don't feel like it's going to achieve the thing I think they want to achieve. And I think is my kind of protest against it i'm gonna call it zip a that's a very noble protest even if because i'm not sure i like you i don't know if it is zip k with the people with the with the double per capital or if it's just zip a and zip a sounds kind of fancy and so yeah but i think i think i'm gonna go with zip a it does sound more exotic um helen it'll be interesting just to get maybe the sort of established bank perspective?

21:16Because this feels very much like a defensive play in so far as they're trying to build that moat, to Jamie's point, and kind of keep everybody else out. But surely their efforts would be better focused on how do we deliver better outcomes for customers? Well, I'm going to go a slightly different angle to what Jamie's gone. I think, first of all, let's talk about pace. actually they've got together three banks they've launched pretty quickly so so it's interesting to see well how much investment what have they actually put into it but from a customer and product point of view there's clearly a demand for that that simpler payment experience and if that demand and that experience is going somewhere else then the bar's been raised and that's that's a good thing for customers in Ireland, I would say.

22:16So part of me here is, actually, this is a good thing. This is raising the bar, better experiences, and more choice for customers. And the second thing for me then is, you start to look at payments. Payments are really complex, actually. It's something that requires trust. It requires the infrastructure. It requires the ability to authorize a payment settle a payment check for fraud and actually that's that's a that's an ecosystem and what's exciting for me about this story is incumbents coming together doing a service and building it and i actually think that one of the themes that this starts to point to is that we'll see more and more of that um will it work i mean in america zelle launched and within a year took over Venmo.

23:09So possibly, possibly. And then if we look in the UK, so fintechs, established banks, regulators coming together on variable recurring payments. So I think there's something in this one, actually. An ecosystem, people coming together and technology starting to operate at pace. I think it's one to watch. You convinced me, you convinced me. Oh, good. That was easy. But do you think it's going to achieve, I guess, you know, my view is like, do I think that this is going to ultimately help them achieve their goal, which is stemming the flow to new challenges? Honestly, I don't think it will in any kind of dramatic way.

23:48I mean, we were talking backstage about, you know, you've listed the three largest banks in Ireland. One of those is not, by customer numbers, is not, because Revolut is larger. Significantly larger. Significantly larger. So that's the kind of, I don't disagree with the novelness of the infrastructure and the collegiate nature. And that's great to see. But it's kind of, will it achieve the objectives is the bit that I'm kind of, I don't know, I'm questioning. I think that's a good question. And it's going to be interesting to see. I mean, I don't live in Ireland, so I haven't been able to test it.

24:25So we were, I think it would be like, you know, we're saying this when we like, sort of Irish fintech would be a really niche, like specialist subject on Mastermind. And while I appreciate, Helen, I think you're a more generous and optimistic view on what they're doing, the simple fact is that the big Irish players, whether that's the big banks or the acquirers, they have form in trying to shut other people out in sort of cynical ways. They had their own domestic card scheme until that got mandated out by the European regulator. I still can't sort of shake off the feeling that this is probably a more cynical play.

24:56And it's not, you know, the Irish market in terms of customer numbers and share of market hasn't been disrupted in the same way as we've seen with other markets. So it does feel more of a, can we at least slow down the flow of customers that we're losing to some of these other players, if not necessarily stop it entirely, at least when you look at the numbers that Revolut have already managed to achieve there. And of course, now Monzo have launched. But Helen, you did make a really interesting point, which is those sorts of P2P transfers is definitely an area that we've seen fintech providers go after quite aggressively and win customers.

25:27Marisha, do you think this is something that could have, you know, could help them achieve an outcome of at least sort of maintaining market share in the immediate term? So I think when you look at P2P, it's kind of the entry product, right? It's the way to create, you know, habits around customer usage. And once, you know, customers start to spend using P2P, they build behaviors around it. Do I think that this is going to move the needle? No, I don't, right? But it's really important to look at the demographics, right? And especially when you're looking at not the top three banks, but three banks in Ireland.

26:05It's really important to understand the different customer segments. So I think that the older generation who don't like to transfer from one to the other, who are not that tech savvy, I think, yes, they will use it. Also because when you look at it, it is, you know, they're automatically included. They're using phone numbers. It's easy for them to do the transfer. So do I think that it will work around those demographics? Absolutely, especially for domestic P2P because it's simple, it's easy, it's there. Do I think that they're going to take any of the Revolut business? No, I don't. Because the reality is, is Revolut does so much more than just P2P payments and that's what customers want.

26:43They want Forex, they want Card, they want split payments. They also want to operate where their friends and family already are. And the reality is, is that is Revolut. So when you look at cross-border payments, cross-border P2P, those will all stay with Revolut. That's the reality. But I do think that this is a gateway for the banks to start to challenge Revolut. I do think that they have a long way to go, but this is a good start. P2P is the best way to create behaviors. And Clem, they have the scale and the distribution. Of course, that gives them a pretty good starting point for launching a feature like this.

27:21Yeah, definitely. And as you've been saying, it's kind of an entry-starting product for fintech that I've been building since from scratch. And one of the things I'm going to be super curious about is to sort of monitor the whole Cold War situation and the activity on the gates between these networks. because I feel like there's going to be some interesting incentives of banks letting Revolut, for example, access that network so that when you have the dynamics where maybe a younger person wants to send a payment to an older demographic that is not on Revolut, something can happen where one can stay on Revolut and the other one can stay on their bank, and this kind of movement can still happen.

28:09and it's kind of in the interest of the bank of like letting that access possible because this will avoid maybe the pull from the Revolut person to bring someone else to Revolut and it's probably also in the interest of Revolut to integrate these networks to sort of let their friends send money to the like non-Revolute people so this kind of, all of the whole like architecture of all this, the activity on the gates is something I will be very interested in monitoring in a Cold War situation. I was going to say that's a really interesting point because actually when you look at, and we've seen this happen across other regions as well.

28:51So for example, Paysharp in South Africa, they started with a very simple P2P model, but that was the foundation layer for them to really create a domestic switch service across the country, which is now growing throughout the rest of the continent. So this could be a really smart play for the banks to say, this is the start of us creating a debit network that is interoperable across all of the banks. And like you said, could also include other payment rails like Revolut in the future. But this is a starting point. And I'm with you 100 % on that. You know, if that's the direction of travel, then great.