“We don’t want to be the next bank, we want to be the next tech giant”
If the likes of Netflix, Twitter and Uber were successful at matching millions of customers with third-party providers through their platforms, why couldn’t banks follow a similar business strategy? That’s perhaps the question that was in the head of Ed Maslaveckas when creating Bud, one of the hottest banking startups from the UK.
Here we talk extensively with Ed, now CEO of this original Fintech, trying to understand how the digital world has enabled entrepreneurs to come into banking without a) directly providing any financial services; and b) even more surprisingly, without needing a banking licence.
Q: Let’s start from the basics. You describe yourselves as a ‘Universal Banking Platform’. But what is Bud all about?
We see Bud as a platform that enables the customer to choose between as many financial services as possible in a single place. We currently have 35 service providers in the UK, integrating them directly into our system through an intelligent interface that connects them all.
The fact that hundreds of firms have entered the market offering new financial products and solutions is great for having a healthier and more competitive market environment. The downside is that such an increase of supply adds a layer of complexity for the customer in terms of analysing and selecting which of these products suits them better. Helping them to solve that problem is where Bud can really add value.
Q: The first thing that came to my mind when hearing your business proposition was the firm Skyscanner, a successful aggregator and comparison engine for flight tickets from different companies. Are you trying to replicate that model for banking services?
Not really. Of course, we are aggregating and comparing services from different providers. But I see, at least, two big differences. The first one is related to the product features. This is because financial products – bank accounts, investment plans, etc. – require the establishment of long-term relationships, which are much more complex than acquiring an individual flight ticket. The second is that such relationships are not only longer, but also across products. In other words, our third-party services are interrelated and therefore they need to speak to each other. Obviously this adds another layer of complexity.
Q: But you don’t consider yourself a bank either…
That’s also true. We don’t think we should be taken as a traditional financial institution for a very simple reason: we do not provide our own financial products. Actually, we see ourselves as a financial assistant. We are trying to deeply understand users in order to find the right solutions for them. The more your ‘Bud’ learns, the more relevant the insights you can gain. This isn’t purely about product acquisition; it’s about forming a relationship with an assistant that is proactive in helping your money work better for you as an individual. You can expect a smart nudge from time to time when there is a valuable action to be taken.
Since people will have the opportunity to choose between different current accounts, different FX providers or different investment platforms, we want them to understand why they should use one instead of another. This is actually where the name Bud comes from.
Q: Does this mean that banks are not your competitors?
Yes, I really do not see them as direct competitors. We are very different and agnostic in some sense. In fact, we want their products to be in our platform and them to be our partners. I would say that tech giants could be potential competitors. These people – Google, Facebook, Amazon, etc. – do know how to build successful marketplace and platform businesses, and they already have a huge customer base. However, whether they will enter our space is very difficult to predict.
Q: Let’s avoid the “bank” label then. However, you are doing banking without having a banking licence. Isn’t this an oxymoron?
Not in today’s digital world. Platform business models allow us to not even think of getting a banking licence. This does not mean that we won’t be regulated, but it will depend on the products we host. But again, we are not a bank nor do we want to adopt their business model.
Why? Firstly, because if we started building core financial services we would be competing with some of our service providers, something we don’t want to do; but mainly because that strategy would take our focus away from our real concern: how to build the best platform and create the best consumer experience when integrating multiple products.
Q: Picking up on your last point, I guess the real challenge behind that offering is the tension between how open you are – how many products you accept on to your platform – and how integrated the experience you provide is.
Obviously, whereas assisting people when choosing the products that suit them better is one of our key objectives, achieving a seamless cross-product experience is no less important. In the end, we want those products speaking to each other with a kind of unified message.
Depending on the specific solution, this is more or less complex in terms of the amount of details needed – e.g. a stock trading application where you get insights, graphs, etc. could be more complicated. That’s why we are currently focused on the integration of more straightforward services and we’ll evolve towards more complex services further down the road.
Besides, right now we are building such integration hand in hand with our service providers, but a year from now the plan is to allow them to come on to the platform and do this integration themselves. In the end, we want to be the centrepiece where the consumer sits and service providers plug in their services.
Q: Can you give us more details about this integration process?
It will be very easy to apply to be on the platform. Or, to put it a different way, we seek to design a process less painful than Apple’s App Store but with our own checks on the regulatory situation – of course, we need to verify that the provider complies with the regulatory requirements. Let’s say you’re a new service provider, you can go ahead and start building out your page, you can even go ahead and link to your website, to your sign-up process in there. Part of this process requires the providers to identify what they do for customers and who their target audiences are. This allows algorithms to start matching users to products as well.
Q: And how does this integration crystallise when the customer goes on to the platform?
In order to avoid the current scenario in which you go to different websites with different layouts – which makes it harder to understand the main relevant features of each product – we have created some themes that try to standardise the UX, so the customer experience is more seamless. It’s the provider who builds this theme page, similar to the process of building a Facebook or LinkedIn page.
However, although there is a dashboard from which the user controls all the different products they are connected to, the customer flow, the branding and how the product ‘feel’ are managed by the provider they are using. So, once you find the product in the marketplace, all of the content, imagery, everything about the company is actually controlled in the back end by our third parties through CSM. Here is an example:
Q: How important is consumer data – and what role does it play – in your business?
Data is crucial. Take into account that in order to assist customers during their trip through a platform full of products, we need data that supports our suggestions and recommendations as well as our feedback – though obviously the final decision is always in the client’s hands.
Q: And are you thinking of monetising it in some way?
Not at the moment. Today we monetise through our affiliate partnerships. But if we ever considered pivoting towards that kind of data monetisation business model, first we would want to make sure that the customer sees the benefit of that. Whatever the case is, we deeply think of customers as the owners of their data.
This implies that if you are giving – or selling – your data to a third party, you need to benefit in some way. Ultimately our interest lies in helping our users to be better off. So if the data on the platform shows that many consumers are being let down or under-served in a market segment then we would want to inform our partners about this, allowing them to serve them better. Or even better than that, to show our partners that there is a need for a whole new service or product. If the market provides more information it can serve us better.
Q: And finally, apart from data and revenue, what are the main points of friction when interacting with third parties?
Perhaps I would say the whole onboarding process, the KYC and AML kind of stuff. In the future, that could be a bit of a contentious point in the industry. Everyone is doing their own KYC and their AML checking, which is good, but for example a lot of people are using the same third party to do those checks, which obviously entails some inefficiencies. We could actually use the platform to reduce them through allowing different parties to have more fluent channels to communicate.
The way we all acquire new services is wildly inefficient. Advertising is very broadly targeted. If we manage to see an advert that is relevant, we then have to do a whole bunch of work to understand how a product may or may not benefit us. Most of us don’t have the time to do this. Or have insights into our own data to support that decision-making process. This is also why advertising is inefficient for service providers in all segments, especially finance. This is where Bud is taking the first steps to change that. We believe that Insight + Relevant = Assistance. We are pretty excited about it.
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Ed’s Twitter: @
My Twitter: @bankingunion_eu
Bud’s Twitter: @this_is_bud
Kantox’ Twitter: @kantox