How did a London-based fintech startup turn a successful email newsletter into an end-to-end financial planning platform? Techworld sat down with the founder of Finimize, Max Rofagha, to find out.
Speaking to Techworld in a Clerkenwell cafe, Finimize founder Max Rofagha told a story that might be familiar to young professionals living in an expensive city: "Every month I put money aside from my salary and one day I took out my phone and looked at my bank account and thought, cool, I have some savings."
"The natural next question was what do I do with these savings now? And even though I studied economics, I was pretty much clueless. So I asked some of my friends who are bankers here in London and realised that when it comes to their personal finances, they also didn't have a clue."
Rofagha quickly realised that the banks couldn't help him, a financial advisor was unreachable with his income, and the rise of the robo-advisor hadn't really taken off yet.
Then there is one of his favourite statistics: "86 percent of millennials save each month but they keep more than 50 percent of their assets in cash, because there is no suitable way for them to get financial advice." This was his lightbulb moment.
From a newsletter to a platform
Finimize started life as an email newsletter for bitesized financial news, as Rofagha wanted to close the "advice gap" in the UK and "to empower our audience of millennials to essentially become their own financial advisors." Essentially he wanted Finimize not to be a 'black box' that invests your money and promises returns, but rather to help people understand what they are investing in and why.
The newsletter clearly hit a nerve, as it quickly built up an audience of more than 100,000 people. Now Rofagha has launched the next phase, a financial planning platform called Finimize MyLife, which is currently in beta and has a waiting list of more than 24,000 people.
The Finimize MyLife platform is free to use and helps users create a financial plan by answering a few questions about their financial position, setting goals and then selecting from a range of options, be that opening an ISA or investing with a partner like Nutmeg or Moneyfarm.
Rofagha admits this is an unconventional approach to building a fintech startup, in that they built the community and audience first, and then the product "together with the community".
The next steps for Rofagha will be to invest in data science so that the platform can make more tailored product recommendations for users, once it has built out its data set.
Then there is the always-tricky route to monetisation. Finimize MyLife is free while it is in beta, but the company is already considering charging a subscription fee further down the line. This would be "for premium features as well as exploring other monetisation routes," according to a spokesperson for the company.
The open banking opportunity
Rofagha sees Finimize as playing a vital role in the next phase of the fintech startup cycle. He explained: "The fintech revolution started with the infrastructure for digital finance with Mint.com, then the robo-advisors came around, and now savings.
"Now we are at this point where the next play will have to be a platform that sits on top of this. Everyone that is touching the money is having a problem as there is a race to the bottom with the fees they can take. So the real value add will be building the platform that connects them all together and guides the user through the financial jungle."
Rofagha clearly believes that Finimize is the right app to guide users through this process, but the founders of fellow fintechs like Bud, Curve and Revolut are all angling to be that platform. Not to mention Tom Blomfeld and his digital challenger bank Monzo, which has been built to be an open banking platform from day one.
Then there are the established banks, who are all talking about "banking-as-a-service", or modular banking, and how they can stay relevant in the age of open banking, where customers can start to pick and choose which financial products they hold with the best possible provider.
Kevin Hanley, director of design and services at RBS, highlighted this ambition back in 2016 when he said: "We are moving from an era of physical banking to a connected bank of digital services. This starts to re-frame banking and our role in it as much more of a composite where we both provide services and link to other services. So we become a platform for our customers to navigate around."
It might not necessarily be a winner takes all market, but that is some serious competition for a nine-person operation with less than half a million pounds in seed funding, even if that money did come from Eileen Burbidge's Passion Capital.