Fintech Insider Podcast by 11:FS
00:07:49 · Sarah Kocianski, Kate Moody, Benjamin Ensor
[00:07:49] S4: I mean, Kate, Benjamin, if Ross got his wish, you know, if banks were better incentivized to help customers build stronger financial futures, what difference do think that would make to customers? [00:07:59] S2: I mean, I think hopefully the benefit for customers would be that, yeah, they would achieve better financial futures. Obviously, that actually looks like is going to be different for different people. Think, you know, we've done quite a lot of pieces of research work with different companies across financial services, we would look to precisely this problem, how can you actually map out what financial future somebody wants to move towards about it being just massively generic, you know, one size fits no one. So yeah, guess, I think the point Ross was making around the underlying business models is also really important, know, think actually really if we were able to restructure financial services in this way, probably what we would also see is yes, customers achieving better outcomes but probably also customers having to pay for financial services in a slightly more transparent way, know, I can't remember who to attribute it to, who probably but you know, that phrase, if you're not paying for the product, you are the product and I think that is maybe the shift that if you follow this wish all the way [00:08:51] S6: through,
00:08:51 · Benjamin Ensor, Kate Moody
[00:08:51] S6: through, [00:08:52] S2: you might need to shift across the industry as a whole that people have a better understanding of financial service providers are helping them to accomplish financial outcomes but to do that, you know, is a service that you as a customer need to pay for either directly or indirectly. So I think that would be a benefit as well but they'd probably also be, people probably also feel a difference in terms of financial service becoming less something that just exists in the background where you're being charged about even really realizing it, to something that you have to make conscious decisions about. What kind of help and support am I willing to pay for?
00:09:24 · Benjamin Ensor
[00:09:24] S6: I think there are plenty of companies and millions of individuals in the financial service industry who are trying to build better financial features for customers, but it's hard to do. The problem comes down sometimes to alignment. And there are products and sectors where it's much easier to get alignment between the customer and the firm and products and sectors where it's much harder. So a good example is investment funds, right? In theory, we invest in investment funds and the value of those goes up and we're paying a sort of fee based on the value of those investments, then in theory our interests are largely aligned with the provider of those funds. It doesn't always work, it broadly works. But then there are some other products perhaps like the one that Kate's husband enjoys where he's borrowing. Any kind of credit product sometimes there's an incentive for the firm to encourage customers to borrow maybe more than they need because the firm makes a profit. Or stockbroking is another classic example, stock trading where actually sometimes your best customers, the ones who trade most often, the best customers for the firm are the ones who are sort of doing the most harm for their financial future. So I think to crack this wish, you've got to, as Kate was saying, think about the incentives, think about the alignment, think about how the financial services industry is rewarded, have more transparency about some of the outcomes. We have this thing where people in many countries don't want to pay for financial advice because they think, Why should I pay for financial advice? Financial advice should be free. Maybe missing the fact that $100 spent when you're 20 or 30 might actually be worth many, many hundreds of times that later in your life because you took some better decisions when you were a bit younger. So think people would people notice because they would never have experienced another life. But I think there's a huge opportunity to give people better advice if we can just find good ways of aligning the interests of financial services firms with those of their customers, which mutually owned firms are generally a bit better at doing.
00:11:17 · Sarah Kocianski, S3
[00:11:17] S4: There's plenty of food for thought there. Think I think there's plenty of things to dig into, I'm sure, on a later episode of this very podcast. For now, let's move on to Kate. So your wish is that money was less awkward to talk about. So why do you think we're still so uncomfortable discussing something that affects almost every part of our lives? I'm going to put it [00:11:36] S3: out there that I don't [00:11:37] S4: think anybody on this podcast is uncomfortable talking about money, I suspect that there are many
00:11:41 · Kate Moody
[00:11:41] S2: people listening who are. Yeah, I suppose, you know, I see this firsthand in the primary research we do on the sort of consulting side of our business. And when we're interviewing people, trying to really map out kind of those, those systems that they use and the jobs we've that they have. Yeah, I, even after doing this for eight years, I'm still amazed how at the end of most interviews, especially when you're speaking to people in the retail space or maybe even small business owners, people quite often sort of look quite relieved, like they've had almost like a sort of quasi therapy session. And so many people say like, oh, did I say things that were helpful? Did I, does everyone else make the same types of decisions or mistakes that I make? So yeah, suppose I see it in a research capacity that it feels like it's a much more unique environment for people to find themselves in than I it should be. And you can completely understand why, how much you earn or how much you spend, the kind of decisions you're making about how you prioritise your money as well, are reflective not just of your choices as an individual but you know, your perceived worth I guess in terms of the work that you're doing and how you're being paid and all sort of stuff. And there's all sorts of really established cultural norms about surrounding money and talking about money that hold people back. But you know the fact that we don't talk about money also helps sustain lots of negative things, know like pay discrepancy and gaps in sort of achievement and outcomes across different communities. So yeah, I mean that would I've I've generally no idea fundamentally how we solve this and treat everyone else's perspectives, but I really, you know, given the whole remit of the show is just throw wishes out into the ether, this is just definitely something I really wish was was fixable. Is it partly as
00:13:20 · Sarah Kocianski, Kate Moody
[00:13:20] S4: well because it would make your job so much easier if people were more willing to talk to you about their money? [00:13:25] S2: Well, I mean, I've got quite chubby cheeks, so I tend to find that those help to break down people's anxieties. But yeah, I mean, think it's something that probably is a solution for. I'm maybe just not smart enough to have found it just yet. [00:13:40] S4: Well, I mean, I think potentially what do you think financial institutions could do? Like it doesn't have to be you who finds the answer. So what do you think financial institutions across the board could do to make subjects, you know, like certainly some of the more complex financial services products as well, more relevant and therefore easier for people to talk about, I suppose.