Head over to the WIRED Money 2015 hub for more coverage of the thought leaders and innovators speaking at this year's summit.
Personal finance has never been more complex and confusing. That means interesting opportunities for the industry, but a potential catastrophe for consumers, says Raphael Ouzan, cofounder, CTO and head of product at personal financial security firm BillGuard. "We can't make rational decisions about money," he told WIRED Money 2015 at London's British Museum on 8 July. "We're not computers rationalising decisions... Consumers now will choose convenience over trust. Why? Because we can."
Speaking in the "Innovating by Design" session alongside Hiroki Takeuchi of GoCardless, Taavet Hinrikus of TransferWise and Valentin Stalf of NUMBER26, Ouzan said: "We know that many industries have taken giant steps forward, but we have not... We all use credit cards, debit cards and bank accounts, but how many times do we actually check our statements?"
The evidence is stark: nine out of ten people don't actually check their bills, Ouzan said. In a recent poll, 86 percent of Americans lack basic knowledge of financial information, including the essentials of interest rates and inflation. There are more than $14 billion "leaks" from consumer accounts every year in the US alone, and identity theft is rising in most major markets. "Consumers now will choose convenience over trust," Ouzan said. "Why? Because we can."
The issue, he says, is making the core "loop" of personal banking -- checking for problems, noticing missed or unexpected payments and keeping track of your balance -- a habit as addictive as checking Facebook.
His company's solution, BillGuard, lets users more easily track their spending, and receive actionable alerts for fees, scams, ID theft and stolen data. The service can also let you cancel cards if you lose your belongings. Ouzan, a recipient of Israel's President's Award for technology innovation, founded BillGuard in 2010, building its core technology and now leads the company's tech and product team around the core concept of building "the anti-virus for bills".
But although the service immediately helped consumers save money after it launched, BillGuard still considered its core product a failure because engagement remained low: users were protected, but not engaged with their money. "If it doesn't become a part of your daily life it doesn't matter. It was not relevant... this is what's wrong with our industry. A lot of our products are just not relevant for our consumers."
That forced a rethink, leading to a new mobile app that turns your bank accounts and services into a list of actionable items that reinforce the habit of paying attention to your money. The core of the app is a consistent, "simple loop", starting with triggers (or changes on your account you should know about) which are easy to deal with, and resulting in a clear conscience. "If you run this loop enough times, you know what you get? A habit. And a habit makes a service relevant." The app hit the top of Apple's finance charts in several countries, and was named one of the best of 2014 on Google Play, Ouzan said.
Next for BillGuard is a recently released personal identification security service, and a focus on growing market share. But the lesson for financial services as a whole is clear, he insists -- be relevant, or have someone else do your job. "Will the bank remain the primary interface? It's not quite clear. But the race has begun," he said. "There are multiple ways it could go. Some of the tech giants we know could bite the bullet and buy the bank," he said. Alternatively startups will replace big institutions, piece-by-piece, or alternatively banks themselves could take up the challenge and become relevant again. "What we do know is financial services will change, because they have to."
This article was originally published by WIRED UK
