The rebundling continues. Many popular fintechs began their lifecycles doing one thing very well and over time, have added in more products and services. For online banks, many have added — or are planning to add — investment offerings. When firms like Revolut and MoneyLion added investing, they did it by partnering with DriveWealth, which provides investment infrastructure as a service.
DriveWealth’s John Shammas, the firm’s chief product officer, joins me on the podcast today to talk about what’s driving the business and how the move to zero commissions is changing what challenger banks are looking for from an investment product. We talk about how DriveWealth has integrated spending off a debit card to the rest of its product suite, as well as what’s in the pipeline for 2020.
What is DriveWealth?
We are an API-based broker, providing a technology platform for companies to offer investing capabilities in an effective and competitive way. Our partners get full control of what the customer experience feels like, the types of investment products they offer — through integration with our modern API stack.
Financial industry insiders and outsiders
Our company as a whole has a really good mixture of staff that’s come from a financial services background and many who haven’t. We spend a lot of time thinking about the products our customers should be putting in front of their customers. We start with defining the actual experience we need to power, and then back out from that to determine the technology to power that. Overall, I think that mixture of backgrounds has made our technology so versatile and has allowed our partners to build some very innovative investment capabilities.
Drivers of the business
One of the things I’m most focused on is the transformation of how people are thinking about investing. If you think about the investment workflow over the past 30 years, it hasn’t changed much. The delivery has changed — instead of calling a broker, you can do it with a few taps over an app. Our job is to focus on the core technology behind all this so our clients can focus on what would make investing really compelling to their own customers.
Maybe it’s an experience where after buying a $1,000 iPhone, you get a message from your financial institution that asks you if you want to buy Apple stock. Or maybe you have $100 left from a monthly budget for coffee and you get prodded to invest it in Starbucks, Dunkin, or an ETF. Our partners are focused on what it takes for someone to enter an investment order. We’re focused on making that work.
The move to zero commission
What’s clear is that there isn’t a battle to be won over price. If you’re going to offer investments, you have to have an incredible experience behind it. Also, rather than having different brands you interact with for banking, investing, loans, that’s all converging. DriveWealth helps these financial brands with successful products that want to expand into investing. They know that they have to have competitive pricing, and they also know they need to have a really competitive product, as well.
Tying in debit cards and spending to investing
For a number of our partners, spending — and debit cards — is a really interesting way to encourage thinking about investing. Analyzing how someone spends can give you a lot of insight into what industries and companies they may be interested in investing in. Our partners have all the technology and data to automate this. And from a branding point of view, it’s relatively easy for a fintech to leverage the trust its customers have for it to move into investing.
Changing customer requirements
A lot of the companies we’re working with are targeting a demographic that isn’t invested or is underinvested today. Similar to the concept of accessing the unbanked, to some extent, we’re accessing the uninvested of the world. What can be challenging, DriveWealth is trying to figure out what the investment products are our clients need before they necessarily ask for them.
One way we do that is by looking at other experiences people have in other spaces and try to mimic them. In ecommerce, there’s a very clear UI workflow for adding something to a shopping cart and completing a transaction. If we can make investing similar to that — and some of our partners use a shopping cart approach — it’s a more accessible way to start investing for a customer without any experience investing.
Looking out to 2020
Our biggest focus is on what more we can do to promote good financial behavior and give our partners the ability to offer a more diverse set of financial products. That could include more assets, more availability of different types of investments. There’s a tremendous amount of things in our pipelines we want to give to our partners to offer their customers. Our product that we offer isn’t stock or ETFs — it’s investment experience. We’re focused on how to make the experience as good as possible and provide as much diversity as we can as to what our partners can power.