Move over ‘financial wellness’, the next frontier for fintechs is ‘financial intelligence’, says the founder of digital banking alternative Yondr.

Money management is something of an obsession for Melbourne-based entrepreneur Shane Chanel.

He first knew he wanted to be a financial planner as a 16-year-old student at Melbourne’s Nazareth College. After studying financial planning at Deakin University, he landed what he thought would be his dream job.

“I went into financial planning thinking, ‘I’m going to be there helping these people with their finances and helping them invest and grow their money’,” Shane tells Startup Daily. “And such a massive part of it was selling insurance. It’s just something that didn’t sit right with me.”

Shane made the move into capital markets to play a more involved role in growing customers’ portfolios. Over the course of his 15-year career in finance and banking, it became very clear to him what was missing in the ways financial institutions were servicing their customers.

Seeing the growth of neobanks like Monzo in the UK and N26 in Germany, Shane felt the Australian market was underserved when it came to lower cost, customer-driven financial services that have budgeting tools embedded in their platforms.

“There’s a lot of trends within banking that are starting to shift the expectations that customers have from their providers, and what they want moving forward. A bank isn’t going to just provide transactional services – they’re going to do a lot more,” Shane observes.

“We’re working closely with customers to define the best possible product-market fit. They’re dictating to us what they want and driving our product offering.”

Enter ‘financial intelligence’

While the idea of ‘embedded finance’ is nothing new in the banking world, the focus on financial literacy and transparency is becoming a core part of digital banking challengers like Yondr. Only two-thirds of Aussies are considered to be ‘financially literate’. The recent HILDA (Household, Income and Labour Dynamics in Australia) survey of 17,000 Aussies found a drop in financial literacy when participants were asked basic questions around savings accounts, interest rates and investments.

It’s no wonder ‘financial wellness’ and ‘financial wellbeing’ have become such buzzwords in the banking industry. Shane says the opportunity to create products and services focused on ‘financial intelligence’ is the next frontier.

“It’s based on behavioural science plus habits,” Shane says of Yondr’s upcoming developments. “We’re basically giving them a budgeting tool that’s completely automated. It should help people manage their money better.”

Using AI and other machine learning processes, these budgeting tools have the potential to help change a customer’s spending behaviour in a more proactive way than we’ve seen before.

“We’re not just basing these predictive analytics on this budgeting advice and recurring transactions. We’re taking a lot of behavioural science into consideration, including things like the weather,” Shane explains. “If it’s a hot day outside, you are more likely to go out for a drink. Or if it’s a cold day, you might sit at home and jump on Netflix or go online shopping. Gaining a better understanding of your spending habits can lead to the ability to make better financial decisions.”

Banking, budgeting and behavioural science

Yondr, which officially launched in 2022 with the backing of former ANZ CEO Mike Smith, combines core transactional services with money management tools. There’s virtual cards and a multi-currency wallet with exchange rates that beat the traditional banks, but there’s also comprehensive budgeting tools to monitor, track and set budget limits, split your expenses and access real-time spending analytics.

“You’ll start to see trends pop up on your phone,” Shane says. “So in my case, I spend the least amount on Mondays. I spend the most on Tuesdays.”

“After noticing that I spent the most money on Tuesdays, I browsed through my transaction history and noticed that I was buying lots of after-work drinks and eating out nearly every Tuesday. I found that 74 per cent of my dining out occurs on Fridays and Wednesdays. So this is collating my data and telling me things I didn’t even know about myself.

“Having this information readily available makes it much easier for our customers – and myself – to be aware of any habitual spending over time.”

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In the current cost of living crisis, financial intelligence is financial power. The depth of customer experience, as well as the speed of delivering it, will be crucial for fintechs like Yondr and their big bank competitors.

“We’re incredibly proud of being able to have a feature-rich product in market with a few thousand customers and all the bells and whistles that we have,” he says. “These customers are onboarded for just over $500,000. No other bank or large organisation would be able to do what we did for even $50 million… we’ve got the runs on the board.”

Shane says his own financial habits have changed over time – especially since he scored his first capital raise of $500,000.

“I think I became more money conscious later on in life,” he laughs. “Mainly due to startup life. You just don’t have a choice.”

Yondr is taking expressions of interest for its next capital raise. Head to Yondr Money’s website and select ‘Investor’ to find out more.

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This article is brought to you by Startup Daily in partnership with Yondr.