This week is Mental Health Awareness Week. According to the Money Advice Service, nearly two-thirds of UK adults (63%) say that stress over money has affected the mental health or wellbeing of someone they know. Victor Trokoudes, the CEO and co-founder of Plum, believes fintech can help.
He first started building the personal finance app in 2016 when he and fellow co-founder, Alex Michael, were struggling themselves to save money. Plum today acts like a brain for your bank account, with automatic saving, bill switching, spend analytics and easy-access investments. Ultimately, Plum aims to alleviate money worries, help people out of financial instability and be better off over their lifetime.
What has been the Plum response to financial technology innovations?
Plum is a direct response to problems in people’s everyday finances that can’t be solved by traditional banking. More than 10.5m people in this country have less than £100 in savings. For some the issue is that they don’t have enough money coming in; for others, they don’t have time or energy to tackle the problem and many times it is a combination of the two. And savings aren’t just a nice-to-have. Without some money saved, an emergency can plunge you into debt, and leave you at risk of financial vulnerability over the long-term.
We believe that automation is the solution to these parts of finance that we find difficult. Plum is an app that uses Artificial Intelligence (AI) to work across all areas of your banking to save you money, from setting aside small amounts that you can afford every few days to finding you better deals on your bills. We estimate that with the help of Plum’s technology, the average person could be £186,000 richer over their lifetime.
How has this changed over the past few years?
When we founded Plum, we were looking to apply our empirical evidence that putting money aside automatically is the fastest way to build up savings. Open Banking legislation via the EU’s PSD2 regulations has meant we can now build a complete personal finance app around automation with useful features that are truly intelligent and personalised, all the while keeping users’ bank details fully secure. As an example, Plum can detect through scanning transactions where you could be on a cheaper utility deal, and gives you the option to switch in a few seconds. These are exactly the type of useful features that people need for their money management, but don’t necessarily have the time to do themselves. Now, they can count on Plum to do the hard work for them.
How have you created a culture of change at Plum?
We’re all united around an important mission: to help people to manage their money better. This drives us to respond quickly to the immediate needs of users so quickly. For example, during the Coronavirus lockdown, we realised that more than ever our users needed better ways to monitor and understand their spend. We’ve launched several new features that directly help with this, including Diagnostics, where users can compare their spending in different categories with that of others, and Cashback, where users can get money back into their Plum account when they spend using our app with certain merchants.
What FinTech ideas have been implemented?
AI is an important part of Plum’s power. Firstly it is used to work out the perfect amount for each person to set aside, and means Plum will keep responding to your behaviour, essentially becoming smarter over time. Secondly, it’s used to categorise your transactions and find more ways to put cash back in your pocket. Traditional banking isn’t smart enough to help the individual optimise their finances in this way. Its primary focus is the transactions, like spending money on a card or sending money to others. We’re focused on managing your whole financial experience and giving people the tools to make good decisions about money. Of course, rich people have always been able to consult financial advisers for this kind of help, but our technology makes it accessible for everyone.
What benefits have you seen from FinTech adoption?
The best thing is seeing consumers benefit from our technology every day. We’ve built an engaged and vocal community of Plum users (we call them Plumsters) and we love hearing how Plum has changed their lives. Many Plumsters tell us they were unable to save at all before; with Plum, they’ve been able to save up thousands of pounds without really noticing. And once they have built up a saving pot, they feel much more confident to explore other key areas of personal finance that they may not have considered previously, like investing. It’s permanently changing how people feel about their finances, for the better.
Do you see any other industry challenges on the horizon?
Right now we’re in the middle of the Coronavirus pandemic, which none of us saw coming. People are rightfully concerned about what the future holds for their finances and this will bring some big challenges for our industry. Restrained spending across the board is impacting many businesses. We’re likely to see caution in adoption of new technology too. For the bigger and more established Fintechs, their business models are perhaps less able to adapt quickly to the changing circumstances, particularly if we enter a recession. But there’s no doubt that Fintech will be an essential part of how we build financial resilience after lockdown ends.
Can these challenges be aided by FinTech?
For Plum, the current circumstances are a big opportunity. It’s likely that people are going to emerge from this period with a new perspective when it comes to money, and will be looking for new ways to make both short-term and long-term improvements to their financial health. FinTechs like Plum offer an easy and cheap way to do this.
Money management doesn’t have to be a struggle. We look forward to a future where everyone is able to automate the parts of their finances that they find difficult and banish money worries permanently.