Tweaking Money: Parts 1 & 2

Part 1

Malcolm Gladwell, in his 2011 New Yorker article “The Tweaker - The Real Genius of Steve Jobs”, discusses the difference between Visionaries - who start with a clean sheet of paper, and reimagine the world, to Tweakers - who inherit things as they are, and push and pull them toward a perfected solution. In his words, Visionaries create macro-inventions that spark new realities, like the invention of automobiles, electricity, television and the internet. Tweakers create micro-inventions which are necessary to make macro-inventions highly productive and remunerative. For example, Henry Ford did not invent the automobile nor the assembly line, but by welding them together in an efficient way, he converted the automobile from an expensive curiosity into a practical conveyance that changed the landscape of the twentieth century. Lawrence Lessig, in his Ted Talk “Laws that Choke Creativity”, calls them Re-mixers; they borrow features and change something from its original form, transforming it into something new, pushing the human race forward.

The Internet was an inflection point that was created by the Macro-Inventor Tim Berners-Lee. It introduced the first large-scale, open rapid communication infrastructure that continues to transform every facet of our lives. But it wasn’t before companies like Google, Facebook, Youtube and most recently Uber harnessed its potential by tweaking it through highly productive and remunerative products and services that the Internet could be seen in all its glory. However, these companies were not the first to try and do this. What distinguishes them is great timing, ruthless execution and constant iteration. These traits (amongst others) have helped them achieve success, and not just own but dominate their market.

The Financial Services industry, like many other industries that have now been transformed by the Internet, is characterized by fragmentation, complexity and high barriers to entry. Many companies have tried to solve the problems and inefficiencies in the space, particularly in Payments. These companies range from Paypal which introduced a revolutionary solution to increase trust and security in online transactions, to Mint which introduced a better way to manage your money, to Nectar and LevelUp which connect merchants to consumers to increase loyalty. Largely speaking we can group most of the companies that provide solutions in the Payments space into three groups:

• The first is the ‘Gap between Merchants and Consumers’; as a merchant I do not fully know the customer, and therefore I cannot communicate with him. This lack of communication creates both Fraud and challenges around Loyalty and Rewards. There are a plethora of loyalty apps that I can install on my smartphone, yet most merchants don’t have the technology nor scale to offer a robust solution to match. So they use stamp cards instead. This is where companies like Nectar and LevelUp have flourished, by aggregating merchants and providing a single reward card/app to consumers.
• The second is the ‘Gap between the interfaces’. 60 years ago we could pay with cards and cash everywhere. It worked seamlessly. However, with the introduction of the Internet and mobile phones, new interfaces have emerged and with them- new challenges. The more you move towards online and mobile interfaces, the more fraud and less conversions merchants experience. This is where companies like PayPal, and other Alternative Payments providers have flourished, decreasing fraud and increasing conversions to merchants and consumers alike.
• The third (and most complex) is the ‘Relationship people have with their money’. Most users don’t feel that they own their relationship with their finances- for a broad and sometimes very personal range of reasons. Many companies have sprung up to try and solve this tackling different specific issues; from companies such as TransferWise which minimizes your currency transfer costs, to companies such as Mint and You-Need-A-Budget, which provide you with better clarity of your spend and enable better financial decision making, to alternative credit providers such as Affirm, Wonga and many others.

The issue is that although these companies individually relieve specific pain points, paradoxically as a whole they increase the fragmentation and complexity that previously existed. This just alienates the user further from their financial world. Pain points that are seemingly solved at a micro-level are unsolved at a macro-level. Put simply, the sum of the (new) parts don’t add up to a simple, understandable comprehensive whole. Add to this the significant barriers to entry that characterise the financial services industry due to complex regulations, capital requirements and maturity of incumbents, and it suddenly becomes clear why we haven’t seen a total revolution as we have in other industries.

But times - they are changing. We are on the brink of an explosion of innovation in the financial space. Governments and economic unions worldwide are introducing new policies and regulations that increase competition by decreasing barriers to entry. The outcome: over $12Bn in 2014 alone (almost tripling the amount invested just a year beforehand1), invested by multiple startups and incumbents on all three verticals. But what are these companies doing? Some are continuing to try and solve specific pain points, such as small-business lending, mobile banking and Fx. But others aim for the holy grail - Tweaking the disparate pieces of the jigsaw puzzle to create a single holistic solution that will unify and simplify the fractured space and in doing so will become your Everything Money.

Part 2

One of the first things you learn in Law School is that Law is a living entity, affected by our social perceptions, history, culture, and technology advancement. In 1945, the U.S Supreme Court dealt with a unique complaint. Two farmers, Thomas Lee and Tinie Causby, who raised chickens, complained that their chickens had begun to follow the pattern of the airplanes that flew over the land, flying directly into the walls of the barn. Out of pocket - and chickens, they sought the protection of the law that stated land is a property which is protected by trespass law, covering both the land all the way down and also to an indefinite extent - upwards. Ergo - one can’t fly over the land without permission of the landowner, so these flights must stop - and the wayward Causby chickens saved. After deliberating the 100-years tradition, the Supreme Court disagreed. The doctrine protecting land all the way to the sky had no place in the modern world - it seems laughable to consider that a flight operator would have to get permission from each and every landowner they crossed or else face a suit. Common sense, a rare idea in the law, but here it was. A mirror of society, lagging behind passively accommodating new advancement.

As the world continues to evolve at an exponential pace, the law can no longer be passive and reactive, changed in retrospect. The legislator must become active and proactively introduce laws that free creativity and promote competition.

The regulatory landscape in Europe is a prime example of this. Led by the Payment Service Directive and the European Commission, it has fostered a breeding ground for new opportunities across the entire continent by lowering barriers to entry, creating real and effective competition in the Financial Industry. You no longer need to become a licensed bank with prohibitive capital requirements to provide innovative “money” services. With the introduction of Electronic Money (‘e-money’), a digital equivalent of cash, the European Union has provided revolutionary means for numerous new players to launch and transform the space.

These range from new challenger banks such as Atom, Sterling and Tandem, to online wealth management services such as Nutmeg, to alternative lenders such as FundingCircle and LendingClub, to unique Prepaid cards such as Osper and Simple, to Currency Conversion players such as Transferwise and CurrencyCloud. The world of finance, owned and dominated by the banks, is being ‘Unbundled’ and challenged by technology startups that use the power of the internet, big data, and sophisticated algorithms to create a better user experience, and drive costs down.

But this misses the real point.

The FinTech revolution has perpetuated and exacerbated the fragmentation that underpins the financial landscape. As a user, I know all too well the requirements to own, and manage multiple different cards, accounts, and services to stay on top of my financial self and save money. I need to have a business account, a personal account, my BA Amex for BA rewards, and my Virgin Money for Virgin flights; my Nectar card for rewards, and PayPal for online transactions… And so forth and so on.

In reality, and as mentioned in Part 1 of Tweaking money: “this just alienates the user further from their financial world. Pain points that are seemingly solved at a micro-level are unsolved at a macro-level. Put simply, the sum of the (new) parts don’t add up to a simple, understandable comprehensive whole.”

The solution to the fragmented and complex space should be holistic, unified, simple and ubiquitous. It should put the users back at the centre, enabling them to understand what’s going on with their money, regardless of the payment form, currency, or interface. It should leverage existing technologies and infrastructures, tweaking them into a single micro-invention. One platform that will put the user back at the centre, connecting them with their unique Everything Money.

Smartphones have the potential to provide the infrastructure for that platform. Mobile Payments such as Apple Pay have the potential to ‘re’-bundle and consolidate the fragmented services of the financial world. However, they can’t currently do this, due to infrastructural and behavioural gaps. Merchants have to accept contactless payments (less than 148,000 terminals across the entire UK, most of which are same retailers) and a user has to make the leap to pay with their phone, rather than the card they’ve been used to for the last 60 years.

This is exactly where Curve comes in..

We are Tweakers. Curve is a micro-invention to make the macro-inventions of the financial world highly productive and remunerative. With Curve we’ve used the best of PayPal, ApplePay, TransferWise, MasterCard, and other services, to create the ultimate payment experience - a ubiquitous mobile payment platform backed with a humble bankcard- which ‘re’-bundle a multitude of existing services to create a single focal point of access to your Everything Money.

Find out more at imaginecurve.com