EXCLUSIVE: “Solutions, not buzzwords” – Jasper Martens, PensionBee and Leda Glyptis in ‘The Fintech Magazine’
Open banking, APIs, platform economies… the consumer doesn’t need to know about any of them, but they’ll vote with their feet if established financial providers fail to whole-heartedly commit to what they deliver, says PensionBee’s Jasper Martens
PensionBee has been working industriously since 2017 to leverage open banking and digital technology to transform the way people think about and manage their retirement savings. But, five years on, it still rubs up against others’ legacy systems, as Leda Glyptis discovered when she talked to Jasper Martens, its chief marketing officer.
LEDA GLYPTIS: PensionBee is now a household name. Fifteen years ago, it would have been hard to imagine seeing adverts for a pension provider such as yourself on your daily commute. What has changed?
JASPER MARTENS: Two things. Because of auto enrolment, almost everyone with a job will now have a pension and, because people move jobs more than ever, it’s likely an individual will have many pensions from previous jobs. So, pensions are now much more front of mind.
Combine this with the fact that technology, including open banking, makes pensions more accessible and visible – it eliminates paperwork and makes it easier to trace previous pension pots – and you have a perfect cocktail for engaging with savers who want to take control of their pension and look forward to a happy retirement. It’s fair to say that PensionBee has helped to transform the way other UK pension providers engage with their customers and we now see some incumbents innovating and new brands entering the market.
LG: Saving for retirement is daunting for many folks. How does technology enable you to serve your communities better?
JM: Especially in a time when inflation is rising and the cost of living is squeezing our daily budgets, it can be really difficult to think about tomorrow’s money when dealing with today’s money issues. But remember, almost everyone who works for a company has been saving into a pension every month for a while (thank you, auto enrolment!). Locating your old pots is simply making visible what you’ve already got.
That’s a different mindset and triggers most of us to take control, rather than confront the daunting task to ‘start saving’. We estimate that around their 40th birthday, most people will start making an inventory of what they have saved. Back in the day, this was really hard and often done by a financial advisor.
Technology has enabled you to do this yourself almost instantly, helping you make informed decisions about what to do with these pensions. It provides easy tools to project a comfortable retirement and how well you are on track (or not) to achieving it. Technology also allows you to add more money into those pots easily.Financial advice will still have its place when you need an expert view, but it increasingly won’t do the inventory and easy planning part.
I compare it with travel agents: you wouldn’t plan a city break to Amsterdam through a travel agent, but you might well use one for a four-week trip through South America.
LG: If you had to explain a ‘digital’ pension to someone outside the industry, how would you bring it to life?
JM: A pension used to be this obscure piece of paper you got through the post once a year (if you were lucky). A digital pension is there when you want to see it, in the palm of your hand. It has a live pension balance, you can put money in, take money out (from the age of 55) – instantly.
It’s a long-term savings account that sits alongside your current account, deposit accounts and other financial products. Modern pensions allow you to see your tomorrow’s money today.
LG: Let’s talk about talent. Tech may be seen as a sexy industry but the ‘fin’ part generally isn’t! It means trying to attract and retain good people is a constant battle. How does solving the pensions problem play in this space?
JM: You’re right. Turning a cold purchase like a pension into a warm and exciting experience is hard!
In order to attract talent you’ve got to offer a purpose (and an attractive pay packet to match). At PensionBee we’re solving a problem for millions of UK pension savers. It’s a purpose that will get others on board. Mission is also important. An example is our Fossil Fuel-Free pension plan, a product that excludes investment in oil, gas and other environmentally damaging companies.
Our customers asked for the product, it did not exist, so we built it (it took more than a year!). It’s not more profitable for PensionBee, but that doesn’t matter: it’s better for both our customers and the planet.
So, if you’re recruiting, you need to articulate both a purpose and a mission. Another helpful way to attract talent is to offer everyone a stake in the business. At PensionBee, we don’t simply hire you, you become a co-owner. It’s not just another job, you’re part of the journey. It sounds cheesy, but it’s proven to be effective in retaining great talent.
“I believe that, in a few years, it will become less common to go to a comparison site… instead, providers will offer a product that’s tailored to you because of the insight you gave them into your financials”
LG: PensionBee is a very successful vertical play and yet the platform economy is important to you. How do you fit into that?
JM: Although a pension is an important part of your finances, it’s not the centrepiece. A bank account that receives salary and other regular income is the place where most of us manage our money. We feed into that, providing a holistic view of your finances.
Your today’s money, such as your bank account and your credit card, is combined with your tomorrow’s money, your savings and investments. We are not the platform, but we are essential to feed into others. We’ve been doing this since 2017 and an interesting by-product is that we’ve been able to welcome customers through marketplace arrangements. Not a lot of pension providers offer account visibility in platforms, so consumers are happy to transfer their pension somewhere that provides that level of connectivity.
LG: Looking ahead 15 years, what are the biggest challenges and opportunities for the sector?
JM: Let’s forget the buzzwords such as open banking and focus on solutions for consumers. Account visibility to provide a holistic view of your finances and easy payments into your pension both run on open banking technology, but we don’t advertise it as an ‘open banking feature’. We’re not all financial technology experts so don’t treat consumers as if they are.
Rather, providers should be offering them solutions. I believe there are three other significant trends and challenges worth highlighting. Connectivity and compatibility. We still see quite a few established financial brands just doing the bare minimum to enable account connectivity or incorporate new solutions to make managing your finances easier.
For example, we use open banking to make payments into your pension. However, some legacy banks simply won’t process them on a Sunday, so your payment fails. On paper, those banks are part of the ‘open banking revolution’ but because of their ‘no-payment Sunday’ rule, we exclude them from our provider list.
Some APIs from banks are flimsy and you’ll end up fixing bugs that really should have been fixed by the bank in question. These things are not always down to ancient technology of incumbents, it’s mainly driven by the unwillingness to innovate. Banks need more than a token ‘head of innovation’ or ‘task force team’. That ship has sailed.
Although consumers are really sticky when it comes to staying with their bank or financial provider, I believe that, eventually, consumers will switch if their current provider does not change with the times. Once they leave, they are unlikely to return.
Platforms provide smart shopping
It’s still early days, but we are beginning to see some banks and money managers provide personalised recommendations to buy money and insurance products. I believe that, in a few years, it will become less common to go to a comparison site and compare your annual home or car insurance renewals. Instead, providers will offer a product that’s tailored to you because of the insight you gave them into your financials.
I recently switched from my mobile phone provider after 12 years because the money app I’m using analysed my monthly spend and subscription and benchmarked it against other providers. In 10 years, we will also be able to do this with pensions – I would hope!
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