Problem: Managing your personal finances is hard: making sure you’re not overpaying for streaming services, understanding ways that you can cut back on spending, making sure that you “pay yourself first”, and more.
Solution: A service that serves as your personal financial butler with the sole purpose of eliminating financial waste from your life. The app/platform (which could either be a mobile wallet or analyze existing transactions in your current bank account on a recurring basis). This could even be as simple as upload your bank account statement to have all your purchases analyzed for a specific time period. For example, some things that this financial butler would do include:
Analyzing your subscription services and recommending when you should unsubscribe (e.g. if you have both Blue Apron and Hello Fresh, it would automatically recommend that you cancel one)
Automatically canceling subscriptions for you after your free trial is over (c’mon… we all do it!)
Examining your transactions to see if you are spending “within limits.” One of these limits could be modeled after The Richest Man in Babylon (10% savings, 10% debt, 10% investments, 10% charity, 60% living expenses including mortgage) and another one could be modeled after FYRE (read more about it in this New York Times article)
Giving users a “spending score” so they can gauge how much money they are saving relative to peers.
Currently, the rise of financial apps like Wealthfront and Betterment have demonstrated that millennials are looking for new financial tools to help them control their spending and increase savings. This also falls in line with trends identified by TIAA institute. Some broad trends on the consumer finance space are below as provided by ARK Invest in their Big Ideas 2020 report:
It goes without saying that the market is huge.
According to ARK’s research, digital wallets will be valued at a premium to retail banks and, thanks to their low cost of customer acquisition, will offer banking services to low income earners in a way that traditional banks cannot.
Given ARK’s estimate of 220 million digital wallets in the US by 2024, if every user were to be valued according to the lifetime value of traditional bank customers, the digital wallet opportunity could be worth more than $800 billion
This business would target the digital wallet market.
Monetization: Financial surveillance (i.e the Robinhood model). Collecting financial data and using this to create competitive market insights. Also selling this service to consumers on a subscription or per-bank-account-analysis basis.
Contributed by: Michael Bervell (Billion Dollar Startup Ideas)