Fintech Feature – Lumio
Fintech Lumio coins itself as the next generation of personal finance, giving your finances ‘a brain’. Lumio connects your entire financial life in seconds, identifies your ‘Lazy Money’ that isn’t being optimised (like low savings interest or investment returns), and then suggests the products and services from its independent marketplace that will optimise and grow your money.
We spoke to Adrian Shedden one of the co-founders of Lumio to find out more about this exciting fintech.
Where did the idea for Lumio come from?
Lumio came about through my co-founders Charlie and Tom Richardson. They’d been advising wealthy individuals on their investments and were constantly asked by their friends, largely millennials, about advice on what to do with their money as there wasn’t really a service that catered for them. It really highlighted the large advice gap and how existing solutions are a bit like an Apple watch that gives you lots of insights but doesn’t actually tell you what the next steps are so none of those insights are actionable.
How was Lumio then formed?
Charlie and Tom went away and did a lot of research in this area and found that there are lots of budgeting tools, loads of innovative digital banks and investment products the likes of Monzo, Starling, Revolut, and the likes of Nutmeg and Wealth Simple, along with many more, but there was no real independent first port of call to help you find the absolute right product for you. Even independent financial advisors generally speaking have a fairly narrow remit of things that they will look at, and other service providers usually don’t have that independence, they’ll have a tied partnership with a particular provider. Hence, there seemed to be a gap in the market for someone who could connect your entire financial life in seconds, help you understand it and then suggest the best products and services that will help you optimise and grow your money. That’s what we started to build in Lumio back in late 2018, we proved it out through a website and a marketplace and secured some initial revenues and subsequently funding. We then decided there was enough of a value proposition here that’s been proved out, so we built a Lumio app which we launched on iOS in February (Android launching this month!).
How has the pandemic affected Lumio?
We were raising funds and were going to close the funding round in March this year, then the pandemic hit and brought everything to a halt. However, it enabled us to redefine and sharpen our value proposition due to; 1 – rapidly increasing financial uncertainty and the need for Lumio’s services and 2- a competitor analysis of over 20 similar businesses in adjacent markets that showed us a high concentration in budgeting and information tools, but not real focus on independent savings and investment actions in the customer’s absolute best interests (rather than their own products and balance sheets).
What can we expect to see from Lumio in the near future?
We’ve just delivered our independent marketplace in the Lumio app on iOS and are very excited about launching on Android by the end of this year. We are also building towards the payments function, so you will be able transfer funds to anyone (including your savings/investments) across all your accounts and create auto-savings and -investment payments really easily. This will enable you to grow your money on autopilot, by moving money to the most optimising part of your savings, investments or to pay off credit cards or loans with interest. That is all coming in the next few months.
Lumio are relatively unique in their approach. They aren’t just providing actionable insights based on an individual’s financial position, they are seeking to automate insight-driven actions.
This is a fairly large leap from what the majority of money management applications are able to do today, and has the potential to create tailored, specific product recommendations for customers that otherwise wouldn’t seek out this advice.
However, whilst a seamless and automated switching process will enhance the convenience factor for customers, its development needs careful consideration.
There are clearly some technical hurdles that need to be address. Whilst PSD2 provided a framework for consent-based data sharing and payment initiation, there isn’t an existing pattern for automated product switching that Lumio can lean upon. This will almost certainly require close collaboration with regulatory bodies as well as deep technical integrations with product providers.
From a customer’s perspective there is a heavy reliance on trust – namely, trust that Lumio’s technology will make truly impartial product decisions that serve to exclusively benefit the customer.
This is an incredibly exciting space and Woodhurst look forward to seeing the Lumio proposition develop in the coming months, because it really has the potential to revolutionise how customers manage their entire financial lives.