Thought Leaders in Financial Technology: Bristol Gate Capital Partners CEO Richard Hamm (Part 4)

Sramana Mitra: Let’s switch to the other question which is open problems in FinTech using the kinds of approaches you’re talking about. Where do you see the possibilities of applying these kinds of techniques? And to do what?

Richard Hamm: In the FinTech world, which is alive and well in Toronto, my biggest concern, particularly for FinTech that sells itself into banks, is that it’s no different than a lot of technologies. They’re built to solve a particular problem. They’re not an integrated solution.

Let me fix how quickly I can analyze the ability of someone to borrow money. Let me figure out if I can take their driver’s license and lend them leasing money. They’re not answering the big questions. They’re solving questions that often bothers them individually like all technologies.

I don’t see it moving the dial very much in the world of banking, to tell you the truth. Banks are filled with big legacy systems that are very difficult to redo. The costs are enormous. They don’t even have the luxury of starting fresh and building the foundation that they should build. FinTech does a lot of patchwork.

Sramana Mitra: You started your current company 10 years back. If you were starting a company today in FinTech, what kind of a company would you start?

Richard Hamm: If I was going to be in the financial space, I would look at companies like Digit in Canada. Their view is much more holistic. They would like to integrate all of the aspects of a client from understanding the client and their needs to educating them about how money actually works, how different returns work, and building better allocation models. All of these are done in parts by people, but very few have an integrated offering.

This is where the world of robo investing and direct investing are trying to get to. Most are not very successful. If I would take a bigger view of the problem, I would just try and solve an issue with the problem.

Sramana Mitra: What do you think is hindering the robo advisory category?

Richard Hamm: The biggest issue for them is the money still resides in people who are 55 and over. The millennials may be driving the need for robo. Here’s the interesting thing. People are quite willing to try and self-serve, but when it comes to financial decisions, they’d like to have someone confirm with them that what they’re doing is right.

At the end of the day, robo companies are finding that their cost structure is not as neat and tidy as they thought. People want to get confirmation that what they’re doing is the right thing for them. 

Sramana Mitra: That can be managed. If the industry is coming to terms with the fact that when it comes to managing finance, people don’t want to do automated advisors only and they want a human being, you can have technology assisting people. They can be technology-assisted users.

Richard Hamm: We’ve developed with some people in Oxford a chat-with program. It can answer a lot of questions but at the end of the day, talking to a chatbot is not the same as a person.

Sramana Mitra: I’m not talking about a chatbot; I’m talking about a real person. This person doesn’t have to have a Ph.D. in Finance.

Richard Hamm: They don’t have to have a Ph.D. I don’t know what it is.

This segment is part 4 in the series : Thought Leaders in Financial Technology: Bristol Gate Capital Partners CEO Richard Hamm
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