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Digital Transformation Across Financial Services With Mike Sha of SigFig

Financial Services has historically been a fairly low tech space. Mike Sha, CEO and Co-founder of SigFig join us to discuss the way Fintech is transforming the investing and banking experience. SigFig prioritizes collaboration with the banking industry to enable them to connect with consumers in a personal way, having a powerful impact through customer centric digital engagement.

Payments & Fintech Insights In This Episode

  • The story behind SigFig and modernizing the financial services experience.
  • Why the personal nature of financial services plays such a large role in all of our lives.
  • The value of focusing on customer centricity in Fintech development.
  • The opportunities in the banking industry to engage with customers in an individualized and personal way.
  • The advancements in creating rich, immersive remote interactions.
  • And so much more!

Featured on the Show

Episode Transcript

Heather: Hi, everyone, welcome to another episode of Pay Pod. I’m your host, Heather Bodie. And today we are going to be discussing the digital transformation of financial services. Joining me to help explore this topic is Mike Sha, the CEO and co-founder of SigFig, the leading US based enterprise financial technology firm that develops next generation products for financial institutions, advisors and their customers. Mike, welcome to the show.

Mike: Great to be here. Thanks for having me.

Heather: Absolutely. So to get us started, tell us a little bit about you. How did you find your way into fintech?

Mike: That’s a great question. I’d say it was the convergence of a couple of different things. One is I grew up in a first generation immigrant household where my parents actually started their own company. So you know, between that and going to college during the.com, boom, I think I developed a default path in life to start something on my own is probably somehow woven into my blood since then. So that was part of it. The second part is, I’d say, really informed by, you know, some of my first career experiences. So after school, you know, I studied computer science, and then I went to Amazon. And they’re, you know, it’s just an amazing company, you know, I was there kind of in the earlier days back in the early 2000s, and some of what I worked on there was in the financial services space. But really, I think the most important takeaways that I took from that era, was the amazing power of technology to transform businesses. It sounds so trite, but it is so true.

Heather: Yeah.

Mike: And a real obsession around customer centricity that’s been really the key to Amazon success is always starting with the customer’s needs. And working backwards from that. Those two themes, then married with a personal passion I had around kind of finance and investing that also developed at a young age. My mom was a very passionate, self directed investor. And I think I ended up getting exposed to her hobbies younger than most. So you know, when I eventually was at Amazon and thought, You know what, I’m getting old, if I don’t, if I don’t think it’s good, and I’ll probably be too late. And, you know, of course, I was like, you know, like, 25 at the time.

Heather: Oh, my gosh.

Mike: So, I quit my job and got this thing off the ground. So but yeah, it’s been a fun journey. Long and interesting one. It’s great that there’s even podcasts about FinTech because like when we started, you know, FinTech was not even really a term. Right. But it’s been amazing from a attracting talent perspective that, you know, it’s become such a big part of the tech sector that many more people are now interested in working in FinTech.

Heather: So let’s get into a little bit more detail about the origin of your company. It takes some serious guts, Mike to decide to create a product that disrupts decades of financial practices, what was your “aha” moment, so to speak, that gave you the push to dive into this.

Mike: Sometimes I think it’s less about a moment and more about understanding a customer and a need. You know, I think we in the early days, we got a bunch of friends together and kind of got together on almost like a weekend basis to keep exploring, keep exploring. And you know, there was a distinct weekend where we really started to kind of hone in on financial services and investments. And I think the insight that kind of unlocked that was really this fact that financial services is like a woefully low tech space. You hear a lot about quantitative traders. And you know, they’re building all these crazy trading algorithms. But if you go back to 2006, technology was not well permeated in finance, and for being one of the largest sectors of the economy. I think our view was like, well, if technology is disrupting e commerce and social networking, some of these other spaces, of course, it’s eventually gonna come and impact financial services. And I think the passion that we had for it tied back to the fact that financial products very intimately impact people’s lives. You know, you think about why people use financial products, it’s almost always connected to some sort of life goal or, you know, providing for your family.

Heather: Right.

Mike: And if technology could help make that product and that experience, better, higher quality, more affordable, more accessible, those feel like important ways that we could deploy technology for good. And that’s kind of how we ended up diving into it.

Heather: You’re taking me back, I’ve got a fun fact for you. So in 2007, I was the director of marketing and training for a financial services firm.

Mike: Oh, wow.

Heather: So I’m very intimately familiar with With how little tech was activated in that space specifically for our clients, but also for the individual financial services professionals, I was really heavily leaning on the power of story to guide people in their choices around their financial investments based on what you were saying life goals and those sorts of things.

Mike: Oh, yeah.

Heather: You know, there wasn’t any sort of technology in place that was accessible to them to have a whole lot of transparency around how things were performing and the decisions they were making, etc. So yeah, I’m deeply familiar with the 2006-2007 financial services arena.

Mike: Yeah, you know, it’s interesting, you know, it’s talking about both technology, and customer centricity. And when you look at banking, I think it’s perhaps one of the greatest missed opportunities to really kind of connect with the customer at a deep level. You know, you think about the typical financial institution, they’ve kept pretty commoditized products, they sell them based on rates and fees. And yet, these products actually unlock these super, super important things in people’s lives. You know, I think a lot of people love Amazon. But at the end of the day, by and large, for the average consumer, they deliver stuff to your doorstep. Whereas these financial products, I mean, they help you retire, and they help you buy homes. So you know, how’s your family, and they help you pay for your kids’ college education, I mean, you can’t get much more intimate than that when it comes to serving needs, the customer really cares about. And so I think there is a real opportunity to modernize the mode of engagement that consumers have with their financial institutions.

Heather: So how exactly does your suite of products help clients and partners achieve their goals?

Mike: There’s three big kind of product verticals that we’ve built our platform around. Where we started was in helping to digitize the wealth and investment industry. And there, I’d say the problem that we’re solving is multifold. One is that the modern wealth manager needs to actually provide not just investment management, you know, like managing a portfolio, but they really need to provide wealth management. And the difference is that wealth management talks about goals and planning, and estate and tax, and you know, all of these interrelated themes, what we’ve built is an integrated suite that can help cover the end end experience of what a firm or an advisor would want to do with their client. And that covers a much broader set of technology than you know what usually exists at a bank today. If you have an investment account, and you’ve logged into your accounts, you know, a lot of the digital experiences today revolve around seeing your balances and checking your performance and things like that, right. They don’t have around goals and planning and some of these things that actually speak the language of the customer.

Which gets to our second product vertical, which is under the kind of umbrella that we call needs discovery. I don’t know of a single financial institution in the world who wouldn’t want to earn more business from their customers. These modern financial institutions that exist actually have a lot of different products under one roof, you know, they’ve got deposit products, payment products, lending products, investment products, and the typical financial institution could do a much better job presenting their solutions in the context of the actual customers needs. And the way we think about it is instead of selling a product to a customer by talking about the rate and the fee structure, why not start with understanding what the customer’s goals are, and then presenting the solutions in the context of their goals. So for example, instead of selling an investment strategy based on the asset classes, and the performance and some of these terms that feel like Greek to the average consumer, why not talk about investment solutions in the context of being able to retire, right and helping to save and plan for retirement. That’s something that every American is probably thinking about and caring about.

Heather: You’re speaking my language. This is what I used to talk to all the folks I was training, I love it.

Mike: Yeah, there you go. So for sure, meeting the customer where they are and focusing the conversation about their needs to us is a much more powerful way to kind of interact with the customer. And then the last product vertical that we have, is a new product of ours that’s really designed around enabling rich, immersive remote interactions. I think we’ve all experienced in the pandemic, you know, changes in our behaviors as consumers. Whether that’s the way we go to the doctor or the way our kids go to school, the way we interact with our friends. And my guess is a big part of the behavior change that we have seen has been a significant increase in remote interactions with people you are collaborating with. You know, we’re doing this podcast and we’re each sitting you know, in our own homes, right?

Heather: Right.

Mike: So that’s an early sign of, you know, an obvious trend that people are experiencing. And banks are going to be part of that trend. Think about that bank that you have an account at and the way you interact with the people who work for that bank, I’m guessing it’s probably either dialing an 800 number and calling the call center or is walking into a bank branch, wouldn’t it be nice if there were, you know, kind of more modern ways to interact with your bank that could really unlock the convenience of you know, these remote interactions. So those are some of the big themes that we’ve been innovating around. And it’s been just a fascinating last few years,

Heather: I’m sure.

Mike: And the behavior change has happened and the opportunities that that creates for technology,

Heather: Was that priority around those remote interactions, did that exist before the pandemic? Or was that something that was sort of highlighted for your company during that time?

Mike: Yeah, you know, it’s something we had talked about. But if you looked at the consumer research around, let’s say, video conferencing with the banker, you know, that was not something that the majority of consumers would have said they absolutely want now, right? After the pandemic, I think that totally changed. So I think it was in the early phases of the pandemic, you know, I don’t know if you remember, at least our experience of 2020 was that for the first nine months of the year, you know, a lot of banks were busy putting up plexiglass, literally, you know, in their branches, and like trying to operate their call centers with the call center reps working from home. These are major changes in the way their operations worked. As we got through to the fall of 2020, I think it really sank in that one, the pandemic was not about to end, and that some of these behaviors that we had adopted as consumers were actually kind of durable. They maybe weren’t going to go away as soon as the pandemic ended. And then the other thing is, you know, the initial kind of triage phase of needing to deal with business continuity, you know, we all got through that. So both of those changes allowed people to look up and look further ahead. And, you know, for us, that was the moment when remote engagement became, you know, a really interesting priority and product for us.

Heather: You’ve partnered with some major financial institutions, speaking of banking, Wells Fargo, UBS, Citizens Financial, and in some capacity, your company reaches 1/3 of all households in the US. So when you’re developing these new partnerships, what’s your top priority?

Mike: For us, it’s really making sure that the incentives and the motivations of the partner are well aligned to the reasons that we’ve built these products. I think when you have really good alignment on why, then the solutions start to kind of speak for themselves, especially when they work really well.

Heather: Absolutely.

Mike: But let’s be honest, I’m working with financial institutions, it’s complex, these are highly regulated entities, they’ve been around for a very long time, they have a lot of old technology. And a lot of hard work goes into modernizing all that hard work really pays off when the strategy and the objectives align. But if they don’t, and thankfully, you know, we haven’t really experienced this so far. But you know, I know many other FinTech companies who have, when they don’t align, it can actually just be a lot of time and energy, you know, wasted. So we want to commit a lot of our time and energy and the talented people that SigFig to initiatives that are really going to have real world impact. And so that alignment of why are we partnering? And what are you trying to accomplish and of using it SigFig solution? When that is aligned, it really sets the partnership up for success.

Heather: I know integrations can also be a really big sticking point. How has your company approached integrations, especially when there are so many different financial services products that are all running their own unique platforms and different softwares? How do you handle integrations?

Mike: Part of what marks the technology of Financial Services is a lot of old legacy systems. You know, there’s there’s a blessing and a curse that the sales cycles to bank so long, the blessing part of it is that once you’re in, if you’ve done a good job, and your technology is impactful, it’s very hard to kind of unwind the technology because it gets so intertangled with, you know, the rest of the banks technology. And so our view is because there is so much legacy technology there, our best approach is actually to integrate with a lot of it. And that way, a bank is not forced to change their core systems just to take advantage of SigFig capabilities. You know, if if every bank that worked with us had to actually swap out old legacy core systems, we’d probably have a lot less customers, you know, because those systems right, impossibly difficult to swap out. But when we can integrate with and play nice with the systems, suddenly, I don’t know a single bank in the world that doesn’t want to modernize their client experience and have a more digitally friendly set of experiences for their customers. And if they can get the benefit of modern technology without the pain of swapping out the legacy technology, that’s kind of best of both worlds.

Heather: Have you found that that process of integration with those legacy technologies like you’re talking about that it differs greatly with every client? Or are there some similarities, some overlap, that your team is sort of gaining an understanding of that landscape in a way that it’s not easy by any means, but a more simple and forthright approach to those integrations, or you shooting in the dark every time, it’s like something new?

Mike: You know, obviously, we do come across new things. But there’s more that similar than different, especially when you think about the core systems that these banks use, like many banks, you know, the 1000s of banks in the US many of the I could count the number of core providers on on my hands. So the nice part of our integrating with legacy systems is, you know, there’s not a different system at every firm. So, yeah, we’ve definitely made it a priority to be able to integrate well, we do a lot of the integration work ourselves as opposed to outsourcing it. And I think that’s enabled us to really kind of build our strong reputation of actually being good at, you know, some of this less sexy, but critically important work.

Heather: Right. So speaking of this effort to create a seamless integration, simplifying our lives, not only for the larger institutions, but also for consumers. I feel like we’re, all of us are craving intuitive and efficient technology to help us manage every aspect of our lives these days. How is the financial services industry as a whole responded to that rapid pace? I mean, I know you’re saying they’re using these sort of legacy technologies that can occasionally be archaic, if I can use that word. But has there been pushback?

Mike: You know, I think the good part about the technology transformation that’s been afoot for the last few decades, is unless you’ve been living under a rock, you know, it’s basically impacted every consumer and people who run these banks are smart, thoughtful people, and they are consumers themselves. So I think it’s been very easy to get the world to recognize the importance of being able to modernize some of these technologies. Now, there are corners of FinTech that are, I’d say, a little bit less accessible to the consumer. If you think about blockchain, and some of these kind of emerging fields, it’s a little bit harder for the average consumer to understand today where that’s going. But again, these banks, they run very large businesses with very well capitalization. And they recognize the critical importance that technology plays on their future. So you know, if you look at, you know, if you even just listened to the Wall Street calls, and you read the annual reports, I mean, name me a single financial institution where like, they’re not dedicating a meaningful portion of the strategy of the dialogue around technology, you know, that’s pretty much unheard of.

Heather: Let’s talk security and privacy, the financial services industry, FinTech banking, very much plays a key role in protecting consumer and business data. What is SigFig’s philosophy when it comes to security? And how do you put that into action?

Mike: Yeah, not surprisingly, you know, we deal with super sensitive data. And on the same lens that I said earlier, where this the, you know, the money that people entrust us, you know, impacts their lives, we’d take that obligation incredibly seriously. So for us, it’s all about being world class, and knowing that it’s a static battle you’re fighting, it’s not a static battle, you’re fighting, you know, that the people who are out there to try to break through, they’re always adapting, trying to come up with new techniques. So you’re always needing to make sure that you’re a step ahead Then that basically means embedding that focus, you know, throughout the company throughout the team, not just having, you know, a subset of the team focused on security, but to make sure that throughout the firm, you know, anyone who is touching the building of these capabilities, you know, has that mindset. And thankfully, we’ve never had a big security incident or a big privacy breach. But we know that we’re a target and you know, that that’s a it’s an ongoing threat. And so you can’t be complacent, you always need to be investing more into it.

Heather: what do you see for the future of digital transformation and financial services? Talking 5-10 years down the road?

Mike: Oh, the $84,000 question. There’s no one answer. That’s the exciting part about digital is, you know, there’s so many different things happening in the industry. You know, I know I mentioned a little bit about remote engagement. I do think that that is going to be a defining change. You know, you think about the typical financial institution, and how much of their existing business model is built around the bank branch, and all the people who work in those bank branches. That is a sea of change that is still yet to come. And some companies are still of the belief that the people are going away. The branches are going away like it’s all going to be digital, digital digital. I think we have a more balanced point of view that financial products are complicated. They’re scary. And so therefore, speaking to specialists and experts is part of the process of helping customers make the right decisions and get the right solutions.

Heather: Yeah.

Mike: But again, having those interactions have to happen in person. And a bank branch is not the wave of the future. So I think that’s a big theme. You know, obviously, crypto and blockchain, those are really interesting trends in the early days, but finally starting to kind of hit Escape Velocity in a mass market, we are still in the early phases. But if your timeframe is over the next five to ten years, you know, I’m sure we will see, you know, pretty meaningful change on that front as well. Yeah. And then maybe the last theme I would point out is, you know, there was a hubbub of thought leaders who many years ago thought that the future of financial services would be like infinite specialization. That you’d have a different provider for every subset of your financial needs. And I was a pretty vocal disagreer of that prediction. Because my view is, as a consumer, I don’t want to have like 36 different providers for every last financial need that I have!

Heather: How do you keep track of all that?

Mike: Yeah, so if a few firms could do everything, well could offer me more value, could offer me more convenience, could understand me as a customer better, I would much rather prefer to do business with a small number of firms who really value my business and understand me. And the challenge that the industry will face is, as an industry, even though we sell and offer a variety of products, we do so in a very siloed way today. I’m not going to pick on any bank in particular.

Heather: Yeah, we don’t need to name names.

Mike: But if you are a customer of a mortgage, a checking account and a retirement investment account, I challenge you to name one bank that actually brings that all together under like an integrated experience that feels like they understand me as a holistic customer. Most banks, even though I have like one login, and sometimes I don’t even have one login, the parts of the experience where I interact with my checking account versus my investment account versus my mortgage, feel like they’re from different planets, you know, like they really are very disjointed. And so, you know, I think there’s a lot of work to be done to kind of bring that all under, you know, a coherent, integrated client experience.

Heather: I can’t wait. I cannot wait. The tracking of my logins is a job all of it on its own. So what specifically is next on the docket for SigFig? I mean, any exciting offerings, projects, partnerships, what should I keep an eye out for?

Mike: lots of stuff going on, you know, something that we haven’t talked about, you know, today yet, is actually team and talent. So, you know, we’ve talked a lot about the business and the products. But, you know, to us, you know, the future of SigFig really starts with hiring amazing people. And that is a huge focus of ours is, you know, kind of bringing on that next level of scale and talents, that they can actually build the exciting partnerships and exciting products, when it comes to the actual workout ahead. You know, there’s a lot of scaling happening at SigFig. So, you know, we are significantly expanding the number of institutions that we serve a volume, you know, of, of transactions that our platform is supporting for our customers. So there’s a lot of, you know, work being done on that front. On the product side, you know, we’ve always been a product centric company, you know, that’s probably how we ended up building out this integrated product product suite. Now, we’re not done there yet, either. There’ll be a lot of new capabilities, you know, coming down the road. So as I steal from my Amazon days, they had this term that they said, you know, it’s always day one. And you know what it basically means, like, even if you feel like you’re large and scaled, there’s always a lot more ahead than behind. And I would say the same is definitely true for SigFig and definitely true for FinTech. We are just in the early innings of you know what, what we’ll probably continue for many more decades is you know, complete kind of transformation and reimagining of you know how financial services really works for the customer.

Heather: I love it. Oof, you are talking to a financial services nerd and this conversation is right in my space today. I’m so grateful for you. Alright, so it is coming to – the wrapping up our show. We have a segment we like to do – Rapid Fire Fast Five questions to close us out. Are you ready?

Mike: Okay.

Heather: All right. Make a prediction about changes in the immediate future of financial services in general. What do you expect will happen in the next 12 to 24 months?

Mike: Ooh, I would say definitely big growth and remote interactions.

Heather: Yes. All right, what’s one cool piece of payment or finance related technology that you’ve come across recently that impressed you?

Mike: I’d say it’s been interesting to see how many more places consumers can buy crypto from now. That was a niche space, even just two years ago, but you’re seeing a lot of mainstream companies jump in now, and try to make that easy and secure.

Heather: In the next five years, most people will make a purchase with either as you mentioned, Bitcoin, or Apple Pay or some other sort of product, which one and why?

Mike: I would probably in five years still say like more traditional digital wallets. So whether that’s Apple Pay, or you know, contactless with your phone. You know, convenience is the name of the game when it comes to payments. And, you know, second name of the game is probably, you know, point of sale financing. So, between those two is, you know, where I think, you know, the real problems are still still to be solved.

Heather: What’s one piece of advice you have for someone considering financial services tech, FinTech industry as a career?

Mike: Ooh, I don’t know if this advice is specific to finance. But, you know, I’d say especially for hungry, ambitious, younger folks joining the younger, smaller company, you know, sometimes people will look for that, like name brand on the resume, nothing wrong with that. But you know, these big companies, you end up in narrow roles. And the pace of your ability to learn, I think, is hampered by, you know, the scope of your role. Whereas, if you’re a high potential hungry, smart, young person at a startup, and the startup will throw as much as possible at you because there’s always more work to do than people to do it and hungry, ambitious people. It’s like an amazing learning environment.

Heather: Alright, last but not least, what is the best piece of business advice that you’ve ever received and from whom? Did I get you with that one?

Mike: I hate to repeat this, but I really did. The inculcation at Amazon, really starting from Jeff Bazos, around, always start with the customer’s needs and work backwards. I think that is useful in really building meaningful things, but really also making the right long term decisions. There’s a lot of business decisions that get made that is more kind of short term optimization for long term trade off, and you never lose on, you know, betting on the right side of the customer. So that feels like a good golden rule. I can’t imagine a lot of situations where it’s not the right advice.

Heather: That does it. Yes. Thank you so much, Mike Sha, for joining us today. And if folks want to get in touch with you or your company, learn more about maybe opportunities for career placement at SigFig. Or just about your company in general. Where can they find you?

Mike: SigFig.com We got a mobile app. And we would love to bring on passionate people about fintech. So definitely hiring across all roles and excited to chat with you.

Heather: Right. Thanks so much for joining us today.

Mike: Thank you. It’s great to be here.

Industry Spotlight

SigFig

Using a combination of design, data science, and technology, SigFig builds platforms for financial institutions that delight consumers and empower bankers to have more advice-driven conversations. For consumer banking, They’ve built SigFig Discover, a digital platform that guides consumers through rich needs-discovery journeys, delivers advice, and connects them to the right resources and financial products. For wealth management, They’ve built SigFig Digital Wealth, a modern managed accounts platform that digitizes processes, freeing up full-service financial advisor teams to nurture client relationships and dramatically improve the client experience. Their enterprise technology accelerates time to market for their partners, while doing so in a secure, scalable, and compliant way. Founded in 2007, SigFig is backed by leading financial institutions including Eaton Vance, Comerica Bank, New York Life, Santander InnoVentures, and UBS, as well as top-tier venture capital firms, including Bain Capital Ventures, DCM Ventures, Nyca Partners, and Union Square Ventures.