[THE INVESTOR] Among the flurry of new credit cards hitting the market every year, many consumers face difficulties in picking one that fits their spending style. Carefully reading the terms and conditions is one way, but not everyone has the time nor understand the full-scope of contents printed in tiny fonts on thin-papered pamphlets.
This kind of information asymmetry -- between card issuers and users -- is what led Korean fintech startup Rainist to roll out its financial product recommendation service Banksalad in 2014.
“Finance is a critical part of our lives. But for many consumers, the terms and conditions of credit cards and financial products are complicated to understand. And often times, it’s very difficult for users to track the total amount of their own checking and savings accounts scattered among different banks,” Park Kyu-in, co-founder of Rainist, who heads finance product data operations team, told The Investor in a recent interview held at its office in Seoul. “This is a crucial problem. And we thought solving this inconvenience and information asymmetry could create enormous value.”
With this vision, Park joined his college friend Kim Tae-hoon, CEO of Rainist, to establish the firm in 2012. The web-version of Banksalad rolled out in 2014, followed by a mobile app in 2017.
Park Kyu-in, co-founder of Rainist and head of finance product data operation team
The all-in-one money management service recommends credit cards and other financial products, based on the individual’s financial status and spending habits. It links to the user’s bank accounts and credit cards to track expenses, income, bills and savings, making budgeting easy.
What makes Banksalad stand out among other rivals, according to Park, is its UX design that is user-friendly and personalized recommendation service backed by vast amount of data. Recommendation is based on over 5,900 financial products, which include 3,600 credit cards, deposits, savings and loans across 20 major banks and 18 credit card companies and 11 security companies.
While the financial institutions provide the terms and conditions of products to the public, it is Park’s finance product data operations team that manually collects and organizes them. Data standardization is critical to make sure that different data from financial firms are internally consistent to be used for its recommendation service.
Once the database is built, the algorithm recommends financial products and provides advice and feedback to consumers based on their spending.
“We are also preparing to add recommendations for insurance products, hopefully within this year,” said Park.
He added financial firms are willing to tie-up with Banksalad, as its recommendations are bringing more customers to them.
And that’s how Banksalad has been making money. It gets commissions from the financial companies when users sign up for cards or products based on Banksalad’s recommendation.
For now, Banksalad plans to keep its services free of charge. But that could always change, if it rolls out premium services or other paid-contents in the future.
Going forward, Banksalad, which boasts 1.6 million users, wants to become the go-to personal financial management platform for everyone, tackling all the missing financial products on the app -- which includes real estate and car financing. It wants to focus on the home turf first and then eye overseas expansion.
“Banks do provide wealth management services, but they are usually reserved for VIP and wealthy customers,” said Park. “But our goal is for everyone to use the full-fledged asset management service easily to improve their financial life.”
To boost expansion, it is seeking to raise more investments in the future, in addition to the previous seed round of 2 billion won (US$1.76 million). It is also actively hiring for positions, from engineering, marketing and design to business operations.
By Ahn Sung-mi (email@example.com)