bg-arrow-down icon-arrow-up icon-back-to-top icon-linkedin icon-menu icon-search icon-twitter logo-white slider-arrow-left-gray slider-arrow-left slider-arrow-right-gray slider-arrow-right

SigFig Sees Banks As Robo Partners


Mike Sha doesn’t want to put banks out of business.

While many fintech start-ups are trying to compete with traditional financial-services providers, Mr. Sha sees his firm as a partner to banks that are exploring the nascent world of robo-advice.

The chief executive officer of SigFig, a firm that offers automated investment advice, says banks need to recognize the enormous opportunity to serve customers who previously have had nowhere to turn because they don’t have enough money to attract traditional wealth managers.

“We are more likely to achieve our mission of having that impact on that wide audience by working with the industry rather than trying to put them out of business,” says Mr. Sha, who estimates there are “hundreds of millions” of people who need access to investment advice.

A number of banks have announced partnerships with SigFig, including Citizens Financial Group Inc., UBS Group AG, and Wells Fargo & Co. SigFig has also teamed up with Cambridge Savings Bank, a community bank in Massachusetts. (See A Little Bank Embraces Robo Investing)

“Others are clearly beating the David vs Goliath drum, but we’re not part of that narrative. We want to sit side-by-side with traditional incumbent players who are interested and willing to evolve their product and business model,” says Mr. Sha.

Mr. Sha’s connection to investing dates to his childhood in Malvern, PA. where one of his chores was to dial a phone number each day and write down a series of numbers that he heard on a recording. He didn’t know it at the time, but he was tracking the end-of-day net asset value of mutual funds owned by his mother who was an enthusiastic investor.

He played stock-market games in high school and earned degrees in computer science and math at Harvard University.

“Even as a kid, I geeked out on stuff related to finance and money,” he recalls.

After earning degrees in computer science and math at Harvard, Mr. Sha landed at Amazon.com where he launched the company’s Visa credit card and built fraud-detection models. He founded SigFig in 2011 in a bid to solve what he considers to be “a real gap in financial services.”

The timing, he says, was right.

“Banks are quite intrigued and serious about partnering with fintech companies. If we had started this company 10 or 20 years ago and tried to do this, we would have had a real uphill battle,” he says.

It has also been an uphill battle for banks, which have stumbled in their efforts to develop investment opportunities for the mass-market customer.

“It is ironic that it is a new opportunity for them, but most American consumers just don’t fit the traditional investment-advisory model,” Mr. Sha said, referring to wealth-management divisions that target high net-worth clients. “Retail banks have tons of upside in this trend because all of these people who have $50,000 or $100,000 are already customers of these banks.”

Mr. Sha also sees robo-investment services as an opportunity for wealth advisors, not as a replacement for them. By automating some of their duties, they can spend more time with clients.

Still, banks need to figure out how much effort they want to devote to the new offerings.

“The traction in the industry won’t be limited by concerns over the offerings, but by competing priorities like systems overhaul for KYC requirements, the NIM crisis and the closure of branches,” predicts Mr. Sha.


Robin Sidel
Director, New York
rsidel@novantas.com

For more information, contact Novantas Marketing

+1 (212) 953-4444


Related Materials

article

Lenders Need to Seek New Skills from Commercial Bankers

The commercial bank executive of tomorrow will look a lot like a quick-thinking technology executive or a nimble start-up CEO.

article

Why Should Consumers Choose Your Bank? Distinctiveness in the New World of Retail Banking

For years, Novantas has challenged banks with the question: Why should someone choose your bank?

article

Sending the Right Signals: Industry Advancements in Behavioral Life Measurement

The prospect of rising interest rates and more competitive pricing is challenging one of the banking industry’s traditional ways to value deposits.