GlobalFintechSeries Interview with Richard Barrington, Senior Financial Analyst at MoneyRates

As people seek to minimize physical contact because of the ongoing Covid-19 related concerns, it’s driving them to do more and more business online, including their personal banking and investment needs. Richard Barrington, Senior Financial Analyst at MoneyRates joins us in this interview to talk about these latest finance, investment and fintech trends.

____

Can you tell us a little about yourself Richard?

I am a Senior Financial Analyst for MoneyRates.com. MoneyRates.com is one of a family of financial web sites owned by QuinStreet, Inc. MoneyRates.com specializes in providing consumers with personal finance information and advice to help them make sound decisions.

I have worked with MoneyRates.com for over a decade. Prior to that, I spent over 20 years in the investment management industry, during which time I earned my Chartered Financial Analyst designation.

Read More: GlobalFintechSeries Interview with Ernest Rolfson, Founder and CEO at Finexio

What are some of the top savings/financial management strategies you would share with businesses and individual users at this time where everyone is affected by a global pandemic?

As people seek to minimize personal contact due to health concerns, it’s driving them to do more and more business online. When it comes to banking, this could have a very positive financial impact for consumers.

Online savings accounts generally pay much better interest rates than traditional, branch-based accounts. According to the latest MoneyRates.com America’s Best Rates survey, online savings accounts pay an average of more than 16 times the interest of branch-based accounts.

Banking online also helps you save on checking account fees. The latest MoneyRates.com Checking Account Fee Survey found that more than two-thirds of traditional, branch-based checking accounts charge a monthly maintenance fee. In contrast, more than two-thirds of online checking accounts have no monthly maintenance fees.

With the average monthly fee now at a record of $14.13, these fees come to a total of $169.56 per year. That makes monthly maintenance fees well worth avoiding if you’d rather have that extra money in your account at the end of the year rather than paying it to your bank.

Once again, banking online is not just a safe move in light of the pandemic, it is a sound move to make financially. That financial benefit should last beyond the current health crisis.

Read More: GlobalFintechSeries Interview with Patrick Turiano, Director of Marketing at Paysafe Group

What are the 5 best practices that individuals should keep in mind always to ensure they have planned well for exigencies?

• Always keep an emergency fund of money you can get at readily (i.e., not tied up in investment or retirement accounts). At minimum there should be enough money in this fund to cover three months of basic expenses; ideally an emergency fund should be able to cover six months of lost income.
• Under normal circumstances, always pay off your credit card balance in full from month to month. If you can’t do this, it’s a sign you are living beyond your means and have left yourself no cushion against financial setbacks. Carrying credit card debt is an incredibly expensive way to borrow money.
• Don’t dip into retirement savings except as a very last resort. Even though rules about accessing retirement savings have been relaxed somewhat due to the pandemic, doing so is still a costly strategy.
• Keep to a budget discipline. Budgeting your spending will not only help you save during good times, but during bad times it will help you more readily identify which expenditures can be cut back.
• Keep your job skills up-to-date. Whether it is a purely financial crisis like the Great Recession or a health crisis like the current one, during bad times a lot of people find themselves looking for work. Those who kept their job skills current and competitive will have the best chance of landing on their feet.

How will the effects of the pandemic impact new innovations in the finance/ fintech segment in terms of user platforms/products?

In terms of fintech innovations, the biggest impact of the pandemic will be to speed adoption.

The development effort for fintech was already very extensive – lots of firms were already throwing a tremendous amount of money at it. However, financial habits can be hard to change, so adoption is a big challenge to gaining traction for any fintech innovation.

This is especially true among older consumers – but that’s a key market because these consumers have the most money.

Social distancing is forcing people to change their habits so they can do more business remotely, and often fintech can provide the right solutions to enable that. Once people change these habits, they are unlikely to change back once the crisis is over.

Read More: Largest Cryptocurrency Exchanges

What are some of your thoughts on bitcoin and other digital currencies; how do you see demand/usage for this change with time. Would you encourage investments in this space?

It’s important to split this up into two parts and discuss bitcoin et al separately as a) currencies and b) investments.

A fundamental problem with digital currencies is that up to now they’ve lacked two characteristics that are crucial to function as a true currency: stability and widespread adoption.

A business cannot afford to take in receipts and budget expenditures in a currency that frequently has erratic short-term swings in value.

Also, digital currencies have not achieved a critical mass of adoption to be something consumers and businesses can count on being able to use wherever they need to spend their money. Having multiple digital currencies vying for supremacy only makes achieving that critical mass of adoption all the more difficult.

So, as currencies, digital alternatives are still significantly flawed. What about as investments?

Digital currencies would have to be viewed as purely speculative investments. They better resemble a gamble than they do a fundamentally sound investment because you can’t accurately assess the supply and demand for them.

In terms of supply, there are multiple digital currencies, relatively low barriers to new entrants, and somewhat arbitrary rules about limiting supply. This makes it too easy for the value of any given digital currency to be eroded by oversupply.

In terms of demand, a major appeal of digital currencies over digital transfer of traditional currencies is anonymity. In other words, a lot of demand is coming from illicit activities. The global volume of those activities is certainly enough to create a substantial amount of demand, but given that these activities are always going to be under some pressure from law enforcement, that demand is far from stable.

The price volatility of digital currencies will certainly attract people to speculate in them because that volatility means there is an opportunity to make a lot of money quickly. Just remember that this also means there is an opportunity to lose a lot of money quickly.

How according to you will emerging tech play a key role in finance and fintech as a whole?

Adoption is really the key. There are a lot of firms competing in the fintech space, and that’s a double-edged sword.

On the plus side, heavy competition means more ideas so it should result in a faster pace of innovation. The negative side is that having a lot of players in the game means that it’s tougher for those innovations to gain widespread traction.

After all, finance is a consumer mass market. The best idea doesn’t necessarily win – it’s a question of what catches on with the public.

So, while we’re seeing an era of tremendous fintech innovation, be mindful of what will inevitably come next: a shakeout period in which a few ideas catch on big while most others fall by the wayside.

In the first half of the 20^th century there were many US car makers. Over time, a few became dominant while most went bust. This pattern has been followed many times over with new consumer markets, and fintech should be no different.

Tag (mention/write about) the one person in the fintech industry whose answers to these questions you would love to read!

There are a lot of great people and great companies approaching this from both the financial and the technology sides. I suppose I’d be very interested in what Jeff Bezos had to say about it because Amazon is such a huge consumer platform that they may be best positioned to make the transition between having money and spending money as seamless as possible – and that’s what this is all about.

So far, it seems Amazon has just nibbled around the edges of fintech with things like Amazon Coins. Even with their massive consumer base they haven’t yet cracked the code of widespread fintech adoption. But I’m sure Bezos thinks about it a lot so his thoughts would be very interesting.

Read More: The Rise of Contactless Payments

Your favorite FinanceTech  quote 

I remember reading an article about a survey showing how frustrated consumers are with security measures. Of course, they expect their money and information to be secure, but the effort of dealing with user names, passwords, authentication processes, etc. annoys them.

As a VP of fraud solutions at FICO named TJ Horan said “when it comes to digital transformation, a smooth customer experience is going to be vital.”

That’s important to keep in mind at all times. All the very tech-savvy folks creating clever new ideas have to remember that most people aren’t that tech-savvy. The really brilliant innovations are those that are functionally complex and yet operationally simple.

Would you like to share specific finance or business tips for Marketing and Sales teams struggling through this uncertain time?

The best business advice I could give in times of uncertainty is to stay aggressive.

During tough times, everybody starts cutting budgets and going into a defensive posture. While budget cuts may be a financial necessity, the last place a company should cut is the marketing and sales budget. In a crisis, a lot of your competitors will be in disarray. That makes times like this a great time to pick up market share. Any market share gains now will really pay off when we come out on the other side of this crisis.

I’d say a corollary to staying aggressive on the marketing side is that now would be a great time to recruit talent. We’ve been through several years of a tight job market when talent has been hard to find. Now, a lot of talent is back on the market. While the knee-jerk reaction to a business downturn is to freeze hiring, this may be the best time in years to recruit talent.