Hulk Smash

How can financial services businesses find their superpower?

Upfront listeners assemble.

If you’re a regular listener of the Upfront podcast, you’ll know that one of the issues raised by almost every guest is the constant battle in financial services between profit and doing what’s best for the customer.

Is there a world where the business and its customers can be successful?

We think so. And so does the latest guest to join the Upfront podcast.

John Winters is the co-founder and CEO of Superhero, the online investing app that’s giving trading a mighty kick up the ASX.

The former stockbroker and wealth manager joined the Upfront podcast to talk about creating a start-up that is now loved by hundreds of thousands of Australian investors. From spotting an opportunity to turn superannuation (pensions) on its head to becoming a valued part of people’s lives. In this episode, he shares his perspective on how more traditional financial services businesses can find their superpower and deliver more value to more people.

Read on to hear some of what he had to say, or tune in to Upfront ep.7 Hulk Smash to listen to the episode in full.

The customer is the superhero and we need to give them the power to be successful.

So, John, let's get right to it. How can financial services find their superpower?

John I think the industry has always thought of itself as the superhero, and it’s becoming more obvious that it’s the other way around. The customer is the superhero and we need to give them the power to be successful. More broadly, across the tech space, it's all about building your product around the customer. I think that the financial services industry really needs to grasp that, and that's how we all collectively find our superpower.

You built Superhero to put more power in customers’ hands. Tell us about that.

John At the time, the clients I was advising had quite significant amounts of money in superannuation. It was all in a self-managed super fund which gave them full transparency and full control over what they could invest in. Everyone outside of the top 1% had no ability to to make those sorts of decisions. So I set out to build a superannuation fund, a retail super fund, which is not a new concept, but putting a share trading platform within it so that individuals could sign up and keep their super within that ecosystem. They could continue to get contributions from their employers, but choose where they invested to give them that control and also that transparency.

Why was it important to you to challenge the way things were done?

John Well, that's your money. Why don't the incumbents tell you where it's invested? In every other industry, even in financial services, fund managers have to disclose their investment holdings. Whether you're in the US, Australia or in the UK. It's legislation in Australia that super funds do not need to disclose their investment holdings. It's mind blowing. It's $3 trillion of people's retirement assets where they basically say, hand over your money, we'll take it from here, we're going to invest it for you, but we're not going to tell you what we invest it in. And sometimes they don't even tell you how much they're going to charge you for it. It doesn't make sense. So yeah, it doesn't take a huge amount of common sense to realise there's something wrong in that picture. And that's what we’re trying to change.

I suffered conflicts every day when I was a broker.

What else would you like to change in the financial services industry?

John I have a major issue with conflicted remuneration. It doesn't really matter what space you're in, there is conflicted remuneration throughout, and it doesn't need to be that way. I suffered conflicts every day when I was a broker because I was paid to trade. If I gave someone advice to do something, I'd get paid for it. And if I didn't, if I said don't do anything, I wouldn't get paid. So there's a real conflict there and a way to go for that to be worked out.

Do you think financial services is easily open to disruption?

John The challenge major institutions have is they are so risk averse that it works against them. You see the likes of Elon Musk saying fail, failure is succeeding. Certainly, in our business, there were multiple points of failure. I think these big legacy businesses don't accept that sort of that failure. Everything has to be perfect, everything has to work the first time, and it drives away innovation and the ability to bring out new products. They may not have the ability to build new products in-house or new systems. But I think the financial institutions typically are bad innovators because they are not willing to accept failure within their business. You know, they go and spend a huge amount of capital. It doesn't work. They have to answer to shareholders. So it's this vicious cycle. That's what’s positioned start ups and scale ups to be biting off pieces of the financial services industry and really disrupting. You know, they might not go and disrupt JP Morgan or Commonwealth Bank of Australia in its entirety, but they're able to bite off and disrupt business units within those behemoth businesses.

We have to ask you about your Superhero adverts - ‘We’ve given trading a kick up the ASX’ and ‘Crashed Wall St’s party” which are provocative, to say the least. How did you get away with it?

John Yeah, I think it really punched through the old boring, dreary financial services ads that you see around town. We plastered them all over busses, bus stops and billboards and did a whole traditional outdoor advertising campaign. It was a pretty high-risk move. Putting ‘we're giving trading a kick up the ASX’ on busses driving up and down outside the ASX offices was provocative. But at no point were we trying to have a go at the ASX, we were raising awareness of investing, and trying to give trading a kick up the ass. The world of financial services have been in evolution since the late nineties, it needed a shake-up. We saw it in the US with the rise of Robinhood and how they took on a huge amount of customers from some of the big banks. And you know, no one had really done that in Australia. It was provocative but it was needed.

Putting ‘we're giving trading a kick up the ASX’ on busses driving up and down outside the ASX offices was provocative.

The world of financial services have been in evolution since the late nineties, it needed a shake-up.

The Superhero app has gained a huge user-base and amazing reviews - people love it. Why do you think it’s been so successful?

John We came to market with a really simple message - $5 flat fee brokerage. Our nearest competitor was twice the price. The banks were four times the price. But the user experience was simple. Signing up took about three minutes. I think it's a little bit quicker than that today. We did all of the email ID verification on the way in, and you could instantly deposit funds, which no one else offered at the time, and not many platforms have in Australia today. Fast forward to now, you could sign up tonight sitting on the couch at home watching telly. You could sign up, deposit funds and buy Apple shares in the States within about 3 to 4 minutes. Everything was real-time and a really simple user experience. There was no Jimmy in the back office emailing us the account numbers the next day.

How can financial services add more value to people’s lives?

John The possibilities are endless. There's a huge amount of opportunity particularly around the rise of digital assets. So whether the way crypto is today is the same in ten years, who knows? I think there's a big opportunity to bring new and exciting opportunities for customers to improve their lives and successfully build their wealth - education is a major piece of that. We've got a huge strategy around education within the Superhero app. We want to try and help lift financial literacy across our customer base almost without you even realizing it. I think there's going to be new products that come into the market that will change the way the world looks at financial services, that will be pretty exciting.

What do you think the future holds for traditional stockbroking and wealth management?

John I think there's always going to be a place for financial advisers. But which 20 to 35 year old is going to pick up the phone and call a blue chip private wealth firm and say, hey, I've got five or ten grand. Can you help me? Like, no one's going to do it. They probably feel inferior. I think there's a place in the market for direct to market investing and how advice gets introduced into that. As you grow older and your financial circumstances change, I think there is definitely a place for financial advice and advisers - they're embedded in the financial services system. At the end of the day, people are still going to want to pick up the phone or go and meet someone to talk, to get advice and understand what they should do. I think the younger generation probably turns to friends and family, but they can only take you so far before you need professional help.

Everything was real-time and a really simple user experience. There was no Jimmy in the back office emailing us the account numbers the next day.

I think there's going to be new products that come into the market that will change the way the world looks at financial services.

Tell us your vision for the future of financial services

John Everything to be called Superhero. That's the dream! No, look, the vision I've got is us playing a major part in the ecosystem here in Australia. I think that would lead to much better outcomes for a number of the market players and no doubt for our customers and anyone who is leveraging the infrastructure and the network that we've built.

Finally, how can financial services Hulk smash their way to success?

John As an industry, we need to put the customer at the centre of every decision. When it comes to making business and product decisions, a customer-first approach is probably what’s missing. The industry really needs to look at how it can improve. I think we're taking a major step forward in that regard and hopefully, we’ll see some of the big legacy banks and institutions follow in our footsteps and put out products that drive successful outcomes for everyday people rather than drive successful outcomes for their business. If we can drive that vision of when you're successful, we're successful, the world will be a better place.

If we can drive that vision of when you're successful, we're successful, the world will be a better place.

Hulk Smash

Listen to John's episode of the Upfront podcast here or wherever you get your podcasts.

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