We start this new blog series with Peter van Hees, Head of Product, and Davy Kestens, CEO, at Cake.
Peter Van Hees
🍰 Why did you start Cake?
Davy: Our mission is to improve the financial well-being of consumers. This all starts with helping consumers better understand their finances. We want to offer our users a better independent banking app that gives them a clear overview and insights. Insights into their own situation but also the comparison with peers.
We are convinced that a good insight is the basic requirement to get a grip on income and expenses. This is the only way to start improving the financial well-being.
In a second phase, we will complement this with pro-active and automated advice, in which, in addition to daily banking functionalities and insights, we also want to help users further optimise and improve their financial health. Both in the short and long term.
Peter: In addition, next to optimizing spending and savings behavior, we also want to make the bank accounts of Cake users profitable again. We do this through our unique business model where we share our revenue with our users. When their transaction data is anonymously processed in statistics we sell to companies we feel they are entitled to receive a fair share of this revenue. Commercial partners can also offer Cake users certain financial benefits based on their shopping behavior.
💰Is our financial well-being that bad?
Davy: 4 out of 10 Belgians are insufficiently financially literate, according to recent research. And the less well we know and understand how money works, the more likely we are to make wrong decisions. And all of this in a context where more and more people are struggling to pay their bills makes this a growing problem.
Peter: We have to bear in mind that income and spending are a very complex issue. An average person has 40 banking transactions per month and that is not easy to understand. Payments include a wide range of goods and services from many different suppliers. They also differ in terms of necessity (e.g. the payment of an electricity bill versus a luxury birthday party) or in terms of expectation (e.g. the monthly repayment of the loan versus an unexpected breakdown of the car). And there are not only the recurring monthly expenses such as food, but also the large annual expenses (taxes, fire insurance, …). On the other hand, people also have different sources of income (salary, growth package, rental income, …). In addition, a mix of payment methods is used, from cash and electronic payments to automatic transfers. All these aspects make it very difficult for consumers, understandably, to keep a good overview – difficult on an individual level, but even more difficult on a family level. This leads to a lack of understanding of their own financial situation, let alone being able to adjust their behaviour accordingly.
🧰 Aren’t there enough tools and aids that already offer solutions for this? Whether or not online?
Davy: There are indeed several systems and apps on the market which already offer possibilities, but we notice that there are still a number of limitations which prevent the potential from being fully exploited. We believe that with technology we can make a difference.
The problems we see with the current tools (from a manual housekeeping booklet, over the classic excel files to apps) are multiple:
- They still require too much manual input work. And experience shows that people usually don’t succeed in maintaining something they need to keep track of themselves in a consistent way.
- In many cases you also have to manually assign certain expenses to certain categories (e.g. food, clothing, health, sports, …). If this is not done in a consistent way, you cannot make comparisons over time.
- Often the overviews are also presented in a complicated and not easily accessible way with complicated graphs and statistics.
- And many tools tend to be finger pointing rather than encouraging people.
We are convinced that by starting from the actual transactions on the bank accounts (in Cake you can merge several accounts of different banks) and thus automate everything from day 1 without having to enter anything yourselves, we already remove the first 2 obstacles.
With Cake, we also want to bring the conclusions and suggestions of spending behaviour to the user in a very clear and simple way, instead of presenting complicated graphs. If we combine that with proactive and encouraging tips and advice, obstacle 3 and 4 are also bridged.
🏦 But don’t banks also offer their own banking apps that already offer overviews?
Peter: That’s true, but first of all, consumers often have accounts with different banks and it’s not always possible to link them all within the app of one particular bank. And even when they offer this, consumers often don’t want one bank to know how much money they have in the other bank’s account. Cake is bank neutral, puts consumers first, and does not offer multi-banking to sell additional banking products.
In addition, most banking apps are still based on the methods of the first banks in the Middle Ages. A chronological list of income and expenditure. A long list of amounts with minuses and pluses in front of it. And actually that means very little. A net income of €4000 is not a lot if there are €3500 fixed monthly costs in counterbalance. What is important is the balance between income and spending and how that evolves over time. This approach also does not take future income and spending into account.
Fortunately, these overviews are now much better organized and grouped in banking apps, but this whole flow of data is still being pushed into the hands of the consumer who has to figure it out.
Davy: And with Cake, we want to look at this differently. We want to rewrite the rules and completely rethink the underlying methodology; put the consumer at the centre and start from the actual budget available for a given timeframe.
Thanks to our unique business model, we can also provide a comparison with the average spending pattern of groups of other Cake users. By calculating anonymous patterns of all transaction data of all Cake users together, we add an important extra dimension. And that, in its turn, contributes to the consumer’s financial literacy. If I spend €200 a week on grocery shopping, is it a lot or not a lot? If I know that the average amount that people in my family situation and with a comparable available income spend each week on supermarkets is €150, then I know that that might be a expense that I could potentially reduce if I would like to. This context is extremely important.
👷 How did you develop the Cake app?
Peter: Our advantage was that we could start with a blank sheet. As Head of Product, I have to admit, that is a dream come true. This allowed us to pin down some basic principles even before there was anything on paper, which we implemented in an almost compulsive way. Unlike a bank that mainly tries to sell products, we have the luxury of always being able to develop Cake in the first place with the user of the app in mind.
A clear example is the internal rule in the product team that you, as a user, should not need more than 3 seconds to understand a graph or overview. If an insight that we build does not comply with that 3 second rule, it will inevitably get kicked out.
🏁 When will the app be fully ready?
Peter: There will be at least another year before all the currently planned functionalities will be available in the app. And by then, based on feedback from our users, we’ll certainly have invented a whole bunch of new features that we want to develop (laughs).
Davy: By the way, we recently made our roadmap publicly available. You can find it here. That way, all of our users and future users, as well as commercial partners and investors, will be able to see what the plans are. Everyone can think along with us, give feedback or propose new ideas, which are then evaluated by our team.
Peter: The chronology of our roadmap is built according to our belief: to first give people better insights, to give them more control and to finally improve their financial lives. And that is our ultimate goal.
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