{"id":4032,"date":"2023-06-28T11:47:10","date_gmt":"2023-06-28T11:47:10","guid":{"rendered":"https:\/\/innovationisrael.org.il\/en\/?post_type=report&p=2761"},"modified":"2023-08-15T10:36:07","modified_gmt":"2023-08-15T10:36:07","slug":"just-for-you-financial-consumerism-in-the-digital-age","status":"publish","type":"article","link":"https:\/\/innovationisrael.org.il\/en\/article\/just-for-you-financial-consumerism-in-the-digital-age\/","title":{"rendered":"Just for You: Financial Consumerism in The Digital Age"},"content":{"rendered":"\n

“After twenty years in the world of finance \u2013 in insurance and banking \u2013 I realized that people don’t understand and don’t manage their finances “logically”, says Yossi Yarkoni, Founder and CEO of the startup Robinhood Pro<\/a><\/strong>. “Take for example, a person with a positive balance in his bank account who takes a loan and loses twice: he doesn’t receive any interest on his balance and pays expensive interest on the loan. Or another popular mistake \u2013 people who buy a car from a car dealer and sign without comparing deals on a loan to complete the deal. They are happy that they have a new car but fail to realize that the seemingly low monthly repayment is at a very high interest rate and that, in practice, they are paying 4 or 6 times the price that they could have paid if they acted wisely”.<\/p>\n\n\n\n

The essence of Robinhood’s app is to translate financial language into consumerism language, in order to make decisions in the world of pension and insurance more accessible. For example, to point out double insurance policies that are not just superfluous and expensive but also detrimental.<\/p>\n\n\n\n

“If someone has two insurance policies for the same thing, it’s reasonable to assume that he will end up emptyhanded because the insurance companies will make him run between them for payment”, Yarkoni emphasizes. In many cases, you cannot receive payment twice for the same insured event. People don’t buy double car insurance but do buy superfluous health insurance policies. This is not just throwing money away but also impairs their ability to receive money quickly. We wanted to make all these things more accessible for people and to enable them to conduct their finances cleverly via an app. <\/p>\n\n\n\n

“In today’s insurance world, the insurance agent’s interests are self-serving because that’s his livelihood”, says Yarkoni. The chance of receiving a phone call from your insurance agent informing you that he is cutting your insurance premium by half is very low. Some still say that the human element is necessary, but I think that an objective perspective and monthly monitoring is important”.<\/p>\n\n\n\n

Yarkoni calls this the “objectivity revolution”: “The wise customer using our app will receive indications that his insurance is too expensive. An objective digital tool that is easily accessible and which uses simple language solves the problem of not understanding the professional terminology. We know how to break down products according to investment, risk level and insurance coverage and provide a recommendation on what action should be taken. Once there is an objective digital tool that compares my genuine needs and the price I’m paying, I can save a lot of money”.<\/p>\n\n\n\n

The quality of service is also taken into consideration by the app via the rating of the Ministry of Finance’s service index. This index checks how quickly companies respond and pay claims. “If someone sells for 90% less but you wait another 30 seconds on the phone, that’s not so terrible. But if he sells for 5% less and you need to wait for two days for a response, the service is not as good, even if it’s cheaper”, Yarkoni says.<\/p>\n\n\n\n

The same principle applies to yield \u2013 two companies may earn the same yield in a particular year, but one does so while investing our money at a high-risk level and the other at much lower risk. Obviously, for the same yield, we will prefer the company taking the lower risk. “So, we have parameters that consider seniority, size, the timing of money coming in and going out, volatility, the risk level of investment management and the quality of service. The computer can calculate all these parameters in the most objective way and issue recommendations”, Yarkoni says. “We can input business insights from the sector and prevent a situation where we relate only to the cold figures without looking at the qualitative data”. <\/p>\n\n\n\n

‘We run processes that are called RPA (Robotic Process Automation) that enable the computer to conduct hundreds of thousands of necessary actions. First, due to cybersecurity and regulatory requirements, we perform a stringent identification process to ensure that the person receiving our service is indeed the person who signed up for it”, Yarkoni explains. <\/p>\n\n\n\n

“The second step is the RPA. Among others, there is a series of data gathering actions. We are connected to the national data service \u2013 data.gov.il \u2013 and receive all the data about the performance of all the mutual funds’ different investment verticals and risk levels. During the next stage, we operate the layer of AI that includes an analysis of the data and a recommendation of the funds with the best market surveys according to an analysis of 17 different parameters”, Yarkoni says.<\/p>\n\n\n\n

“The next stage is automation of all the bureaucracy. This means that the user is not required to complete all the forms to move his savings or to change insurance company. Instead, the app fills in all the paperwork for him and the user merely checks, confirms, and fills in any missing details. At the click of a button, the paperwork moves from one company to another without the need to physically sign any form. It is all done via the app. 
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From Israel to the World<\/h3>\n\n\n\n

Robinhood used Israel as a beta-site to prove the technology’s stability. “The app is operational in Israel, and we’ve learned a lot from the insights”, Yarkoni says. “Our advantage is that we are close to the clients and if we learn that they like something, we can make it happen for them. When we sit with large international clients, we can say what customers prefer, for example, to take a picture of the ID certificate at the end of the process and not in the middle of it, because then you have to get up and take it out of your wallet.<\/p>\n\n\n\n

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