TechWatch’s Emily McDaid talks to Squad’s Padraic Sheerin about how AI can help the fintech industry to understand spending habits.
Padraic Sheerin is the co-founder of Squad, a fintech start-up using AI to help under-30s to manage their money.
Before Squad, Sheerin spent 10 years in the corporate world, building world-renowned data science teams. He gave up a plum job with Prudential Financial to form Squad, so I wanted to find out what made him take the gamble.
“If you think about how people manage their finances, it’s a closed-off world; it’s very individual. Whereas with purchasing decisions, you tend to take ideas from your friends and solicit feedback. Squad’s mission is to make saving money more social and collaborative, so it’s much easier to do it with others than on your own.”
Squad is aimed at younger generations who are very familiar with using social media for all sorts of life tasks. Through Squad, people will set a savings goal for a particular event, say, a holiday. Users engage with their friends as they save towards their goal. It’s a form of digital peer pressure, except it’s used for something very positive.
What made Sheerin leave the corporate world after so long? He said: “I always had the itch to build something that I think can have a bigger impact.
“Accountability helps you motivate towards your goals. It’s like going to the gym – it’s so much easier if you go with friends.”
Sheerin said that Squad will link to your current account. Using open banking APIs, it can integrate with 95pc of UK banks. The visibility into users’ financial habits is where AI comes into play.
Sheerin explained: “We’re using Al to analyse their bank accounts. It can forecast how much money they could save and automatically saves it for them.” The AI algorithms can also classify spending habits, to show people where their money goes – on food, drink, entertainment or bills.
I mention to Sheerin that it requires being super-comfortable with your data being visible to algorithms. He said: “We sometimes miss that young people are extremely savvy when it comes to knowing what parts of digital gets shared and what doesn’t. They’ve grown up using social media; they know exactly how some messages disappear and some don’t on Snapchat. There’s [sic] elements of emoji that show them which friends are talking to other friends. They understand privacy settings greater than anyone over the age of 30 could ever understand.”
Sheerin said that there’s “a line between sharing too much, and sharing so little that we can’t learn from each other”.
I wondered whether Squad would inform my friends that I’ve saved £10 towards a £100 goal, or whether I could choose to be more discreet, showing that I’ve saved 10pc towards my goal. He said: “We don’t have all the answers yet but it’s uniquely crafted for positivity. We’re designing it in a way that gives users positive reinforcement – and we need to give people full control.”
‘For too long, data has worked for corporations and not the person’
– PADRAIC SHEERIN
Sheerin mentions, hilariously, that his users are very honest. “It’s a divisive subject. One person said: ‘It sounds like Mark Zuckerberg on steroids and that’s not what you want to be right now.’” He goes on: “But I think your ideas have to be divisive or you’re not going to go anywhere.”
The nature of younger generations is ideally suited for this, said Sheerin. “When you talk to young people, they’re all in it together, they’re all struggling to make ends meet, they all want to go on holidays. Most are earning similar amounts of money.”
How will Squad monetise? Sheerin said: “With fintech, it’s important to focus on growth. We’re there right now but we have a few approaches for monetising. For instance, as you move users from savings to investing, we’ll charge a small investment fee that will be more competitive than some brokers.”
This all comes back to using AI to recommend the right financial products. He said: “We use AI to understand what people in their social circles are buying. The most powerful influence for buying trends is what your friends are buying.”
Sheerin concluded: “For too long, data has worked for corporations and not the person. Our work is about putting data to work first and foremost for users.”
By Emily McDaid, editor, TechWatch
A version of this article originally appeared on TechWatch