Cover Story

Would you trust this man with your money? Again?

Christo Davel, of 20Twenty fame, is back in the startup game, and back in financial services.
1 February 2012
photos: Sean WilsonChristo Davel’s new product is 22Seven, a financial services game that aims to change the way its player thinks about money.

You’d be forgiven for thinking the demise of 20Twenty had put Christo Davel off financial services startups for life. In fact, he nearly was put off for life. Six years after 20Twenty closed in 2006, however, he’s changed his mind and is about to launch a financial service that will propel him and his team back into the spotlight.

Says Davel: “I got a call from Gidon Novick (recently resigned CEO of Comair, and co-founder of Kulula) three years ago. He started buttering me up, saying no one had taken 20Twenty’s space, and that they were trying to do Kulula Wealth but it wasn’t working. I said I was never touching a financial services product again. Then he said ok cool, well come and do some consulting for us then. I said cool, pay me money? That’s a novel idea. I got hold of the old 20Twenty team and said, ‘Let’s do something’.”

Three months later, it was apparent to Davel that the proposed brand extension of Kulula into the financial space wasn’t going to work.

“I said to Gidon, ‘There’s a hole but it’s not for a transactional bank, but thanks for lighting the fire. I’m going to get the team to do something.’

“The call came at the height of the financial crisis,” continues Davel. “Anyone who looked like a banker was being crucified. The subprime crisis was about people taking money. I started asking myself why we’re so addicted to debt.”

This question led him to behavioural economics expert Dan Ariely, author of Predictably Irrational, and a TED talk of Ariely’s. Impressed by Ariely’s thinking, he went out and bought the book, which looks at why people make illogical decisions (and they do), and challenges the assumption that people make decisions based on hard, cold logic.

“And I thought, what if we can show people how irrational they are? I thought we could use a sexy infographic, and that would be what people need. Then I met Dan, who burst my bubble. I spent a week at the Centre for Advanced Hindsight in the US with Dan and his team. They shared some research with us that was unbelievable, and we’ve gone on to design the system with a lot of input from them. Dan says we’re animals and certain behaviours are hard-wired into us. For example, we have to fit in because if we’re outside the herd, we get taken by predators. In the 21st century, this means we need to keep up with the Joneses. The ad industry is milking this.”

Instant gratification

Christo Davel’s 22Seven uses modern technology to change age-old human behaviour.

Davel decided it was time to help people become aware of this behaviour. “Dan talks about the concept of relativity and the way our minds work unconsciously in certain ways. They did tests. If a guy buys a car at a dealer for $50 000 and the dealer says, for $1 000 more you can have leather seats, he’ll think it’s not much more. The same people going to buy a sofa won’t pay $1 000 extra, but they will on a $50 000 purchase. It’s the way people think.

“The other thing is instant gratification – we’re not wired to plan ahead.

“So we did some research, and people earning $4 000 per month versus people earning $1 000 per week earn the same amount, but the latter group comes out on their money and the former run out before the end of the month.”

All of this added up to what Davel wanted to do – 22Seven, a financial services product that is all about personal finance. It’s about gamification. It’s about using modern technology to change age-old behaviours – in this case most people’s inability to think rationally about their spending.

It’s 100 percent independent, says Davel, although Comair is a minority shareholder because Novick wanted in on Davel’s new gig, Hollard is an investor, Hasso Plattner Ventures has forked up some of the cash and a few angel investors have gotten involved.

The service launched in late January, having been trialled by a group of ‘test pilots’ under a beta programme since 22 September. Test pilots were drawn from Hollard, the media, and 22Seven’s internal team. They were taken through the service via a series of cards, each with a specific set of instructions aimed at getting the user to think about how they think about and spend money, and to use the system. The only prerequisite for being a test pilot was a commitment to using the system and giving feedback so it could be improved and all the bugs ironed out.

Davel’s team hasn’t done it all themselves. Test pilots aside, other expertise has been drawn from.

Says Davel: “We partnered with a technology company that does account aggregation (Yodlee) and uses it to gather customer information on income, expenditure, recurring spend, and day-to-day spend.”

Davel also made contact with Katie Salen, executive director at the Institute of Play in the US, which brings together game design and research practice to create tools for personal development – like learning.

“We convinced her to come to SA and she helped us develop a play frame,” Davel comments. “She says working on the project has changed the way she looks at money.”

Play to win

It helps you become aware of what you really spend your money on so that you can spend less on what you don’t need and more on what’s important to you.
22Seven uses your financial information to tell you what you spend, where and how. It requires your banking login details to pull statements into your 22Seven account. These go straight to Yodlee’s servers in the US and are not available to anyone.

The game takes you through the steps of setting this up, categorising your spend and teaching the system so it can do it for you with increasing accuracy as you go on. It shows you just how much you spend at the local Spar, or on ATM withdrawal fees, for example. It helps you become aware of what you really spend your money on so that you can spend less on what you don’t need and more on what’s important to you. Once you get far enough down the line, it splits your spend into envelopes – taking Davel’s example of the weekly wage earner versus the monthly salary into account to help users look at their money, and use it differently, and better.

The gamification of the system means users are engaged in a way they don’t usually engage with fi nances – there are tasks, and challenges, and progress. Not boring old figures, and dry, depressing bank balances.

Davel says 22Seven made the decision upfront to charge users a monthly fee. “We made a call in the beginning that the business model would be as simple and transparent as possible. The rest of the world has freemium models, and free used to be big, but people are now realising that if a service is free, then I’m part of the product, so we decided it would be a subscription service from day one.”

The fee is R70. Davel says he feels it shouldn’t be a considered amount, it should be a no-brainer.

Long-term learning

Davel has bigger plans for the system. “We’re in it for the long term,” he says. “Ours is not a get-rich-quick plan. We obviously have funders and pressure but we have their buy-in from the word go that what we want is to build a trusted brand.”

The service is targeted at SA’s seven million online banking customers, as you can’t use the service if you do not bank online.

But that’s a pretty big market.

“We’re not going to do any advertising,” he adds. “Our commitment is that if we do something that has the right to exist, people will like it and talk about it.”

Another of his commitments is that the system is being built for the people building it. To paraphrase 22Seven’s words: “For the people we know, our friends, parents, children, ourselves. We use it.”

At the moment, Davel says, the service is a smidgen of where they want it to be. “It’ll keep morphing, as we get feedback. In 12 months, we’ll pull in tax returns. There’s no reason we can’t link it to loyalty programmes. We plan to add the things people have digital access to. Our focus is very clear – to get people to understand their behaviours and end up with more money.”

Ending up with more money can only be a good thing for consumers. Let’s hope Davel’s backers stay the course with him this time.