Too many fintech and insurtech innovations seem to be solutions looking for a problem. At Futureproof, we identify real life problems needing a solution.

When it comes to innovation, there’s incremental innovation and then there’s disruptive innovation.

All of us enjoy the better customer experiences offered by a mobile app or a new tech platform-enabled business. a clever UI or an improved UX, when it comes conducting our banking or insurance business.  

However, if a digital challenger or innovator thinks only in terms of tech differentiation and not product differentiation, then their competitive advantage simply is  not sustainable for the long term. Whilst their immediate opportunity lies in the lack of flexibility and the constraints of legacy systems,  it is a limited window of opportunity. At best, a fintech or insurtech can set itself up for a trade sale to a traditional incumbent, carve out sufficient market-share using a finite first-to-market advantage for a quick IPO or they can join the pack selling the same old products.

But, generally, this is not disruptive innovation.

Of course, there are some exceptional financial technologies that are disruptive – Web3.0, blockchain, cryptocurrencies, digital assets and payment technologies, to name a few.

But for platform-enabled financial and insurance businesses, a smart front-end that sells same traditional financial products that have and continue to be, widely available through multiple distribution channels, is not sufficient to dominate or disrupt the market.  

For example, take forward mortgages which have been commoditised for decades, leaving no opportunity to even  compete on price.

Another example is Buy-Now-Pay-Later, an old-fashioned form of credit previously known as Lay-By, now dressed up as a new disruptive financial play. A BNPL player in this space has only a short window to capture market share and, as we have witnessed, within a few short months there are a half-dozen competitors trying to scale at any cost and now facing unacceptably high credit risks and depressed company valuations or share price.  

In our experience, differentiation based on tech alone, might be an easier path, but it simply buys some time for a fintech or insurtech.

Incumbent competitors and financial institutions do not, of course, sit idle in the face of these digital challengers.  It is too easy to under-estimate their depth of capital, strong IT capabilities and ability to quickly spin-off digital bank and insurance brands to either compete head-on in the digital space or their financial capacity to buy-out the challenger technology or provider.   

The real opportunity to disrupt a market, lies in exploiting the weak spot of the incumbents and financial institutions – product innovation. 

Financial institutions are not, by nature first-movers, let alone product innovators. They lack the innovation culture, are not nimble, they lack business efficiencies due to size, are overly risk averse and heavily focused on remediation of legacy business issues. Ultimately, though, they are simply product-sellers, not product manufacturers.

So why aren’t there more fintechs and insurtechs taking these obvious opportunities? Product-focused innovation is far more challenging – especially in the highly regulated banking and insurance industries.  It requires deep domain knowledge, understanding of regulatory and risk issues with a focus on both the requirements of the Product Issuer and on the needs of the Customer – that’s why so few even attempt it.

The team at Futureproof choose to focus on disruptive innovation that changes the world by addressing not one, but two global issues:

• the growing retirement funding gap as the population ages
• inter-generational unfairness in wealth transfer making it difficult for the next generation to get into the housing market

We are the only fintech world-wide innovating with entirely new product solutions that improve people’s lives in retirement.

Our elevator pitch

Futureproof was founded by Allianz Insurance alumni as a B2B2C platform-enabled SaaS business delivering the Product Platform to write the new Equity Preservation Mortgage®. 

Futureproof does not provide financial services nor is the Company a retail lender or originator of mortgages.

We lie at the intersect of financial technology and financial product innovation for retail banks, life insurance carriers and regulated non-bank lenders.

Our Software-as-a-Service is a product plug-in that makes the Equity Preservation Mortgage™ available to these regulated financial institutions to enable them to better meet the financial needs of their ageing customers at every life stage.

This is a disruptive innovation delivering better financial outcomes to both lenders and borrowers.

There has always been a massive pool of untouched home capital of US$20 trillion in Australia, UK and USA – this is the last remaining untouched asset class. 

However, the only financial instrument capable of accessing and releasing home capital has, up to now, been traditional equity release mortgages – reverse mortgages, shared appreciation mortgages, shared equity mortgages and retirement interest-only mortgages.

Of these existing types of equity release mortgages, the reverse mortgage dominates the market. 

A reverse mortgage is 100% risk-weighted for Lenders, with the average reverse mortgage loan around USD$80,000-$100,000 only. The market uptake of reverse mortgages is currently around USD$20 billion per year across these markets.

In contrast, our average Equity Preservation Mortgage® equity release mortgage,  is a proprietary new form of equity release mortgage with a lower risk weighting of only 50% and an average loan size that is 5x the size, with none of the downsides of reverse mortgages for the  Borrower.

Futureproof’s breakthrough Equity Preservation Mortgage® – a proprietary and entirely new type of equity release mortgage – will see very substantial new capital inflows into the capital markets through mortgage lending, asset management and RMBS securitisation.  With central banks quantitative easing being exhausted and a decade of historically low interest rates, this new capital cannot flow into the global economy soon enough. 

So, here is our simple elevator pitch:

Our Equity Preservation Mortgage® – a new type of equity release mortgage that monetises home capital into tax-free annuity income without depleting existing or future home equity, has to be an absolute game-changer in financial services !

Our Equity Preservation Mortgage® is made available through our SaaS product platform as a white-labelled equity release mortgage, only to regulated financial institutions.

It is decades since existing equity release products (reverse mortgages, shared appreciation mortgages, shared equity mortgages and retirement interest-only mortgages) were invented. These haven’t changed in that time and each remains inherently defective in its product  design. 

This is also true of the most traditional insurance and investment products that have been designed for retirement income – such as guaranteed income products, investment products such as buffered ETFs and annuities.

These all require cash capital for payment of a substantial upfront premium.  However, the reality is that the around 70% of the market are asset-rich and cash-poor home-owning retirees who are under-funded for their retirement – they are simply unable to buy these products.

These retirees are left few choices other than a reverse mortgage.

Guaranteed income products deliver poor returns and annuities are regarded as poor value and inflexible. These existing products are seeing rapidly increasing sales despite the aging population and a growth market of potential Customers to 2050 – the market is clearly telling us something.

Over the past 35 years since reverse mortgages were invented in the UK, no one has been able to come up with better financial products for retirement funding. 

The retirement funding space is well overdue for some re-thinking and intelligent innovation.

Futureproof’s new Equity Preservation Mortgage®  underpins a new generation of ethical, low-risk financial products that offer real value for the ageing Customers of banks and insurance carriers to better meet their retirement and aged care funding needs.