Pefin #DealMemo #fintech #finAI

Today I’m excited to write about a fintech startup Pefin, Pefin’s mission is to provide unbiased and affordable financial planning and advice to anyone seeking it. Pefin will use Artificial Intelligence to make decisions with your money, just like a human advisor would.

The CEO and founder of Pefin is Ramya Joseph. Ramya concurrently completed her MS in Machine Learning (AI) and a MS in Financial Engineering from Columbia University. She appears to have a deep understanding of portfolio construction and trading cost optimization. Her technical co-founder is Joe Abraham and has expertise in software architecture, development and project execution of large-scale systems.

Pefin’s technology tracks more factors than the software used by human financial advisors — market rates, tax codes, inflation, area-specific property taxes, and more. On average, there are over 2M data points analyzed for each user every time a new plan is added or market conditions change.

Financial advisory startups have historically limited themselves to servicing customers cheaper than incumbents. But “cheaper” isn’t interesting, it’s not something that creates disruptive change. I think there will be lots of changes in financial technology, but only small businesses will come out of it, no really big businesses. This brings us to the need for a full-stack fintech startup.

As we move around in this heavily connected world, all the data about where we go, what we eat and where we shop, act as bread crumbs we leave behind, and eventually, as we fill in more details through check-ins and updates such as tweets, a pattern of our spending emerges. While harbingers of privacy might find it alarming, there is another way to look at all of this. The tapping and analysis of this data is the key to a smarter way to manage finances than a spreadsheet or piece of paper.

There is a ton of direct competition in the fintech advisor space with companies like wallet.AI, Betterment, Ellevest, FutureAdvisor and Wealthfront. My instinct tells me that a true full-stack startup that integrates tax returns, remittances, investments, budgeting, planning, lending etc will own the fintech category. Technology and competition will only drive margins lower so a full suite of solutions will be a great hedge to possess but tough to execute.

I do not have data regarding the progress that Pefin has made since launch early this year and am yet to try out the product (they appear to have >$5M from undisclosed investors). But there is something alluring about stealth companies, the team has been working on this for > 5 years now. I am eager to see what Pefin can achieve over the coming years. They appear to have a strong team and are focused on product differentiation, both of which is the need of the hour in the fintech space.

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