Tune Money Lost RM10 million. It’s Not Surprising.

According to the fresh report from The Edge today, Tune Money, the internet-based seller of financial products backed by Datuk Tony Fernandes has accumulated losses more than RM10 million. Did this trigger the recent departure of the previous CEO Tengku Zafrul?

So why did it fail? I see a few reasons:

1. Wrong products. Tune Card - a debit card, is definitely tough to market considering most Malaysians will prefer credit cards (imagine having to top up everytime before you use the card). Most working adults would have credit cards while the middle to upper class late teens to early twenties may have supplementary cards.

So, Tune Card was a very niche product targettting the “unbanked” group who probably do not transact much anyway (which means little revenue for Tune Money). In fact, some card holders use debit cards just for withrawal of PayPal funds. Not only that, there are also other established banks out there offering debit cards competing with Tune Card.

General insurance products - personal accident, home protection, etc. Wrong product choice again!

Firstly, general Malaysians do not have the financial literacy and have not reached the stage of comparing and shopping for insurance online.
Secondly, Malaysians till now, still prefer an agent to service them (isn’t it great that these agents can help renew your road tax when you pay the insurance).
Thirdly, if we buy online, who’s going to help us make the claims when required? We will always prefer to have someone we know personally. That’s how insurance is sold!
Forthly, Motorcycle insurance? Again targetting the “unbanked” group which is unlikely to be internet & financial savvy enough to buy online.
Lastly, people generally do not buy personal accident insurance on a standalone basis!

There’s just no compelling benefits for customers now to shop for insurance on Tune Money!

So what are the better financial products to launch first? Unit trust!!! Key benefits? You save 3, 4 or even 5% of the sales charges when buying online, you can compare 40 - 100 different unit trusts and build your own portfolio, you get access to research reports, etc. Take a look at FundSupermart & eUnitTrust. I am very surprised why Tune Money did not come out with this earlier considering FundSupermart has been operating successfully in Singapore for years!

Let’s continue with the reasons on why Tune Money fails…

2. The website usability sucks. I have heard a lot of complaints about the unuser-friendly site (difficult to register, can’t submit forms, etc.) and poor customer service (takes ages to revert, never replies emails, etc). They should take a lesson in internet marketing & customer service 101. Take a look at this comment Tune Money’s Tune Card Is Lousy.

3. Poor marketing. I can’t recall anything about Tune Money except for Tengku Zafrul’s face. He seemed more keen to promote himself than the products. What is the value of having his face regularly in the advertisements? I just don’t get it. I would expect Tune Money, which is associated with Air Asia to have done a much better job in marketing.

Let’s hope Tune Money can take some time and restrategize its target market and positioning. It’s time to get in tune or you will be tuned out!