Banks need to design propositions that reflect consumer lifestyle. Too often, companies including banks fall into the trap of letting technology lead, not consumer demand. The result for banks has been a failure to deliver helpful and relevant services.
Too often, this is driven by their inability to adapt to the rapidly changing world outside. And when banks do take on change it, often misses the point. The automation of bank branches with a range of kiosk technologies may sound good — it reduces staff costs and provides a modern image — but the reality has a negative impact:
(1) Frequent visitors to bank branches are older and often retired. They require more help using the technology, which can make them feel alienated and less comfortable in the branch.
(2) Infrequent users, because they have little need for a branch, still require some help as they are not familiar with their first encounter of the technology and don’t re-visit often enough to become more familiar with it. These people are often younger, short of time as they lead busy lives, and discover the kiosk is little better than queuing for a cashier.
For both these groups the benefit of a richer personal interaction, which people value, is lost — and replaced with machines that you still have to queue up to use.
This is not to say that technological advances shouldn’t be introduced, but this is a case in point, where the technology has led and the consumer needs not understood. Technology is of great benefit to us where we see a need, and we will embrace it with gusto. Many apps in the app store have low usage and poor reviews because the makers simply failed to pick out the customer insight that then inspired a technology solution.
Challenger banks have a great opportunity to change the landscape of banking, but there is a huge downside if the propositions aren’t built on insight and understanding how consumers live their lives. Propositions must resist the temptation of cool technology for technology’s sake, and find solutions that consumers embrace as relevant.
In my role of Head of Insight at Internet bank Egg, my team and I experimented with a range of technologies. Some of them, consumers embraced — such as an account aggregation service called Egg Money Manager which provided convenience and time saving — and others we test piloted and never launched — such as a mobile WAP service that didn’t meet the needs of customers, was slow and cumbersome.
Already Mondo Bank has been demonstrating some features to its app such as spend history and type, alerts for unusual spend patterns and purchase location maps. I hope this and others go further though.
It is encouraging to see Atom, Tandem and Mondo all reaching out to consumers to join in co-creation of their propositions. The hard piece will be turning insight into meaningful propositions.
My Lifestyle Bank
So what will challenger banks need to consider in their proposition development? Starting in the customers’ shoes, they will need to understand lifestyle and behavioural changes and be able to recognise that these will be continually evolving — hence co-create continuously over time.
Overlay these onto the key elements of consumers’ lives — namely our domestic life, our work place and institutional life and our non-domestic lifestyle experiences — and you get a picture of the propositions people need.
Consumer research of a decade ago showed customers wanted to be in control. Research I have done recently found consumers today are broadly in control — what they demand now is more subjective. What matters most to them, as time has become so precious, is for experiences to be succinct, emotionally rich and relevant.
Take a look at a different sector: food groceries. As new channels — such as online deliveries and click and collect in store, together with tighter household budgets — come into play, consumers looked for even more convenience and time-saving elements to their life. Hence the rise of the local convenience store and a move to more frequent but smaller shopping baskets.
We are seeing the main supermarket chains reacting to these changing needs — such as the closure of some large stores, time-saving through self-serve checkouts and self-scanners (people are comfortable to use these as frequent users, unlike infrequent visits to bank branches).
So what could banks be looking for in this evolving world we live in?
- Technology: A move to a faster moving cashless society, access of banking on the go via mobile devices, richer information about my spending and alerts;
- Culture: A desire to manage money better (future looking) but little time to manage money;
- Communication: Increasingly targeted advertising for goods and services including GPS driven adverts, social media alerts and texts to mobiles, celebrity endorsements resulting in increased pressure to impulse purchase.
My Lifestyle Bank — my top 10 features
- A bank that is looking out for me and is intelligent, with my own chatbot that can not only manage my day to day banking but can advise me on bigger financial needs such as house buying and mortgages, car loans and what I need to think about as I start my family. A chatbot is a computer software program that is able to communicate with humans using artificial intelligence. Aligned to my bank account and analytics that can interrogate my current and future earning and spending patterns this will make a powerful personal banker.
- An omni-channel bank (not just a mobile app). There is no doubt the mobile phone is an inseparable part of our everyday life, but I am still a multichannel user and therefore I’d like my bank to learn what devices I use and what for and tailor services to what I use most on each. Recently the CEO of Next stated that their good results came largely from the computer-based Internet, which contradicted the CEO of the equally successful ASOS saying it was mobile in their case. Soon wearables will take a place in that mix of devices too.
- Predictive budgeting. It is great to understand when, what and where I earn and spend money in my day to day life. The next step would be to budget forward. It would be great to have my earnings split across nominal monthly spending pots — direct debits, leisure, day to day life, reserve, lending (overdraft) — all neatly shown graphically and all feeding from my one current account. It helps to show what’s allocated where at the start of the month and helps budget your monthly spend. Mondo is already showing pots of what you’ve spent — this takes it to the next level.
- Embracing the Internet of Things (IoT). This is the opportunity to be the glue in my day to day life. The chance to step out of thinking like a traditional bank and be an enabler saving me time, giving me rich experiences and being intelligent. You link your banking (current account, credit card, loan, savings etc) to the IoT in your house. For example, your fridge says you have run out of milk, it adds to a shopping basket, and my lifestyle bank reminds me to buy it on the way home — letting me know I’ve got sufficient money in my food and groceries pot. Equally, you could instruct it to add it to your shopping list and click to do a weekly online shop. You may have a smart meter which could link usage and cost to alert you that the cold weather and increased energy use during the month may mean you need to budget for the next few months to pay the higher bill, and so money is moved automatically from your reserve pot to your direct debits. You may think this is over-stepping the mark — banks don’t do this. That’s true — traditional banks don’t. They work in rigid structures that don’t reflect my fluid daily life. A lifestyle bank starts from the position of trusted partner and reflects my lifestyle. In the early days of Egg, it branched out into online shopping and a funds supermarket, so banks can stretch out to be more.
- My lifestyle bank will embrace the customer and technology to improve what matters most to them in their life. It will focus on the future, their changing needs and design new solutions. It will not need to remind them that it is a “challenger” to the incumbents — they already know traditional banks provide poor value.
- My lifestyle bank will help me set simple savings goals, allow me to name my account by what its purpose is — holiday fund, 40th birthday fund etc. Not an original idea, but something that has proved very popular for current savers. It has meaning.
- Flexible lending. I’d like my chatbot to be asking me at the end of the month if I’d like to pay more off my mortgage as I’d under-spent my monthly budget. And in a difficult month to ask if I’d like to take a one month holiday from my loan and pay it after the end of the original term.
- Surprise and delight credit cards. Based on who you are it sets up triggers across all the customers and provides randomly selected free purchases. For example 1000 free coffees on us each month, 50 up to $100 grocery shops, etc. My card would also offer features similar to my current account.
- It would also be picking up on the latest security. Already in use by challenger banks such as Atom and traditional banks, facial, eye and voice security log in is a must — simple yet secure.
- Money is serious but it is an enabler. The huge advances of computer graphics and gaming give rise to the possibility that the interfaces I deal with are simple, engaging and possibly playful.
What does your lifestyle bank look like?