5 customer-centric ideas for the future of retail banking - Written by Drew Smith, Director of Consulting August 2014
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Score Cards
1
Keyfindings
5 customer-centric
ideas for the future
of retail banking
Written by Drew Smith, Director of Consulting
August 2014
Copyright © 2014 Seren Ltd. All rights reserved.
Introduction
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Banks talk a lot about putting customers at the heart of their
business. Seren helps them put their money where their mouth
is. To come up with five big ideas for the future of banking, we
worked with creative consumers from across the globe.
Since the financial crisis, banks’ reputations have suffered. They are
no longer the icons of accountability, community-mindedness and
trustworthiness they once were. They are also struggling to adapt
to a technological revolution that is reshaping customers’
expectations of what banks should do for them.
Spying an opportunity, the tech sector has launched an all-out assault
on core banking territory. With a customer-centric, iterative approach,
companies like Square, TransferWise, Paypal and Wonga have
disrupted international transfers, peer-to-peer payments and lending
markets. Global giants such as Facebook and Apple’s iTunes will
also pose a significant risk if and when they choose to offer financial
services to their customers.
Needless to say, this has caught many in banking off-guard. Now the
banks are wondering what’s next.
At Seren, we are experts in building customer-centric organisations.
We also have a long history of helping banks deliver innovative
products and services to market. So to understand some of the
unsolved challenges in the retail banking sector, we undertook our
own research.
Over 2 weeks, we worked with 16 consumers from the UK, the
US, Japan, Australia and Brazil. We discovered the factors that are
shaping their financial behaviour. We also observed the hacks and
workarounds they use to get the financial outcomes they desire.
To understand the future of time and data management and decision
making, we also collaborated with entrepreneurs in the UK and US.
These people are creating the products and services that will shape
customer behaviour over the years to come.
Over the course of the study, we uncovered five big ideas that we
believe present fertile ground for retail banking innovation. This
document is the summary of the results.
5 Customer-centric Ideas for the Future of Retail Banking
Copyright © 2014 Seren Ltd. All rights reserved.
1. Love will
3
tear us apart
“ Every month, my partner and I have a “band-aid” meeting.
It’s where we take a look at our finances and see how we’re
tracking. It’s painful and it’s ugly, like tearing off a band-aid,
but it’s necessary” says Leah, from Berkeley in California.
We’re used to messages of improved transparency between
banks and customers these days. But Leah’s story shows us
that customers are struggling to be transparent with their
support networks of family and close friends.
To better manage finances and achieve their goals, Leah and her
partner have had to schedule regular meetings. Yet, while their
personal and joint accounts are with one bank, they still can’t
get a single overview of their finances.
5 Customer-centric Ideas for the Future of Retail Banking
Copyright © 2014 Seren Ltd. All rights reserved.
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1. Love will tear us apart
“It sucks” says Leah. “We’re always printing statements and
reconciling between them, our online account interfaces and our
budgeting software. It should be easier, but it’s the only way we
can help one another.”
All our participants acknowledged the financial knowledge and
support of partners, family or friends. But many spoke of the
technical difficulty of sharing financial information. They also
battle with the shame that can come with sharing the results
of poor, short-term decision making.
With emotions running high, bank statements and online account
interfaces can be a blunt tool. Instead, there is a need to view
the hard figures in the context their life goals. This helps focus
emotive conversations and planning on the bigger picture.
Jeff Chow is a co-founder of Springpad (an online data-sharing
platform) and a product manager at Google. He feels that being
able to open up data to those close to us is key to achieving our
goals. “Collaboration is a gateway drug… it’s crack for customers.
Once you get people collaborating, their shared projects progress
faster. It also increases engagement on their personal projects,
too.”
“My money is my business…it’s even more personal than my
relationship status” says Joseph, from the UK. And yet he realises
that managing his money is key to the success of his relationship.
If sharing our financial data with friends and family leads to better
finances, and better relationships, how might banks make sharing
easier?
5 Customer-centric Ideas for the Future of Retail Banking
Copyright © 2014 Seren Ltd. All rights reserved.
2. An educated
5
fool with money
on his mind
1.1
“ I’m too afraid to look at my bank account as the end of the
month approaches…” says Alessandra, “…and by the
time I do, it’s always too late to fix anything and I panic.”
Alessandra’s not alone in her fear; many participants only
logged in when they felt things were getting out of hand.
“I wish I could achieve some kind of money mindfulness. I’ve used
mindfulness apps for the other stresses in my life, maybe it’d help
with my money worries too.” says Ben from Sydney.
Apps like Headspace and Bhuddify encourage this sort of behaviour
change for stress reduction. Lift does the same for a broader range of
life behaviours. So, what about money management?
Most banking apps make it easy to engage with account balances at
will. Stories like Ben and Alessandra’s show there’s an opportunity to
nudge customers to stay on top of their finances when their
will is weak.
5 Customer-centric Ideas for the Future of Retail Banking
Copyright © 2014 Seren Ltd. All rights reserved.
3. Debt: the new
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normal
“ Ieducation,
decided that the most important thing for me was to have an
but the reality is that I’ll leave college with around
$50,000 in debt, and I’m not even sure I’ll ever pay it off”.
Greg is a student at a prestigious California university. He gave
up a successful career in insurance to complete a degree in
something he is passionate about: The English language.
Greg is passionate about another thing, too: How banks behave
after students have entered in to an agreement with them. “They sell
us the dream, and then sour it with the punitive approach they take
once we’ve accrued the debt. We know we’re going to be paying for
the rest of our lives. Help us manage it better!”
Large student debts are now normalised for young adults, much like
mortgages were for previous generations. One of our participants
called her debt “the price of admission to a fulfilled adult life.”
And just like with mortgages, students want this investment
recognised. But, when it comes to communication, banks seem
unwilling to tailor their message to a committed customer base.
Perhaps they could try a tone of realistic optimism and give
students the tools to better manage their debt burden.
5 Customer-centric Ideas for the Future of Retail Banking
Copyright © 2014 Seren Ltd. All rights reserved.
4. The tyranny
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of choice
As an entrepreneur in the East End of London, it is part of Pete’s
job to be across the latest apps to hit the Android and Apple
stores. But when it comes to finance apps, he is yet to find one
that works for him.
“I’ve tried so many now, and the ones that do a decent job
of helping me budget don’t update in real time, because they
don’t work with UK banks. Until I can get my spending data as
it happens, I’m always operating on a delay. And if I forget to
update, I blow my budgets.”
With core markets based outside the UK, most apps treat our
financial norms as secondary or completely ignore them.
Further frustrating matters, UK banks still haven’t implemented
universal data access standard. As a result, customers miss out
on the accurate transaction tagging and budgeting that make
US-based services like Mint and Simple so simple and enjoyable.
5 Customer-centric Ideas for the Future of Retail Banking
Copyright © 2014 Seren Ltd. All rights reserved.8
4. The tyranny of choice
It is little wonder then that our UK contributors are clamouring
for something better. In the absence of convincing third-party
options, they are adamant that they will jump to the bank that
brings useful money management to market.
Pete sums up by saying “I tried ontrees the other day, the new
service from MoneySuperMarket. I thought it was an aggregator
for my UK accounts, but I couldn’t log in to any of them. Surely
my bank should know me best, so why can’t they make a money
management app to suit me?”
Ontrees App - MoneySupermarket.com
5 Customer-centric Ideas for the Future of Retail Banking
Copyright © 2014 Seren Ltd. All rights reserved.5. Take a load
9
off, Annie
We have heard a lot about customers wanting to become more
conscious and more engaged in managing their finances. Yet
for some, the desire to delegate is strongest. It is a movement
that lead Peta Cottee to found a lifestyle management
business called Partners in Time.
“There are some areas of money management - low level stuff - that
should be a lot simpler for ordinary customers to work out and feel
confident without requiring professional advice.” Yet this is where Peta
often steps in. She clarifies the options and helps clients make better-
informed decisions.
Admittedly, Peta’s clients are close to the top of the corporate ladder.
They have the type of income that makes outsourcing to a personal
assistant a cost-effective option. Yet high-end outsourcing hints at
how banks could help the rest of us manage our finances better.
At the simpler end, tracker banking products continue to appeal.
In this case, an ISA interest rate would track the best offer in the
market, less a reasonable interest percentage. Think of it as the cost
of convenience. Toshiko from Japan said “I wish I could just set and
5 Customer-centric Ideas for the Future of Retail Banking
Copyright © 2014 Seren Ltd. All rights reserved.10
5. Take a load off Annie
forget my credit card and savings account. I don’t need the best rates,
but a consistent second best would be fine.”
We think banks could go one step further. The arrival of web-based
services has seen services like Cottee’s offered to the the less wealthy.
For example, FancyHands will complete complex online research
tasks. TaskRabbit will help people outsource odd jobs in the physical
world. There are lessons for banks here.
Alessandra again: “We’ve just bought our first flat. What a nightmare!
Trying to co-ordinate brokers, surveyors, banks and real-estate agents
was so wearing. At the end of the day, the bank is going to make a lot
of money out of us. Surely they could take away some of the mess
and the stress.”
TaskRabbit.com
5 Customer-centric Ideas for the Future of Retail Banking
Copyright © 2014 Seren Ltd. All rights reserved.In summary
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Our research tells us that there is a huge opportunity for banks
to play a more central role in their customers’ lives. They have
the scale and permission to do so, but at the moment they are
failing to meet basic needs in a number of areas.
In order to thrive in this global and highly competitive market
they must focus of the things that matter the most to customers.
Primarily by giving them well designed tools to actively and
confidently manage their finances in the way that best
suits them.
If you’re a bank that’s struggling to walk the customer-centric walk,
try turning to your customers for inspiration. It only took our team at
Seren 2 weeks to develop these 5 big ideas (and a bunch of smaller
ones) and we’re now preparing to prototype them in-market.
Why don’t you find out what we could do for you?
Ben Rubin
Development Director
E: ben.rubin@seren.com
T: +44 20 7749 2549
55 – 57 Rivington Street
London,
EC2A 3QA
www.seren.com
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