Money: banks should use data to help consumers understand spending
Money: banks should use data to help consumers understand spending
A view from Ric Marshall-Nicholls

Banks must become 'habit forming allies' to bat off threat of start-ups

Established banks need to bring innovation to the heart of the industry rather than leaving leaving disruption to the start-ups, argues Ric Marshall-Nicholls, strategy director,...

One of the most interesting things about the smartphone is its ability to create and sustain habits: seemingly unconscious repeated behaviours in a trigger, action, reward formation.

Take the world of physical health. The ways the sector has discovered to provide insights for people about themselves and nudge them into better habits in everything from movement to sleep (and now increasingly to join it all up) – is astonishing. 

In a world where I can track my sleep patterns, why do I need multiple login procedures just to see my account balance?

Compare that, if you will, to the service I currently get from my bank.

In a world where I can track the influence of temperature on my sleep patterns at the touch of a button, why do I need multiple login procedures just to see my account balance?

In a world where I can rank myself against fellow runners to motivate myself for that 10k, why can’t I use similar social pressure to help me invest my savings?

There are of course services that are doing some of this stuff. American outfit Socialmoney.com, for example, let users incentivise their savings by setting up ‘online piggybanks’ to save money for a specific goal – such as buying a new car or next year’s holiday. Or there’s Invoice2go, an app for freelancers that lets them collate and send their invoices, or peer-to-peer forex providers such as ratesetter.com

Innovation at the edges 

However, this activity feels like it’s happening at the edges of the financial services industry rather than at its heart. Which is odd, because if there’s one institution that knows more about me than any other, it’s my bank. 

Manners may maketh man, but the bank statement shows the real story. If there’s an institution that should be capable of not just helping me live the good life, but linking disparate pieces of it together, then it’s the one that monitors my spending.

The opportunity is definitely there. A financial institution is in the privileged position of holding personal information about it’s client… by using that information to add value to the relationship in the eyes of the customer, it can only be of benefit the brand.

Becoming an ally is critical

There’s a real cost too of not doing so, because financial services companies face threats on two fronts. 

Finding ways to become a genuinely useful, habit-forming ally is critical 

Firstly, from new entrants: legions of fintec start-ups are showing how, unencumbered by legacy systems and existing success models, you can offer far more compelling services to customers.

And secondly, from the thousands of other goods and services all vying for consumer attention: a trend which threatens to move banking from being a service people consciously value and interact with to becoming a utility that just goes on in the background.

We live in a world of abundance, where the hardest thing to grab and hold is consumer attention. The competition in this regard isn’t just within categories, it’s between them.

Consumers are used to digital now, and they expect their service providers to use it to make their lives better – financial brands that don’t will quickly find themselves replaced by ones that do.

For those that want to ensure they are in the second category, finding ways to become a genuinely useful, habit-forming ally is the critical first step.


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