As new core functionality within banking apps shifts to third-party integrations, what does this mean for banking customer loyalty when customers will prefer to engage a bank via an alternative platform that is more in-touch with their day-to-day living?
Be it day-to-day banking interactions or seeking new needs, ‘Open Banking’ and it’s journey to enable write access across non-bank ecosystems, supported by more intrinsically integrated overlay payment services via the New Payments Platform will make customers question, “Do I really need my bank app anymore to do my banking or fulfil a new financial goal?
In this two-part post, we explore how customers' use of their banking apps will decrease and explore their desires to have transactional information injected into richer platforms that can be integrated into their daily activities.
The gap is the lack of context and insights of my financial position when it comes to managing my lifestyle. Whilst I can go to a bank app to seek a balance or upcoming transactions, it doesn’t overlay my lifestyle, my goals or my wants; it simply reacts to what I’ve done or to goals I’ve already told it. Personal financial management functionality is still predominantly historical data visualisation with minimal “so what” advice, context and ability to learn my financial behaviours.
With more and more apps driving our lifestyle and being able to pull information into a single pane, the lack of desire for banks to expose information outside of their proprietary apps stunts richer experiences. Much of this is because it goes against the bank’s age-old mantra of, “they’ll come to us, log in and then we’ll flog them an “exclusive offer” on a transaction completed screen.
The transaction itself is fast becoming the derivative, superfluous event. Uber, of course pioneered this by placing the transaction in the background and shifted focus to the goal and verb of getting somewhere rather than paying for a car ride. “Paying for dinner” as a verb is losing its edge to me as “going to dinner” is my verb of choice. It is my bank’s job to advise me whether I can pay for it or not. Anne Boden, CEO of Starling Bank, in a recent podcast said that banking “will be invisible” and with details of my preferred verb already sitting within my Gmail and rendered on my Google Nest, what is the bank’s role to add value to this if I let them?
There are already new offerings such as EML / Frollo’s Consumer Data Right (CDR) infused “Nuapay” bank app in a box, that are taking baby steps to pull customers’ multiple bank accounts together seamlessly, enrich with AI-oriented wellness insights and also allow for fluid open banking enabled product origination. But focusing on enriching and including more “preferred verb” transactions like dining out and managing subscriptions is preferred - to the point where your core banking app becomes irrelevant. Will banks be willing to (or be mandated to) expose data to more superior insights driven experiences? Will the investment profile of core bank’s app start to mirror the stagnated investment of most bank’s web-based platforms?
It is these new platform integrations that will inevitably fracture the loyalty of bank’s customers if they continue to hoard data and not enrich it beyond just pretty graphs and historical spend summaries. Apart from seeing that app splash screen, the visibility of a bank’s brand to the average user is diminishing. According to Roy Morgan, digital wallet transactions in Australia increased from 7.1% to 10.8% in 2020, a 52% increase in just 12 months. 1 in 10 customers are now paying via a Google, Samsung or Apple logo, with the bank’s brand simply being the end-point of a transaction posting, the concert back row of the money experience. Even CBA saw a 90% increase in digital wallet transactions in 2020. Are banks accepting that the experiential “verbs” of banking are unmatched through the handset owners? Through the digital wallets experience, it is a mere second of attention that a user now spends thinking about their bank account as they wave their phone over the terminal.
If the major players like Apple and Google are doing a better job of running our busy lives (or perhaps fitness apps at a more targeted level when it comes to decisions over food and fitness) -- what will the future bring when that last important frontier of banking is injected into these experiences and provide more contextual micro-moment interactions that most bank apps dream of?
If tech companies want in on lifestyle financial management what does it mean for banks and their approach to “personalised” financial management?
In Part 2, we will explore how the proliferation of aggregated, open banking fuelled experiences will allow customers to open accounts and meet more needs without ever engaging a bank’s sales channel.
Be it day-to-day banking interactions or seeking new needs, ‘Open Banking’ and it’s journey to enable write access across non-bank ecosystems, supported by more intrinsically integrated overlay payment services via the New Payments Platform will make customers question, “Do I really need my bank app anymore to do my banking or fulfil a new financial goal?
In this two-part post, we explore how customers' use of their banking apps will decrease and explore their desires to have transactional information injected into richer platforms that can be integrated into their daily activities.
What role does my bank app have in managing my lifestyle?
Recently, I purchased a Google Home Nest and the notion of having a platform that reminds me of events, bill reminders, kid’s activities and where to go for date night is a digital blessing in disguise, while managing a noisy house of four. There is one gap, however, in helping me complete a basic task like date night: How much will it cost me, can I afford it, and if I go out, will it make the time until payday a stretch?The gap is the lack of context and insights of my financial position when it comes to managing my lifestyle. Whilst I can go to a bank app to seek a balance or upcoming transactions, it doesn’t overlay my lifestyle, my goals or my wants; it simply reacts to what I’ve done or to goals I’ve already told it. Personal financial management functionality is still predominantly historical data visualisation with minimal “so what” advice, context and ability to learn my financial behaviours.
With more and more apps driving our lifestyle and being able to pull information into a single pane, the lack of desire for banks to expose information outside of their proprietary apps stunts richer experiences. Much of this is because it goes against the bank’s age-old mantra of, “they’ll come to us, log in and then we’ll flog them an “exclusive offer” on a transaction completed screen.
The transaction itself is fast becoming the derivative, superfluous event. Uber, of course pioneered this by placing the transaction in the background and shifted focus to the goal and verb of getting somewhere rather than paying for a car ride. “Paying for dinner” as a verb is losing its edge to me as “going to dinner” is my verb of choice. It is my bank’s job to advise me whether I can pay for it or not. Anne Boden, CEO of Starling Bank, in a recent podcast said that banking “will be invisible” and with details of my preferred verb already sitting within my Gmail and rendered on my Google Nest, what is the bank’s role to add value to this if I let them?
There are already new offerings such as EML / Frollo’s Consumer Data Right (CDR) infused “Nuapay” bank app in a box, that are taking baby steps to pull customers’ multiple bank accounts together seamlessly, enrich with AI-oriented wellness insights and also allow for fluid open banking enabled product origination. But focusing on enriching and including more “preferred verb” transactions like dining out and managing subscriptions is preferred - to the point where your core banking app becomes irrelevant. Will banks be willing to (or be mandated to) expose data to more superior insights driven experiences? Will the investment profile of core bank’s app start to mirror the stagnated investment of most bank’s web-based platforms?
It is these new platform integrations that will inevitably fracture the loyalty of bank’s customers if they continue to hoard data and not enrich it beyond just pretty graphs and historical spend summaries. Apart from seeing that app splash screen, the visibility of a bank’s brand to the average user is diminishing. According to Roy Morgan, digital wallet transactions in Australia increased from 7.1% to 10.8% in 2020, a 52% increase in just 12 months. 1 in 10 customers are now paying via a Google, Samsung or Apple logo, with the bank’s brand simply being the end-point of a transaction posting, the concert back row of the money experience. Even CBA saw a 90% increase in digital wallet transactions in 2020. Are banks accepting that the experiential “verbs” of banking are unmatched through the handset owners? Through the digital wallets experience, it is a mere second of attention that a user now spends thinking about their bank account as they wave their phone over the terminal.
If the major players like Apple and Google are doing a better job of running our busy lives (or perhaps fitness apps at a more targeted level when it comes to decisions over food and fitness) -- what will the future bring when that last important frontier of banking is injected into these experiences and provide more contextual micro-moment interactions that most bank apps dream of?
Summary
Once write-access is enabled for CDR recipients beyond banks, it will create a springboard of opportunities for the tech giants like Google to infuse financial data into their ecosystems. These players have long been focussed on being one step ahead -- be it booking dinner, writing your emails or proactively guiding your finances so you can enjoy a night out without the kids.If tech companies want in on lifestyle financial management what does it mean for banks and their approach to “personalised” financial management?
In Part 2, we will explore how the proliferation of aggregated, open banking fuelled experiences will allow customers to open accounts and meet more needs without ever engaging a bank’s sales channel.
Disclaimer: The statements and opinions expressed in this article are those of the author(s) and do not necessarily reflect the positions of Thoughtworks.
