5 customer-centric ideas for the future of retail · PDF file5 Customer-centric Ideas for the Future of Retail Banking ... We also have a long history of helping banks deliver innovative

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Copyright © 2014 Seren Ltd. All rights reserved.

5 customer-centric ideas for the future of retail bankingWritten by Drew Smith, Director of Consulting August 2014

5 Customer-centric Ideas for the Future of Retail BankingCopyright © 2014 Seren Ltd. All rights reserved.

2IntroductionBanks 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.


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1. Love will tear us apart

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.

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.

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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?


52. An educated fool with money on his mind

“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.

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.

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63. Debt: the new normal

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.

I decided that the most important thing for me was to have an education, 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”.

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74. The tyranny of choice

“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.

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.

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4. The tyranny of choice

Ontrees App - MoneySupermarket.com

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?”


95. Take a load off, Annie

“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

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.

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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


11In summaryOur 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 DirectorE: [email protected]: +44 20 7749 2549

55 – 57 Rivington StreetLondon, EC2A 3QA

www.seren.com

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5 customer-centric ideas for the future of retail · PDF file5 Customer-centric Ideas for the Future of Retail Banking ... We also have a long history of helping banks deliver innovative