The experience of banking as a service
As always, a random comment on Twitter sparked yet another post.
I was watching a talk by Dan Makoski of Lloyd Banking Group about how himself and his experience designers are trying to reinvent the banking experience. This was was part of Nudgestock 2020 which this year, amazingly, was free and live streamed to anyone who’d signed up to watch (for which we should be forever thankful to Rory Sutherland the the lovely folks in Ogilvy Consulting).
Now, Dan Makoski spoke about reinventing finances for people and described one of the first steps him and his team took to understand how to do that. This was what a designer would normally describe as discovery or empathy, that stage when you interact with the users of your product/service to ask them about their experience with the category so far. Makoski’s team asked bank users if they could visualise their relationship with personal finances and proposed that they draw their visualisations. The resulting images showed a person carrying water between a fountain and a leaky barrel (where the fountain was one’s job and the barrel, one’s savings) or someone walking a long winding road where each curve in the road was a key life moment, like going to university of getting engaged.
Myself, I drew a tightrope and me walking that tightrope everyday with it getting thinner or ticker depending on how much money I had set aside.
What’s repeated in many of these visualisations is the fact that people see their relationship with money as a continuous one, uninterrupted by anything, one of the most lasting relationships in their lives. And, in theory, that relationship should be matched by the approach that the tertiary party in that relationship (your source of money, e.g.your employer, your business, being the secondary party), a bank, is taking in communicating or building their products for consumers.
Now, banking is a service, actually the most often used example when talking about the difference between a product or a service in marketing classes. A product is tangible, fixed, itemizable in a transaction, can be used and returned in case of an unsatisfactory experience. A service is intangible, delivered over time, by a combination of people, it is paid not by item but by time for delivery. A simpler example would be plumbing for a house. You pay the pipes by length or number but you pay the plumber by the hours he puts in (although this may be called by different names it usually is counted in terms of time; in Romanian, for instance, the word is “work by hand” which refers to the manual labor that is put behind the proper functioning of a product; since this cannot be evaluated except by comparison to another type of manual work, it is evaluated in length of time spent doing the work).
However, with modern banking, that difference between a product and a service is harder to grasp. Banking is a service because it delivers something that is not necessarily tangible, cannot be returned or really purchased in bulk or itemised. That said, banks come with both services and products, for instance a Loan or a Mortgage are classed as and even named products, because they are sold as individual “instances” of a bank’s offering, and, in theory, it can even be physical if you decide to take your loan in cash ;). In general, however, banks get paid as if they delivered a service to you.
The trouble is they don’t BEHAVE as if they delivered a service to you. With any service delivery, when that delivery is continuous, it tends to need to stay at a certain level so that it warrants payments at a constant level. In other words, if they were acting like service providers, banks should be treating their customers just as nice as they do before they open an account or take a loan.
This is where the problems begin to show up. Because with most banks, unless you’re a private banking client, you get the experience you would get if you purchased a product NOT a service, meaning that you get a lot of pre-purchase attention and limited service afterwards. This, of course, changes if default on your payments and then the attention is of the unwanted kind. [There would be those who’d go so far as to say you get the experience of one who was getting a favour not purchasing a product, but I don’t want to sound disingenuous :)].
This may explain why online banks with additional offerings which reinforce a relationship and continued service delivery are doing so much better in perception. A lot of the people who use Monzo say they do because of the app (I want to bet they also do it because of the low or non existent rates) and the fact they can track the progress of their transactions and savings. ING Amsterdam made a genius move when they decided to launch a finance app called Yolt, which acts as a personal finances tracker for clients and non clients alike. The expectation with any bank is that, if you continue to pay their rates or fees, you should continue to receive some form of service which is valuable to you (this does not include the occasional CRM email).
So, what should banks do? Those who do not have simple “service for the service” type of add-ons like Monzo does? Well, if you think of “baking with us” as someone buying into a relationship which entails continued delivery of a service, there’s a lot to be done:
- make more information more transparent and more easily accessible
- provide predictions and personalised advice on how to reduce the burden of the consumer in the relationship with the bank
- provide education and transparent advice
- provide digital tools that enable people to have access to their money faster and easier
- while it may be hard, and people might not like it, try to genuinely understand what people’s financial profile and progress looks like. I really don’t get it how I still get emails asking me if I don’t want to invest with my own bank when clearly I have an active investment account with them. I also don’t get how they can’t figure it out that I am in the market for buying a house after I proactively did a mortgage calculation while LOGGED IN to their portal.
- reduce rates for things that are now automated and where the initial investment has been covered
- zero-rate transactions which you should NOT be charging for because there is no service involved
- speak like you’re a service provider not someone better than your customers doing them a favor :)
- and many more …
And yes, this will have to somehow work while the official requirements of KYC and privacy and profitability are considered. But it’s not impossible.
If banking is a service and this service gets delivered, in some cases, for life, then people who are actively paying fees and their loan instalments should receive something in return other than the peace of mind of knowing that at some point they will be “free”. A relationship where the happy conclusion is the closure of that relationship is not a relationship, really, it’s servitude.