Banking is undergoing enormous change, and whilst the bricks and mortar are the same — the banking sector is a money-making business after all — nothing about the design, or the look and feel have any resemblance to the banks that have been and gone.In a recent article by the New York Times, in which they interviewed Andrei Cherny, the founder of Aspiration, a neo-bank that has attracted nearly a million customers, Cherny said in no uncertain terms that, “In consumer banking, you have what is one of the largest industries in the United States, in terms of profits, and at the same time one of the least disrupted industries, and the most unpopular with consumers”.
The indisputable ‘long and short’ of business, be it financial or otherwise, is to make money by any means within reach. How fruitful the business is and how easy it is to achieve real profitability will depend on the strategy you implement. Doing things in the correct order is basic, but without losing sight of the user at every stage of the journey.
This unpopularity with the consumer is part and parcel of a system that has long been outgrown by those that use it. Neo-banks such as Aspiration, Revolut, Monzo, Chime and numerous others have the benefit of youth on their side and the user's experience firmly at the center of everything they do. "Different By Design" as Aspiration so poignantly puts it, and quite right too. Times have changed, and the new kids on the block are adapting to fit.
The "Know Me, Help Me, Monetize Me" mantra at Strands is one that has become part of our DNA and that of our customers.
It's the secret sauce that changes the status quo for banks. We're sharing, because quite frankly, it would be rude not to.
Mind Before Money Matters
Implemented in this order, these three steps take existing customer knowledge and convert it into direct earnings for the bank:
Firstly, Know me —understand the customer’s needs and wants based on their financial data, personal circumstances and information. The bank-customer relationship has undergone considerable change, due to a reduced number of personal transactions or touchpoints, more automation and a loss of the human touch. To truly know their customer, banks must learn how to re-engage with them. Both individual and business customers benefit from the in-depth insights banks have about their money management, their spending and lifestyle, understanding their priorities and ‘moments of truth’ at any given time, alerting them in real time. No one solution fits every consumer, but what’s clear is that the user isn’t looking for a loan or credit card, they’re after the answer to a problem.
Help me —helping means actively solving customers’ financial headaches and preempting issues before they happen. Banks have the ability to give an increased level of financial wellbeing to customers that gives them total peace of mind. Business customers, or sole proprietors in particular are given the opportunity to put their efforts on growing their business, rather than worrying about the peaks and troughs that are commonplace in SMEs’ bank accounts. Tax provisioning tools, cash flow prediction and bridge loans ahead of invoice payments are only possible with knowledge that goes beyond simple transactional data; this is more the stuff of a business partner than a bank.
AI and Machine Learning are put to work to make sure that business and retail customers alike are given the assistance they need and advice on next-best actions, when they need it most.
Monetize me —if you know your customer, you can help them, and if you help them, they will pay you for it. And what’s more, they'll stick around, meaning banks stand to benefit greatly from the reduced churn rate and increased loyalty and engagement of their customers.
Forward-thinking banks are focused on ensuring their customers are happy and to that end are incorporating both financial and non-financial 3rd-party services and products to their offering. For example, any customer that risks running into a cash flow problem, could solve this issue with a line of credit from the bank. Whilst it’s true that 3rd-party credit options might offer a lower amount of money for less, without the red tape, the element of choice is there, as both options are available.
New regulations make the banking ‘hub’ a possibility, meaning customers have little reason to look elsewhere for the best offers, tailored to their needs in a way banks can now do better than most, armed with lifestyle knowledge and insights.
Where a customer is spending repeatedly on computer repairs, the bank will have this information and provide access to the best deals on a new computer to solve the problem. In this case, the bank acts as a go-between, facilitating the transaction for the both 3rd-party provider and the customer, keeping everyone happy in the process.
There’s something in it for everyone in the chain; bank, customer and suppliers, and the bank gets their cut, making it a lucrative business to be in the know.
All in all, banking that benefits the customer, benefits the bank. Ad infinitum.