In the good old days you had to visit your bank, at least once a month by the time your bills were due. You collected your paper invoices and off you went. While there, maybe you put a couple of bucks into a savings account or a mutual fund because the nice lady behind the counter told you to do so.
Then the technology advanced so that you can mail your pile of bills somewhere and the sum would be debited your account. And somewhere around here, the automatisation of banking began.
Today we literally do more or less the same types of errands we did back then, but now we’ve advanced so far that we do it anywhere, anytime, wearing anything (or nothing) on a piece of glass that we hold in the palm of our hand.
We surely couldn’t imagine that 30 years ago. Could we then reasonably project or even have the faintest idea of what banking might look like in 2050?
Of course we cant. But what we do know is that automatisation is an on-going process that has yet to show any signs of slowing down or going in another direction.
Banking is a set of rules
If you break it down. Your everyday banking is really predictable. To a large extent it is a set of transactions from a fixed number of accounts going in and out at the same time every month. Between that is shopping. Monotonous and repeatable.
Even the more advanced parts of our financial life can be managed as predefined goals, actions and regular check-points.
And still it requires a lot of involvement from us. The time I spend doing mundane everyday banking is basically unchanged since the paper days until now. And it’s not because its particularly fun and something that is a great user experience – on the contrary – paying bills is really life at it’s dullest.
So, clearly there is room for improvement on how the customer experiences banking.
Viewing banking as a job to be done
In the early 2000 in Sweden, a couple of startups developed the idea of sending prepared bags of groceries with recipes, fulfilling the weekly chore of planning and shopping for family dinners. Obviously saving stressed families a huge amount of time and ordeal. Since then, this phenomenon has been established with a lot of companies wide variety of choices for consumers.
We could argue back and forth and find lots of reasons why ICA or anyone else of the large grocery retailers didn’t see this development in the market and seized that opportunity first. But the fact of the matter is that they didn’t really think about, or focus on the overall problem their (probably) largest customer group faced every week – namely finding time and energy to plan, shop and prepare a healthy and fulfilling dinner for the family.
In these times – anything that is a nuisance– is a business opportunity. And there’s always a higher level to reach, and a higher order problem to be solved for.
Building a warehouse that you fill with groceries then to let consumers pick one by one, is a problem only partly solved. In the same way, providing the basic systems for financial transactions and savings is merely offering the highway not fulfilling or assisting on the journey. So, only partly solving your customers’ problem is a lost opportunity. Basically you leave money on the table for someone else to grab.
What could banking be like with this approach?
Imagine if you’d let a computer do a simple analysis of your banking history for the last five years. What would come out is patterns that are repeated weekly and monthly.
For the majority of us, I’d guess, changes in our money behavior is rare. Which means that this can be set on autopilot. If there were an anomaly, the system would require our attention. Otherwise, the monthly bills would be paid and life would go on without any effort from us. Then our weekly and monthly banking routine could be seen as rules that we let someone else manage, and we only casually monitor if needed.
The other large part of our banking needs – savings – can in most of the cases be categorized into three parts. Building a buffer, goal based savings, and pension savings. All of these requires diligence, monotony and sticking with a plan. Defining them takes a lot of thought and discussion within a family, but is most likely improved by leaving human interaction and emotion out of it once the goals are set.
Then there is the human part.
Putting the pieces together
Having talked to an entrepreneurial Uber-driver, his story made it clear that banks generally have to cater to two separate modes of service. First of all: Running your day-to-day transactions and finances. We all have the need for mundane banking – the less time we spend on it, the better. It’s the set of rules we set up and hopefully forget about.
The other one is about solving for new opportunities and life events, or more substantial matters. In those events – being available and keen to help is absolutely fundamental. And sometimes, something big happens, and we really need that connection, to which we can present our idea, or our predicament. If you appreciate local business, helping entrepreneurs grow, your tentacles must always be nurturing looking out for relationships that can be turned into business. The daily grind when you least expect it pays off with a business connection.
The hard part here is to do both well, with it’s vast differences in what is required within an organisation, and to be able to see how they are beneficial to each other.
Solution – banking as a service
Banks have for a long time been fixated with turning analogue banking errands in to digital ones. Assuming that it can be translated from one dimension to the next without real changes.
Banks should – or need – desperately to change its perspective from being finance retailers, pushing products – similar to the grocery chains discussed earlier, to examining, understanding problems and pain points, and solving them in exchange for freed up time. Basically it would entail, to view the offering not as a sequence of products but as a complete service that automates the mundane and caters to the special needs.
In “anything as-a-service-world”, obviously, this should be a subscription service, paid monthly as a token of appreciation of the value it creates.
If anyone succeeded with that – it would transform banking from a problem that is only in part solved, to something that would be actually help us live easier and more hassle free life.