Most banking customers regardless of age have a functional relationship with financial institutions. We trust our banks as far as our deposits are insured. According to Deloitte, millennials represent more than a quarter of the population in Europe and the Americas and are set to build significant wealth through individual earnings and inheritance. However, they trust technology brands more than they ever trusted a bank. In fact, Apple has done such a great job marketing the promise of a world where you won’t need to carry cards that many of us have overlooked the many moments when Apple Pay doesn’t work or isn’t accepted.
Furthermore, a three year study of millennials in the US suggests banking is the sector heading for the greatest disruption as their perceptions of value and money shift toward the intangible. The top four banks are amongst the least loved brands, 70% say in five years the way we pay for things will be totally different, and 33% believe they won’t need a bank at all.
This is a clear indicator that banks need to offer a new type of customer experience. The first place to look is at how technology influences how we access money.
A new relationship with our money and our financial institutions
It has never been easier to spend or transfer money across the world. PayPal has set a precedent, Snapcash has gamified the experience of sending cash to other app users, and WeChat lets users in China literally pay for anything from a coffee to their rent with a simple chat message. Masterpass, MasterCard’s digital payment service, has integrated payment capability into Turkish brand Getir’s Facebook Messenger chatbot.
ATOM, a new UK banking concept is an app aimed at millennials. Taking cues from gaming and social sharing, fun behaviours become functional, like signing in with a selfie and using voice recognition to access information. It’s a nascent concept but one that signals what’s to come.
It’s not hard to imagine a near future where we can access, move, spend and save our money through a collection of light touch interactions that removes friction and replaces it with fun and satisfaction. As AI and digital assistants become a truly useful part of our lives, how long before we can simply ask Alexa, Siri or Cortana what our balance is or when our next bill payment is due?
But, we can only interact this casually with our money as long as we trust our banks’ institutional infrastructure to respond to our needs and keep our money secure – a step beyond basic deposit insurance. This is where new banking models come into play.
Toward new banking models
A crop of new banking start-ups is distinguishing itself by actively listening to their customers and working with them to create specific products and services tailored to their needs. They are not trying to compete with full service banks. Simple is a US based banking service that offers one type of account and a suite of app-based services to help you stay on top of your money. Similarly, Monzo is a UK banking app that helps you manage your balance, budget, and contactless spending. They keep their customers updated with their developments as they evolve their services and respond to customers’ needs.
By creating a continuous feedback loop between the brand, their products and their customers, these new banking services are more transparent and available to their customer than ever before. It opens up a world of positive consumer advocacy and loyalty that stems from a genuine sense of brand ownership.
There is a real opportunity for banks to reclaim customers’ lost trust by co-creating products and services to take care of customers in new channels. This allows them to stay in step with the digital economy before they lose valuable customer relationships entirely.