The PATH to the bank of the future
6 March 2017
Path: “A path is a long strip of ground which people walk along to get from one place to another”. Collins Dictionary.
Going from one place to another. This is the key to the transition that banks must undergo at a time when the industry is being disrupted by new players and the imminent changes brought about by the rise of Open Banking. At the same time, young people are demanding new services and experiences. Staying put is not an option.
We have defined a roadmap for banks to follow to become the ideal bank for the iGen consumer based on our investigation. 4 concepts that can be summarized as PATH.
- People centred / People first: services and products that are useful, valuable, personalized and educational. Always presented in easy to understand terms. iGen want to feel as if the banks have no greater purpose but to help them and satisfy them as clients.
- Agile: all banks should be fast, portable, intuitive and always available on each device. Banks share space on the screen with the iGen’s favorite apps: if they can use social networks wherever and however they want, why wouldn’t they be able to do so with their money?
- Tech & Data Savvy: data, the best guarded treasure by companies, will bestow a competitive advantage upon the banks as they benefit from privileged knowledge of their clients. Opening a dialog between technology and historic client data (for both youth and the not so young alike), will allow the banks to not only stay up to date, but also anticipate their client’s needs in each key moment.
- Honest: banks must be honest, and transparent in their internal processes, demonstrating faultless morality. iGen value initiatives as support for entrepreneurs and startups, scholarships, charity works, support for the developing world, etc. This is how banks can prove that they understand and care about the world we live in.
The People First bank
Smart budgeting solution
Taking this one step further, many wanted a smart budgeting solution, that would help them find cheaper deals on the items they’re already spending on, using their existing financial data to plug into external cost comparison feeds for them. They’d love to find ways to save money but would love even more not to have to search around manually for better deals.
Products that work for the customer
Any recommendations for credit cards, insurance, new accounts or other financial products should be made responsibly. iGEN consumers are tired of being offered irrelevant or irresponsible products by their banks. They feel targeted because banks are setting them up to fail, when what they really want is to be targeted with recommendations for the right reasons and intelligently approached based on their personal financial history. With the vast amount of data banks hold on their customers, the iGEN expects banks to actually use this data when recommending products.
Many iGEN consumers have multiple bank accounts. Whilst the Superusers are adept at managing money between accounts, they are often juggling apps, passwords, data and payments. These account jugglers would love the ability to have a single view of their entire financial health, including of course their multiple current and savings accounts but potentially also other financial products like investments and insurance.
The iGEN are crying out for money management support
When we asked our iGEN panel what innovative banking solutions they wanted to see, one of the most popular answers was a tool to help them manage their money better. It’s currently difficult for the iGEN to tell just by looking at their bank balance how healthy their finances are because they aren’t warned about pending payments, fees, charges or direct debits. Some talked about an automatic cap or warning on leisure/entertainment spending once it reaches a set limit each month. The majority of the iGEN really want to be responsible, but they need more support from their banks to do so.
Option for face-to-face
Despite the very clear trend towards increased automation and mobile-only banking, there are still very important ‘money moments’ in the iGEN’s lives that require a personal touch. For times when they’re taking a step forward on their financial journey, like getting a mortgage, setting up a pension, or even just taking stock of their finances, they want to be able to speak to someone face to face. But they aren’t satisfied with the current in-branch experience. They want intelligent conversations based on the financial data history of the consumer; to be treated like an individual with unique needs and preferences. And no more standing in line in branches!
The Agile bank
Simplicity and immediacy
Banking is one of the few remaining areas of the iGEN’s life that still feels so cumbersome and antiquated. Simple tasks are never really simple and waiting times are much longer than they are used to in other service areas. Particularly for this audience that values instant gratification, banks are trailing far behind other consumer industries. Opening an account in the first instance should be much faster and easier. Our iGEN panelists talked about dynamic savings accounts; an easy way to set up individual, temporary savings accounts for specific purposes i.e. ‘trip to France’ or ‘new car’ without having to go through the current difficult process of applying for new savings accounts. And of course, they’d want to be able to do all of this on their mobile phones.
Easy log-ins and payments
The iGEN are becoming more and more comfortable with Touch ID or fingerprint recognition as a form of log-in, and this trend is only set to increase. Many of our iGEN panellists would love to one day be able to pay for goods in shops with fingerprint scanners. They hope that gone are the days they need to remember increasingly complex user IDs and passwords and can use fingerprint, retina or facial recognition for increased convenience and security of banking. In the very short term though, iGEN consumers demand Touch ID for their mobile banking apps.
A common complaint amongst our iGEN panellists was not ever being 100% sure what their actual balance was. They want visibility of their money and instant processing of payments; they really don’t understand why they have to wait to see their ‘real’ balance and want to be confident that what they are seeing is really their balance. iGEN consumers are tired of waiting for their purchases to show up on their accounts.
The Tech & Data savvy bank
To attract and connect with the iGEN, banks really need to prioritise their mobile offering and work on their mobile app UX over any other technical development. The clear first action here is to bring functionality levels on mobile up to the same levels as online (via the website) banking. Mobile offers consumers so much more convenience to manage money on the go and is the first choice destination for the iGEN. Current frustrations around limited functionality must be alleviated.
Ability to analyse
The iGEN consumers (usually the Superusers) that have used apps like Monzo or Santander Spendalytics praise the ability to analyse how and where they spend money over time. Presenting their financial data in a user friendly way, showing the categories they spend most on, and offering additional tips and budgeting advice is what iGEN consumers are asking for to help them manage their money.
Financial advisor in my pocket
The topic of AI in banking was mentioned by some of our Superusers and Adults in training participants. They are excited by the prospect of increased relevance and personalisation promised by AI and hope this technology can provide them with tailored recommendations for financial products or money advice.
Control over security settings
The ability to set parameters on personal security settings was discussed as a way to improve on current security problems. Mobile verification for large purchases over a certain threshold, instant mobile notifications of payments, and setting whitelisted countries cards can be used in for frequent travellers were all tailored security features requested by iGEN panel participants.
For the Superusers and the Hacknophobes, the blockchain is a very attractive alternative to mainstream banking. Offering increased security and openness, some iGEN consumers are looking for faster alternatives to traditional banking systems. Whilst certainly not mainstream, the lure of increased control, reliability, trust and transparency make the blockchain a technology that banks cannot ignore.
It’s quite important not to assume that just because the iGEN are digital and even mobile natives, that they are instantly clued up on banking technology. Often the main problem is that these consumers aren’t aware of the digital solutions that are available to them and need signposting towards products, apps and services. Once they are pointed in the right direction they easily pick up how to use them as their natural digital abilities kick in.
The Honest bank
Simple explanations in a normal language
The iGEN are not comfortable in the language of finance and want banks to lay out their terms in clear and straightforward language that ‘normal people’ understand. Bank charges that are hidden away in terms and conditions will only add to the iGEN’s already deep distrust of banks. When it comes to comparing account terms between products and providers iGEN consumers want standard taxonomy that makes sense so they can make sensible decisions. Whilst text is important, iGEN consumers are increasingly happier with clear video content to explain concepts and benefits to them.
Fair and transparent data usage
iGEN consumers are happy for their bank or even third parties to use their financial data, with two important provisos; firstly that there is a clear and easily translatable opt-in, and secondly that they receive value back in return for their data.
Education and advice
There is an overall lack of basic personal finance knowledge amongst today’s young people. Many recognise this themselves, asking why they aren’t taught it in schools. This is not to say that the iGEN are desperate to have personal finance lessons, and would rather go to a money management seminar than a rock gig, but they would like to know that there was somewhere welcoming and impartial to go for money advice when they need it. The iGEN have lots of questions about money and would like a free, open, impartial service to help improve their finance general knowledge.