Could banks become our 24/7 personal assistants?
Joydeep Bhattacharya is managing director at Fjord, design and innovation from Accenture Interactive
Digital technology is on the verge of transforming banking, in a similar way that Spotify has completely changed the music industry and Netflix has revolutionised broadcast entertainment, writes Joydeep Bhattacharya
Spotify and Netflix are prime examples of the phenomenon we at Fjord have christened ‘Living Services’. This refers to the way that the twin forces of digital technology and the increasingly liquid expectations of consumers have translated into dynamic new services that aim to deliver a totally customised offering to each individual consumer.
Fuelled by the use of sensors to detect (physically or via a computer) the way that consumers use services, Living Services incorporate sophisticated systems of data analysis so that tailored services can be delivered to individuals. At its simplest, you could view this as a virtual personal assistant, learning and anticipating your needs and desires. So Spotify quickly learns what music you like and serves it up to you, along with related products (i.e relevant concerts), while Netflix does something similar for film and TV.
Sectors like music, health and automotive have been the first to embrace the possibilities that Living Services offer, but another industry that could truly benefit from its transformative effects is financial services. We’ve identified four ways that Living Services will seep into the banking world, helping customers take more control of their finances and potentially altering the whole way they perceive their banks.
Self-Checking Statements. Firstly, we envisage that banks will be able to offer self-checking statements to customers. If receipts are increasingly digital, these can be automatically sent to banks for checking against consumers’ spending history. This system could then alert them to anomalies or transactions for which there appears to be no receipt. Simple thumbprint approvals could also transform debit and credit card security routines. The already alerts users to suspicious charges in real-time and allows them to keep in contact with retailers to resolve the issue wherever they are. Like an inbox for payments, users can swipe to confirm the transaction happened or to mark it as suspicious. The app learns from user actions.
Analysis today, stability tomorrow. Second, using data analytics, banks could start to predict probable financial futures based on algorithms developed by aggregating not only past behaviour but that of other customers. The simplest example of how this could work would be if, by analysing past patterns of spending, your bank could remind you that you are likely to go into your overdraft in January after spending for Christmas and getting paid early in December. If they could nudge you with some ideas for stretching your money out in January, even better.
Banks as partners. The potential delivered by sophisticated data analysis will allow banks to step into a role of helping consumers manage their finances more dynamically. Mint is on track with this already by integrating all its customers’ balances and transactions. This allows monitoring of spending; bill alerts; over-budget alerts; tracking of mortgage payments; and a fraud warning service.
Similarly, Tink is a personal finance app that consolidates and manages all aspects of a consumer’s finances. Once the initial financial information such as a debit/credit card, has been entered, Tink automatically retrieves new data once a change has occurred, allowing for up-to-date analysis, no matter how many bank accounts a consumer has, and includes automatic categorisation of spending.
Apps like these work as an ‘extra layer’ on top of the financial organisations used by the consumer. They take the data already available to the consumer and then analyse it in a different way. But they signpost the future in that they show what could be possible if the banks and building societies offered this more sophisticated level of analysis.
Linking banks to our lives. The fourth step is really the ultimate financial services Living Service – the creation of an integrated platform that links your money into other aspects of your life. This is potentially also the most challenging, as many other players (notably Google, PayPal, Apple) are competing for this key role, as it elevates a brand effectively into a kind of ‘housekeeper,’ becoming the gatekeeper of many transactions.
The other areas that banking data could link to are likely to be those where the pace of change is rapid—that is, change either in data analysis or emergent consumer needs. For example, if your bank account knew your power consumption, it could predict your future financial state more accurately. And If your bank knew you were traveling, it could proactively negotiate better currency rates from ATM providers or foreign exchange dealers? Or seek and negotiate best petrol prices as you are driving—and prepay so you can drive away without physically handing over money.
Israeli company 24me is already heading in this direction, its app automatically syncs with utilities and other services to remind and enable users to pay their bills.
As I’ve outlined, much of the exciting developments that Living Services technology has so far brought to the banking world have been pioneered by start-ups. As is often the way in the world of digital, it is the small and nimble who bring about the most disruption.
The next step is when the big banking brands move from watchful exploration to deriving real inspiration from these smaller companies. Some leading banks are already beginning to partner with innovative start-ups and fintech leaders, embedding their innovations into their own business models.
In fact, this kind of collaboration will be a key trend in the financial services industry in 2016. So, the mass adoption of Living Services in banking could be just around the corner.
