The next step in online banking: helping the customer?
That’s a controversial headline, because the bankers I speak to say, "isn’t providing an online banking service helping the customer?" Well, not so much. Now every bank offers online banking, and most charge a fee of some kind, it’s less about helping the customer manage their money and more about helping the bank cut costs and increase revenue.
Yet banks of all shapes and sizes are striving to "engage more fully" with the retail customer, build a longer relationship, "broaden the relationship" . In other words, sell us more financial products and keep us as a customer for longer by knowing more about our financial needs.
So help me optimise every saving, cheque, term deposit, loan, credit card, lease, equity trading and piggy bank account I have. Help me learn where my money is going each month, help me balance my household budget.
The typical online customer relationship with an Australian bank is now almost entirely a task-oriented one: I need to pay a bill or transfer some money, so I click on a bookmark, login, do my transaction, and log-off again asap. Yet, other than perhaps the ATM machine, the online banking application is probably my primary touch-point with the bank’s brand and brand experience. For most of us, the ATM and the online banking application is my bank.
If I’m a bank, do I want an entirely task-oriented relationship with my customers? Definitely not.
Task-oriented relationships turn rich, diverse brands into utilities – the only time I care at all about my choice of gas provider is if I learn that I can get gas a lot cheaper from another utility brand. I do NOT want my bank to become just another utility. So, how can banks use that utilitarian touch point of the online banking application as leverage into a broader, richer, engaging relationship with their customers?
How about: help them manage their finances?
By "finances" I don’t mean "accounts I hold with this bank" – I mean ALL the customer’s finances. Help me optimise every saving, cheque, term deposit, loan, credit card, lease, equity trading and piggy bank account I have. Help me learn where my money is going each month, help me balance my household budget and draft a plan that will lift me out of financial stress and empower me to meet my financial goals.Would that create customer engagement? Reduce churn? Would it be good to be known as "the bank that helped me manage my money better"?
So how? As is often the case, we need only study the lessons that tiny internet startups are learning. Copy them, partner with them, or acquire them if they’re really good at it. I’ve spoken to one Australian bank which is already doing exactly this, but since banks move slowly, that allows plenty of breathing room for others to join the race.
Wesabe is a great case study. A US web startup, Wesabe leverages the US trend to provide banking transaction data in OFX format as a means of parsing bank transaction data from its customers. I upload my month’s statement from my online banking application, and Wesabe parses all my regular transactions, categorising them as car payments, rent payments, entertainment expenses, music from iTunes and books from Amazon.I need to do some training to show Wesabe what each kind of transaction looks like, but the learning curve gets shallower fast, and in 2-3 statements, Wesabe knows enough about my financial habits that it hardly needs any help to do what Quicken takes hours of manually fiddling to achieve.
Wesabe then uses the power of community to show its users how their financial behaviour differs from other users. I can see what the average rate for credit cards is, or home loan interest rates, or whether I spend more or less than my peers on, say, magazine subscriptions.
Users can share tips with each other, and set financial goals that other users will help them meet. All with enough control over privacy and security to satisfy Australian online banking customers.Is my bank always going to come out top in user comparisons of, say, credit card reward schemes? No, not always. But those comparisons are happening already, both in the real world and online in Wesabe and other online communities.
Maybe a bank wouldn’t be entirely comfortable with the idea of customers being recommended competitive products, but how big an opportunity might there be to introduce the brand to the customers of other banks, if this was the first and most prominent application of its type in Australia? With the customer’s permission to review their financial situation, how many products could you introduce them to if you know their entire financial picture?
Sorry, again with the hypothetical questions! Australian banks shouldn’t make the mistake of thinking that it won’t happen if they don’t act; Australians already make up a significant proportion of Wesabe’s users. Every Australian Wesabe user is then one step further removed from an engaged relationship with their bank online, and one step forward to considering their bank as just a utility.
