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2022: the year that financial advice must become more useful

2022: the year that financial advice must become more useful 1

By George Ioannou, Managing Partner at experience design company Foolproof, a Zensar Technologies company

The financial landscape is ever-changing and banks are doing their utmost to meet existing and emergent customer needs, but could some be doing even more? Absolutely.

Here in the UK, we have a mix of financial providers that can largely be divided into three categories: incumbents such as Barclays, HSBC, Halifax, challengers like Monzo, Starling and fintechs like Moneybox who use things like Open Banking to meet unmet customer needs.

Bogged down by digital upheaval and organisational silos, traditional banks have been slow to improve this advisory area of finance, which will help their customers live flourishing financial lives. Until now they have rightfully been focused on meeting more straightforward customer needs digitally, but in 2022 things need to change.

Challengers have been applauded for better designed applications, exciting new features and their democratisation of finance. Their education of customers on savings and debt management is also heading in the right direction but still needs more attention.

The education opportunity 

Last year we spoke to 2,000 UK consumers, of which 20% said they’d seek financial advice from friends or family before contacting their bank. Looking into this further we found people seldom understand, or know where to look, for financial advice. As such, we’re beginning to see startups like Moneybox, Snoop and Mojo Mortgages (powered by Open Banking) stepping into the education space and filling the void.

What they do well specifically is education: they position their apps around better money management, and seek to educate people on how best to save, having established a complete view of a customers’ finances.

This view of a customers’ financial life comes from using Open Banking gateways used to access account information such as recent purchases or bank balances. AI then reads this data and makes proactive suggestions about money management whilst educating customers on the future benefits of taking action today. Both Snoop and Moneybox have education wizards that help customers along this journey.

The question is, what can both incumbent banks and challengers do to better educate their customers, regardless of financial status, or technological ability, to compete with Open Banking powered startups and establish and maintain long-lasting customer relationships?

Data is your friend

Banks can more accurately predict customer needs with the big data at their disposal. Banks, whether or not they choose to do anything with financial information, know exactly how much someone earns, when they go on holiday and how much they spend on leisure per month.

Moneybox has already put this data to good use, to power app-based learning, which is a step in the right direction. Others, such as Monzo, gamify this data, take their yearly round-ups. However, today, this feature isn’t especially meaningful, educational or actionable in its current form, nor is it going to drive sustained customer value.

Data comes into its own when it’s applied to the right context, and directed towards addressing a human need. To identify these contexts, speak to customers and gather their thoughts. One-to-one interviews are useful in this regard as well as more quantitative methods such as surveys and studying big data sets. It’s then important to think about customers from the point of view that they’re not just a banking customer: they are a Mum, and teacher for example. This will help banks build a rich and bespoke picture of who the experience is being designed for, what makes them tick and why.

Importantly, this approach will help to apply data much more effectively. If the teacher is wanting to retire early, and also put her child through University – the data, if applied correctly to the banking experience, should be able to help her reach these goals. That said, design will need bolstering with the right technical foundations, and must extend beyond an eye catching visual identity.

Customer loyalty thinking beyond data, design and feature sets

Data’s creative potential is untold – especially when we think about the future of banking. We know its power and some banks are “doing data” well.  The industry has introduced spending caps to help customers manage their money better, but it doesn’t stop there. The reason Monzo has acquired 5 million customers and counting in the last five year is multifaceted. What they and others such as N26 do exceptionally well is experience design (the look, feel, flow, copy etc.).

They also engineered experiences with features that, for a time, few other banks had. These features responded to a broader range of functional needs. They also cashed in on representing data back to customers in an eye-catching way and use this as a powerful marketing tool.

Then again, a bank can “look and feel” amazing but disregarding broader financial needs in the long-term will result in failure. This year, banks need to double down on digital investment and establish the right foundations e.g. technology stack and intelligence from data to further support and retain customers. Because it’s only with the right starting blocks that a bank is able to educate people and support their financial aspirations.

Humanising finance

Banks will also want to spend on both brand and marketing in 2022 to help them with this educational challenge. At present, too often customers don’t trust their banks to help them lead flourishing financial lives. Considered design, agendas of organisational change and a clear mandate for supporting education will help with this.

A good starting point is communication. In our experience, customers value an open and honest dialogue. Digitising previously physical documents is not enough. This means speaking to people like human beings and removing jargon. In doing so, a tone of voice will be established that’s approachable. This will avoid further instilling the idea of us vs. them. It’s in a bank’s interest to have customers on their side, so make them feel like they’re an extension of the brand. If a bank is unapproachable, or exclusionary, customers will likely go elsewhere.

The market standard for financial management is rising, customers expect much more than the basics. To keep up with the pace set by Moneybox – who’ve already enabled 700,000 customers to “save their way” in the UK – banks must act quickly and make a commitment to identifying, serving and surpassing customer needs. It’s one thing to meet those needs, and well within reach for most banks, but going beyond what’s expected drives even more value and changes the narrative for customers.

Banks need to experiment to get education right and foster an internal working culture that rewards failing fast, constantly testing and tweaking to deliver great experiences for customers. Together with data, this combination is formidable and should bear the fruit needed to fuel experiences that educate, satisfy and keep customers coming back for more.

In summary 

For banks, it’s all about creating the right environment and foundations to establish better educational experiences. Data is your first port of call: gather it and speak to customers to gain greater insight, this will help you direct the design of educational and actional banking experiences.

Once there’s an understanding of who is being designed for and the considerations have been made based on the details (remember the Mother/teacher example) set about serving a modular experience that speaks specifically to their needs.

In tandem, banks need to humanise their communications, image, and perception if they’re to build lasting educational relationships. Invest in marketing and brand work, align against a value and be bold enough to experiment.

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