Archive for October, 2017

How banks can beat the tech giants at Data

October 16, 2017

It’s all about data ecosystems…

There’s a long tradition of using time in the bathroom to think and reflect. For the ancient Greek mathematician Archimedes, his understanding of how to measure volume fell into place when he was in the bath. For me, my most recent eureka moment came while I was brushing my teeth.

I had just bought a new, wifi-enabled toothbrush. It’s great. It gamifies a repetitive task and helps me to do it better. My new brush collects data on me and has an app that gives me insights – helping me to have cleaner teeth. However, this single data set after a while is ignored, another app bites the dust.

Clearly, in the future, Oral B could make a smarter brush that can detect the health of my teeth, even my mouth. More data points that together give a slighter bigger picture of my health.

But they shouldn’t stop there. There are hair brushes that monitor your scalp and hair; Fitbits that measure your heart rate, sleep patterns and stress levels; and scales that monitor and track your weight. So what if they brought these data islands together to provide a much more complete and detailed picture of your health? Now you could take all the information you have and combine it to start providing advice and even coach us to be healthier.

That’s when I stopped thinking about my teeth and moved on to where the big bucks are – banking. Aren’t banks too narrowly focused on banking data? With open banking they can get a broader picture of our wealth; however, the standards don’t apply to insurance, investments or other areas of our financial wellbeing. For a complete picture they also need more dimensions than the current data, like timeframes, goals and life-stage. Some Robo-adviser platforms do allow you to put in more data about you finances, but still we end up with just a view on our wealth.

Just as today we have data on various aspects of our health in silos, the same goes for our wealth, and many other aspects of our lives. What about our careers, our social circles, our knowledge/skills? What if we could draw it all together into one mega data ecosystem?

As more of our lives become monitored – the state of our cars, the food we buy, and the amount of sleep we get – the more data we can mine to help us to make the best decisions. Think of the value of having a dashboard that shows our wealth, health, home, social and other data ecosystems especially when these ecosystems interact. Imagine being able to predict your future income based on you career achievements, or medical bills based on your diet and exercise.

Less monetisation and more stewardship?

There’s huge value in these ecosystems of data. But it all has to be kept safe. Certain data accumulators, such as Facebook, are now being scrutinised on their use of data. And whilst bank reputations have been tarnished over the last decade of debacles, they are, however, still trusted with our money. Despite regulations making account switching easier, customers have not voted with their feet.

So maybe another opportunity exists for Banks, not necessarily to compete head on with Facebook to monetise customers by targeting, but to protect this data and provide stewardship of customer privacy. Tech companies like Apple and IBM see opportunities in between with “differential privacy”, which is monetising from insights that don’t identify individual users for direct marketing. Great article on this from Rana Fooroor.

Regulations like the General Data Protection Regulation (GDPR) are giving customers more control, so banks really need to work harder to make it enticing for customers to want to give up their data. Similar to how many of us download apps that we perceive as useful and give up rights to access our phone features, banks need to find useful applications that customers will want to give their data. If they can achieve this it will make their relationship stickier. For example Deniz Bank’s Kumsal service, in Turkey, allows small businesses to create their business website, upload a product catalog and customer database. They can run their business using apps from the bank to manage their expenses too. All this is valuable data, which could be difficult to move if they wanted to switch banks, all driven by a set of useful apps.

Where’s it heading?

The world economic forum report “Deep Shift” forecasts that 80% of us will have at least one digital presence online and that “In the future, building and managing a digital presence will become as common as when people decide how to present themselves to the world everyday through fashion, words and acts”. The future of banking isn’t about hard cash, or just banking data. The goal will be to take the sum of the data from the entire digital presence each of us has built through our smart toothbrushes, scales, etc., and find insights that allow banks to add value to customer’s lives.

So, the currency is changing and it is now the broader data ecosystems beyond banking whilst ensuring privacy is respected and value is returned to the customer.


Mobile Banking Is Dead

October 8, 2017

I saw a post earlier this week which asked what mobile banking would look like in the future. There were a few responses discussing personal dashboards, statements with PFM insights, chat banking etc. Quite frankly nothing new.

We’re moving from transactions to experiences…

As customers we manage our money for many reasons: day to day spend, saving for a rainy day or holiday, managing a home, going to university. For each reason we have different needs. Today, we have a single banking app that facilities data and transactions with the bank, the customer uses one app to service all their needs. Why do we expect that in the future one interface / experience will continue to manage all our money management needs?

In the future, you may have one account but many apps on top to manage your individual needs. You might use something like Monzo for your day to day spend so it helps you track your general spend. If you’re a contractor, you may use Coconut to manage your work expenses and invoices. You might use CLEO to interact more easily with your account or Chip to help you achieve specific savings goals. You might use Yolt to aggregate multiple financial products so you can plan your overall finances / wealth.

Whilst some of these are banks, others are aggregators. Open Banking will enable more aggregators as should a Bank’s API strategy. The point is that customers will benefit with better experiences from apps that are very good for specific money management needs, rather than a single general purpose app where they have to figure things out for themselves. For me, it is analogous to using email for all your communication needs. Today most of us use Twitter, Chat, Facebook, SMS and email all for different purposes and appropriate experiences. I already use Cleo and Yolt on top of my bank account and have no plans to change my bank.

Complexity kills apps…

Ever tried writing a formatted document in a mobile version of Word? Internet Banking apps can have over 200 features, and with embedded PFM and engagement features, over 350. It maybe that finding the most common features is super easy, but the other features have to be catered for if you really want it to be a fully self-service model. So mobile will be great for every day, not necessarily everything.

Today most customers have 1-2 products with their bank. However, if banks want to take advantage of Open Banking and become aggregators, then not only do the features go up but so does the amount of data to display and navigate.

It’s great to talk…

Using an app either on mobile or the internet generally means you have to understand and navigate banking features using the language (in menus and buttons) of the bank. One of the reasons why chatbots are gaining popularity is that you can speak your own language. A bot with really good Natural Language Processing will do the work to understand what you want from the bank’s perspective. So saying “Send Frank $50” is interpreted as Move Money or Funds Transfer from a banking perspective.  In addition to these the more progressed chatbots have a “personality” that can add a bit of fun to your dialogue, I really do enjoy Cleo’s little animation responses.

Mobile Banking is Dead

In conclusion, interaction has evolved and is continuing to at a pace. Mobile banking evolved from Internet Banking but the future is Experience Driven Banking not Mobile.