Last week, we hosted a much-anticipated online discussion on the now and next of personal financial management tools: four digital transformation practitioners weighed in on why the first wave of PFM tools fell short of expectations and how PFM 2.0 could right this wrong. Here’s the full recording for your watching pleasure – and four expert takes on how to make digital money management apps work on both sides of the screen.
Get ready to compete for screen time
Open banking has set off a seismic shift in financial services, rapidly redrawing the competitive landscape. Today, all sorts of players are battling for customers’ screen time, whether they need help with budgeting, wealth management or trading in stocks and cryptocurrencies. The majority of millennials and Gen Zers have probably never used fewer than four different apps for money management. And in the Game of Screens, whose app is downloaded and used more will ultimately separate digital laggards from digital leaders.
Customers aren’t looking for complexity. All they want is their key financial information on one screen.József Nyíri, VP of Business Development at W.UP
What’s on those screens, of course, plays a key part in winning over customers. The reason why first-gen personal financial management tools failed, W.UP’s József Nyíri said, is that they simply hadn’t been designed to make people’s lives easier. It took a lot of time and manual input to set up and use them – in exchange for little to no value. “They weren’t automated or personalised – the two most important things any money management app should be. Customers aren’t looking for complexity. All they want is their key financial information on one screen.”
Build digital leadership and trust the process
Technology is far from being the only thing that’s ripe for an overhaul at incumbents. Shifting to an agile, digital-first mindset, from top to bottom, is also long overdue. “Sometimes agility requires leaders to say ‘Let’s go’ and put some faith in moving forward,” explained Backbase’s Pierre-Alexandre Boulay. Time to market can make or break digital transformation and banks’ efforts to deliver value to customers.
In no small part because customers expect speed. If a bank spends 24 months on vetting vendors alone, there’s no way to deliver on that expectation.
Speed of decision-making and speed of delivery are key to meeting customers expectations.Pierre-Alexandre Boulay, Head of Software Sales - CEE & SEE at Backbase
Meaning that any digital transformation roadmap should start with a candid, honest reflection on internal processes, including procurement, legal and compliance procedures, and how to make them more agile. Boulay pointed out: “Do you think N26 took two years to select Mambu for their core banking system? Absolutely not. Speed of decision-making and speed of delivery are key to meeting customers expectations.”
Forget tools, focus on ecosystems
With the pandemic still in full swing and in-branch banking on the decline, getting market share has never been harder for traditional financial institutions. Other hurdles to overcome include patched-up legacy systems, cumbersome digital onboarding processes and apps that lack basic capabilities, let alone real-time, personalised insights. Can a shiny new PFM tool possibly solve all these woes? Unlikely, unless it’s developed as part of a well-thought-out ecosystem, Boulay warned. And a gamified one at that.
Ila Bank in Bahrain or Discovery Bank in South Africa, for example, have recently launched digital solutions that take a behavioural approach to banking by rewarding customers for good financial habits. Users who never miss their loan or credit card payments can get discounts on services like UberEats or gyms, dynamic savings rates or better interest on loans. “This is about to become the norm in banking. It’s time that incumbents went from reactive to proactive when it comes to personal financial management.”
Don’t just serve customers – empower them
Thanks to big tech’s relentless pampering, customer expectations have been on a steady rise for years, Bruno Macedo, head of delivery implementations at five°degrees, pointed out. Amazon knows us more than we know ourselves. It doesn’t only track what books we’ve read but also what we’ve highlighted, copied or looked up in the dictionary. The retail giant uses the insane amount of data it’s got on us to enhance customer experience at every touchpoint and keep us in the loop about purchases, shipments, delays, returns and subscriptions. In other words, it empowers users by offering them full visibility and control over what matters to them. If banks want to play catch-up with digital leaders, giving more power to customers can be a winning tactic.