That’s what I hear when I tell people that I’ve just spent the last two years building a new digital bank. And they’re right, their existing bank has had an app and a website for years!
Most traditional bankers would also say that they do digital banking! They’ve been selling current accounts, credit cards, and loans with targeted digital advertising; increasing customer satisfaction with their apps, and dramatically decreasing the costs of servicing customers through their ‘digital channel’.
And despite what you might have heard, most people are also reasonably happy with their bank. They trust their money is safe, they have an app, and although they may sometimes complain about being caught out with hidden fees and charges, they aren’t running to the competition. The annual switching rates for banks is about 3%, and in a recent CMA survey 37% of people reported that they had been with their bank for more than 20 years.
So how will the next generation digital banks succeed, if the big banks are already digital and customers are happy?
Through hundreds of customer interviews, leading the product and proposition development at Mondo, I’ve found that most customers do generally think that their traditional banks are OK, But the conversation gets much more interesting when you ask about how they manage their day to day finances.
At that point, they give you a shrug, before diving into crazy stories of how difficult it is to manage the glide path between pay-days; deal with overlapping annual, quarterly, and monthly bills; save for holidays, open joint accounts with partners, and try to spend less, save more, and basically keep control of their money.
The problem is that what we we think of as digital banking today is actually just digitized banking. In the same way that putting a copy of a newspaper onto an iPad is not digital news, selling ‘albums’ on iTunes is not digital music, and getting fast access to taxi numbers is not digital transportation; looking at a digital copy of your paper statement and account balance just doesn’t cut it any more!
Digital is not just a new channel among many; it can turn traditional ‘dumb’ financial products into real-time intelligent contextual services that make customers lives much easier.
“Banks should be less like bad landlords and more like great waiters.”
So rather than providing cryptic statements and basic transactions – while making profits from customer’s mistakes – the customer proposition I developed at Mondo follows a different path.
Next gen. digital banks will provide intelligent services that make customers lives easier, save them money, and help them feel more in control, while dropping the punitive fees and charges that traditional banks apply.
From letting you know that your electricity bill is 30% higher this quarter, to advising that you are likely to run out of money 4 days early; from smoothing bumpy annual bills, to making that habitual balance check on your way to work unnecessary; there is a whole world of new intelligent services that will provide everyone, rich or poor, with the digital equivalent of a personal banker.
And of course this only becomes more powerful as banks like Mondo work with a growing community of customers and fintech partners to build additional services: integrating savings, borrowing, investment, and analysis into the banking app through secure digital interfaces (APIs).
So yes I tell them, your bank has an app, but you’ll look back in a few years and realise that it wasn’t digital banking. And like any big improvement, you’ll wonder how you ever lived without it.