Fintech is making personal finance an ever-present in people’s lives. Nowadays we don’t just visit our banks – we carry them in our pockets.
This has shifted what banks do far beyond the remit of traditional banking services. Increasingly, apps, websites and other digital platforms are being used to deliver solutions that improve the user’s financial wellness. Multiple services are being aggregated onto single apps.
This leaves financial services providers with a decision to make. Do we embrace the challenge of new digital opportunities and expectations – or do we stick to the old ways of doing things, at the risk of getting left behind?
Meet the digital providers shaking up financial services
If you’re anything like us, you’ll have noticed a marked increase in emerging personal finance brands gaining prominence and credibility amongst consumers. In almost every case, it’s all down to their digital services.
Here are a few examples that really impressed us:
Monzo – “a new kind of bank”
Monzo say they’re not interested in monetizing their customers by signing them up to mortgages and loans. Instead, they want to offer helpful in-app solutions like detailed expenditure breakdowns, budgeting tools and recommendations for cheaper service providers.
This may sound like a public-spirited approach, but it’s also business-savvy. In a decade’s time, the most popular banks will be those which do digital best. Monzo are anticipating this shift.
In our view, one of the most interesting things about Monzo is the banking intelligence it offers users through its app. For example, account holders can set themselves an advisory budget, and view their spending broken down by expense type (groceries, eating out, transport, etc.)
Intelligence like this can be highly valuable to customers – and yet, despite having all the necessary data at their fingertips, traditional high street banks are not offering anything that comes close to what Monzo does.
Yodlee – “helping people reach their financial wellness goals”
Yodlee is an up-and-coming provider of financial wellness solutions, particularly focused on affluent customers.
One of Yodlee’s products, the Okay To Spend service, uses an aggregated view of the customer’s accounts to provide real-time intelligence on whether or not they can afford to make a purchase, based on a projection of their longer-term financial activity. This is especially useful for investors, who could be paying out risky stakes on a regular basis.
Why digital transition is difficult for established brands
Here’s the bad news for blue-chips: implementing FinTech innovations is drastically easier for new brands like Monzo and Yodlee than it is for established providers.
Whereas a start-up can launch with a fully digitised offering, an established business looking to digitally transform may need to deal with legacy systems, change-resistant processes and customers who were not necessarily sold on a digital relationship with the brand.
This is a massive problem for established businesses in a wide range of sectors. And that’s why we’ve come up with some solutions.
How to implement digital as an established service provider
Successful transformation is all about offering something your competitors cannot.
The Royal Bank of Scotland did it in 1728, when they became the first bank to offer overdrafts. And in recent years, Monzo carved out a big market share with their superior digital services.
These brands achieved differentiation by pioneering an innovative offering. Today, established brands should be looking to do the same.
Adding value with new digital services
If you look at the mechanics of banking, you can only conclude that many of the processes involved are optimised to a very high degree. Transactions, for instance, are just about as fast as they can get – if a company could shave off a few extra milliseconds, would it mean anything to customers?
Providers must look to add value elsewhere – and Magpie’s job is to help them do just that.
We enable financial service providers to deliver their core product digitally, together with carefully selected value-added services. These keep customers engaged with your app, providing a continuous flow of actionable user data.
Magpie’s banking services
Magpie offers a catalogue of over thirty value-added services, ready to bolt onto your existing digital offering.
Here are a few examples which you might use to boost engagement with your banking/financial services app:
Allows the customer to manage all their financial accounts in one place – even if these span multiple service providers. Loan and pension accounts are included, as well as banks.
This is great for the customer, as it means they can review their finances holistically, without the need to open multiple password-protected apps.
For the provider, this ensures app engagement whenever the customer wants to check their finances – not just when they want to check the account(s) they hold with you.
Biometric Identification by Onfido
This service can be used to protect the user’s digital account with an optical ID check. It uses the device’s camera to check the user’s:
- Name, address, DOB
- Government databased
- Facial image against reference image
Biometric Identification is perfect for customers with high security needs, and is therefore popular as an add-on for premium banking products.
Cards and Documents
A secure, central repository for all your customer’s important documents. They get a safe, convenient place to keep important info; you gain insights from their document metadata.
One of the many terrible things about losing a wallet is having to call around all your banking providers to cancel each individual card.
With Lost Wallet, you can report a wallet-full of important cards and documents missing with the tap of a button.
This service comes equipped with an additional Emergency Cash feature. If the user loses their card/wallet, they can use it to send money to a pre-arranged location, such as a hotel. A Magpie agent then drops the money off within 10 hours (or within 5 in urban areas).
My Finances aggregates information from all the customer’s financial services – including banking, credit cards, loans, investments and pensions – into a single view. It uses this info to generate insights into the user’s financial activity over time, flagging up any potential problems.
Payroll messaging services for businesses. Can send messages to individual members of staff, e.g. to let them know they’ve been paid; or group messages to the whole team.
This is just one of many Magpie services that pair beautifully with business banking apps. Other effective ways to serve businesses include:
- Providing compliance services, like insurance add-ons and safety apps
- Administration tools, such as Cards and Documents (described above)
- Perks, such as Employee Benefits from Magpie’s VAS catalogue
The culture shift in how people handle money extends to every strand of financial service provision. Whatever your specialism, there’s opportunity to set yourself apart by offering pioneering digital services.
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Like this? Read our spotlight on apps and the insurance industry.