Fintech companies providing easy, meaningful and useful mobile experiences
Last week, I wrote a story about what more financial institutions can do for consumers when it comes to mobile banking.
The story only really scratched the surface of what’s missing from today’s mobile banking experience.
Both my sources in the story agreed banks need to find a way to create and maintain meaningful and useful relationships with existing and perspective customers.
While that might sound like something out of the cliché handbook, it’s a real problem banks continue to tackle without resounding success.
Another real problem for banks: they no longer control, or even have, all the meaningful and useful financial relationships that consumers seek daily.
Over the past few years, the so-called fintech companies of the world have captured relationships with consumers that banks crave. And I can speak from experience.
What I wanted to do in this space is share with our readers some of those experiences. Right now, banks are paying attention to a lot of nonsense and not focusing on what’s in front of them: their current bank customers.
Investing in blockchain and AI is beneficial, but those are more long-term projects. Meantime, it seems banks are missing out on the proverbial low-hanging fruit.
Studies show time and time again that Americans do not put away enough money into a savings account for a rainy day, retirement, or an unforeseen emergency.
While most consumers turn to their respective banks to provide savings tools, some non-traditional financial companies are providing alternative methods.
Digit debuted in late 2014 and offered consumers a savings tool without much hassle. Consumers first link a checking account to the online service. Digit then analyzes income and spending patterns and sets aside small amounts of money into an FDIC-insured, non-interest bearing savings account.
Digit does have what it calls “savings bonuses” for its users.
“When you save with Digit for three consecutive months, Digit will automatically reward you with a 1 percent annualized Savings Bonus,” the company writes on its website.
Digit debits your checking account every two or three days once it determines your money flow. The idea is that Digit siphons away money you don’t necessarily need: $3 here, $2.50 there.
I’ve had months where Digit put away almost $100 without me thinking about it.
Digit did not have a mobile app when it started as users communicated with the service via SMS text. The service keeps savers updated with checking account balances and notifies them when it moves money into the Digit account. Users can withdraw money from Digit at any time without a fee.
The mobile app came later, but functions in much the same way as the SMS text communication.
Digit was once completely free but recently added a $2.99-per-month fee for its service after a 100-day trial. Personally, I didn’t blink when they added the fee. It’s money you don’t notice you’re missing when the service can easily put away $100 a month.
Acorns debuted in 2014 as well and is an investment app that does all the thinking for you. It follows a similar savings model to Bank of America’s Keep The Change program.
After consumers sign up for Acorns and link a checking account, credit card, or both to their account, the app rounds up every purchase and deposits it into an investment portfolio. Users choose between five different investment approaches and can monitor how their portfolio performs over time.
In addition to the roundups, Acorns gives users the ability to invest additional amounts at any time.
One of the things I found so attractive about Acorns is its simplicity.
Outside of my 401k, I don’t do a lot of hardcore investing despite my best intentions. But Acorns strips away the complexity of stock investment.
Speaking of investments, what about bitcoin?
I’ve always had mixed feelings about the popular cryptocurrency.
I understand why it was created, as an alternative to fiat currency. But because merchant acceptance has stalled, I never owned bitcoin to buy goods and services. I believe holding bitcoin as a pure investment play defeats its original purpose.
But, I couldn’t help myself in the past couple of months and bought a small amount of bitcoin through Coinbase.
Again, simplicity was key here because Coinbase’s app makes it easy for a novice to buy either bitcoin, Ethereum or Litecoin. All you have to do is link a funding source, enter the amount you want to buy in U.S. dollars and hit the buy button. Done.
The mobile apps that I’ve presented here are just a small sample of what’s in the market in terms of alternative financial services providers.
Another one I use is Lemonade, which offers renter’s insurance for as low as $7 a month. Again, another simple yet meaningful and useful financial relationship that I’m not getting from my primary bank.
So, looking back, what can banks learn from these examples?
Banks are investing in blockchain, but not giving their customers the option to buy cryptocurrencies. I’m sure there’s an excellent reason for that, likely regulatory, but is it an option banks should explore?
As far as what Acorns and Digit do, there are some similar bank offerings on the market, but I don’t believe they go far enough.
BofA’s Keep the Change program has been around for years, but it doesn’t compare to Digit, which has much more meat and usefulness to it.
One quote from my story last week that really stood out is what Urban FT’s Richard Steggall said about banking’s current state of innovation.
“The banks have taken on innovation,” he said. “A couple of companies found their niche and have provided genuine value in the industry but a lot of those people that came out and demonstrated innovation are not around anymore.
“Banks learned from that, they watched what happened, they took what they liked, and their in-house teams took those products to market. That’s the cycle you go through in any industry.”
When I compare my three examples to what I’m seeing at some banks, it’s clear some gaps remain with features and innovation. And what passes for true innovation these days is always up for debate.
Perhaps in the end, a large bank could gobble up an Acorns or a Digit. But it would be better for banks to truly innovate to secure and then nurture those meaningful and useful relationships with their customers.
Join us Sept. 18-20 in Chicago at the annual Bank Customer Experience Summit as we discuss topics such as mobile banking, how trending technologies can enhance the customer experience, how banks and fintech companies are playing nice, and more. There’s still time to register and join us in Chicago. Early bird registration ends August 18.