The Bank I Don’t Want To Live Without

The Bank I Don’t Want To Live Without

The Liveworker
  • The Liveworker
  • Service Designer

People's understanding of their personal financial situation is a complex matter. There are fixed and discretionary expenses, as well as daily and one-off costs. Also, people use a number of payment methods to manage their personal finance and are increasingly going online or mobile. These create new customer expectations, making their banking experience feel fragmented.

A new banking paradigm

Just two decades ago, person-to-person payments were made entirely by cash or cheque. At the end of the 20th century, online and then mobile payments took to the stage. Consumers now have plenty of payment choices, often involving third-party providers. As such, all banking related processes are becoming less visible to consumers’ eyes, making the process unclear and open to suspicion. People aren’t sure which intermediaries are responsible in the events of incidents or errors. People expect banks to proactively analyse their past, to facilitate their present, and offer advice for the future. The traditional concept of banking is simply outdated.

Flexibility and convenience are rated high in the priorities of people’s financial lives. Two in every three consumers consider it “extremely important” for a payment method to allow them to buy what they want, when they want it, through the medium they want. One of the reasons behind this trend is that half of the customers view shopping as an experience rather than a mere transaction. In this context, the bank is no longer a major interface between people and their money, and disappears behind a number of third-party providers.

Consumer's financial life

When people think about their financial situation, they focus on their expenses, investments and savings. They look into their current and future financial needs, but rarely their banks. The banks come into the picture only when they are needed to facilitate transactions. For example, when a consumer considers buying a house, the initial concerns are whether he or she can afford it and the consequences of taking on a mortgage. The bank is often among the last factors in the decision making process.

The financial situation of consumers can be broken down into four types of expenses, based on the scope of activities. They are Essentials, Household, Leisure and Future. In Europe, Household and Future concern most people. In countries such as Germany, the Netherlands and the U.K., people are most willing to get a loan for their children’s education. However, in Italy and Scandinavia, it’s more common for people to take on mortgages to buy a house.

Past, present and future of consumer's banking

While customers expect their banks to meet their current banking and financial needs, they are most satisfied when the banks can advise on their future financial choices based on their past and current needs and information. Research shows that half of the customers would engage more deeply with their banks, if they are supported to reach personal financial goals. Customers are seeking a proactive bank which is capable of advising them.

More than half of consumers expect their banks to use the information they hold about them to provide customised products and services that fit their needs, and to help them save. They expect their banks to recognise their past relationship, and to build better services on that foundation. People want services that are simple, secure, flexible, accountable and offer them more control. Half of all consumers seek advice from their banks on meeting their future financial goals.

Consumers don't feel attached to their banks

As more payment methods become available (e.g. Paypal, Google Wallet, Apple Pay), banks become less tangible, making consumers feel less attached. In an interview, almost half of the consumers think all financial services providers are the same. Most of them do remain with their banks, not because they are loyal to them, but because they can’t be bothered to switch. But they are very likely to switch, once innovative newcomers or “industry disrupters” come to the market.

Consumers seek banks for support

Even though the bank disappears behind a multitude of alternative online and mobile payment methods, in the event of an incident, consumers suddenly actively start looking to their bank for help and support. People expect their bank to work with them to solve the problem, sometimes to actively make them aware of it, and in general to behave as their advocate. One-third of consumers reported having a problem in the last 12 months for which they contacted their bank to seek support.

People don’t always do as they say. There is a fundamental difference between what people say in an interview, and what they actually do while being observed. When banks fail in customer experience, price or convenience, they really touch the core of what is important for people in the relationship with their bank. No preventive interview can gauge these situations, yet when they occur, more than 30% of consumers actually opt for closing their bank accounts and switching to competitors.

When customers have a payment-related incident, their banks suddenly become visible and indispensable to them. In these situations, people actively look for support from their banks, and expect them to be their advocates. A successful intervention has the potential of winning more businesses with the customer in the future.

Be the customer's advocate

Customer expectations of banks are becoming increasingly precise and sophisticated. One of the clearest emerging roles consumers wish their bank to take on is the one of advocate. They appreciate their banks to play this role most in times of incidents and to help them deal with third-party providers. Most importantly, consumers see it as the job of their bank to reduce the complexity of their financial lives. And lastly, they want their banks to correctly understand their financial needs and advise them on future financial decisions.