Because of technological possibilities and consumer instant demand, services are getting faster, more seamless, it is about getting all the friction away.
At Moneyou we like this. Because in banking there is still lot’s of friction. Still people have to fill in forms, go to branches, speak to non-objective advisors. We have it as our product mission to cut friction away and improve the digital customer experience for instance in the onboarding. It is our purpose that we want to enable our customer to handle their finances with confidence and independency. We believe they are capable of making the ‘smartest’ financial decisions themselves. Does that always have to mean that fast, less friction is a good thing?
Triggered by recent development in e-commerce, m-commerce and the innovations in the payment industry much emphasis is on fast check-out. Amazon (Go) is probably the best example both offline and online getting the payment as an experience in the background, invisible. The question is: Will you still feel the value of the transaction at that moment? With money being physical, cash, this is built-in. And if you have enough money to spend and you don’t fall into the pitfalls of commercial seductions frictionless if fine right? But what if you have a very tight budget and like many of us you love to have that instant feeling of a good deal? People often are irrational when it comes to financial decisions. (link: behaviour economics newsletter)
Recently, the NS the Dutch railways, improved their customer experience big time with NS Flex.
Nieuw: #NSFlex. Net zo flexibel als jij. Zo betaal je al je reizen aan het eind van de maand, reis je met al het OV en ook de OV-fiets en kun je per maand je korting aanpassen. Ontdek alle voordelen van NS Flex.
Of course, as a customer and an innovator I like this new service. I have always hated the top-up services, pre-paid debit cards, wristbands, where you have to put money on every now and then. For most of these services my solution was to connect it to my credit card for an automated payment. But the one thing I don’t like about credit cards is that the amount often comes by surprise. I KNOW I was bound to pay, but I DID NOT really count on it, reserve for it explicitly. This will also apply for the increasing amount of subscription services like NS Flex. My children for instance tend to think traveling with NS is for free, because I am using a special plastic card. Of course I explained them carefully how it works and this might be an exaggerated example, but it underlines my assumption:
Because of the subscription economy customers feel less the financial pain of the service, forget to reserve and risk a nasty surprise at the end of the month. High customer experience of the service, but more financial stress.
If this assumption is right, then there is lot’s of room for innovation. Helping customers to prevent surprises and improve financial confidence. E.g. getting clear insights of all your subscription spending and alerts to reserve, time the debiting. There are many fintech startups active in this field and more and more banks are aware of this (latent) need. But what is the solution that works in practice? At Moneyou we are experimenting how our ‘wallets’ (potjes) could support that. Setting money aside (that is friction already) for all you subscription services, direct pay from/ debit on that wallet might improve the experience and financial confidence. I believe that in specific cases it will be common to add friction, as an explicit step to KNOW what you are doing before you ACT. At the end, you make the financial decision as a customer, you are in control. Not the banks, but also not the ecommerce companies. The bank, that is you!