Banks play a key role in helping people manage their money. But in the digital space they haven't always made it easy for the average customer, and as a general group haven't always been seen as particularly user friendly! Whilst online banking has been around for over a decade, it hasn't evolved much in that time. Exhibit A, the bank statement - which for most banks hasn't changed much in format or function since it was handwritten, even as it has made its way onto different devices. The official copy format is regulated, sure, but the way that transactions are shown on screen outside of the PDF hasn't changed either.
But this is changing. Recently several banks have been adding features to their online banking and upgrading the experience, with some banks even completely redesigning online banking to be really user-centric.
So what's driving the wave of change in online banking?
Ever increasing customer expectations are putting pressure on banks to keep up with the other brands in consumers' lives and create more engaging digital experiences. Adding to that, in recent years there has been an increased focus on relationship banking; banks are now competing to capture the full customer relationship and to do this they need to be seen as trustworthy, helpful, and on the consumers' side. Lastly, since the economic downturn and with the rise of online forums, financial awareness is increasing. Combine that with the regulators' drive to make switching banks easier, and customers are becoming increasingly picky when it comes to who they bank with. They will swap if they are not getting a great deal or a poor experience.
One area several banks have invested in to upgrade their online banking is Personal Financial Management (PFM), which can be generally summarised as a set of tools that help people organise and manage their money. It's by no means a new thing – some non-bank solutions have been around for a while now and several banks have had solutions out for a few years. Solutions have also evolved over time, for example to automatically categorise transactions based on transaction codes and reference rather than relying on the end customer.
But have the banks really cracked it yet?
For many banks, PFM has been done as a separate 'add on' service, whilst keeping existing online banking features. But really, PFM should be less about an 'add on', and more about a way to transform online banking into a more intuitive, engaging, personalised and helpful experience. For example, banks could transform a standard savings account summary into an engaging tool that lets customers add pictures or details of their goals, as well as letting them calculate how much they need to set aside each month or how long it'll take them to get there.
PFM should be all about making life easier and have a positive impact on how customers manage their finances. Existing solutions have attracted an already financially savvy audience, but for most people, checking and planning their finances is a bit of a chore. So how can PFM become not just accessible to and usable by the masses, but engaging for them too? If done in a user-centric way that integrates with and evolves current online banking sites, PFM can work really well.
PFM can be powerful in helping people achieve the things they want in life – whether that's getting their house deposit sooner than they thought, helping them plan how to fund their wedding, or helping them save for an extra holiday. Banks want to be there for these key life moments and this is a chance to help their customers plan for those times.
It is key to understand customer journeys and the role that PFM can play. For example, it is much more valuable to tell a customer at the point of purchase whether they can afford the item they are about to buy or how much budget they have left for those types of purchases. User testing is key to understanding whether PFM tools are hitting the mark.
So PFM can provide a way for banks to win customers and build better relationships with their existing customers, through demonstrating a genuine understanding of customer needs, providing an engaging online experience, and making sorting finances less of a chore for customers. The banks that will win will focus on not just the user experience but also the value they can add as a bank – how can they recognise individual user goals and help them to achieve them through the services, expertise and products they provide?
The race is on to nail PFM and build brilliant next gen online banking experiences!
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