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Predicting future of financial services

In the early years of the internet, the emphasis was very much on functionality, whether it was to find information, make a purchase or communicate with others without having to resort to writing a letter.

Now, though, people increasingly look to use the power of the internet to gain additional insight into habits and trends, and link up with devices, such as Fitbit, to drive behavioural change. Predictive services based on a user’s browsing or buying habits, demographic data or geographic location are becoming more common. More forward-thinking companies are already using this kind of service to differentiate themselves from the competition.

The banking industry lags behind other industries in leveraging the potential that comes from such insight-based activities. “Banks have historically served the huge amount of data they have about customers back to them in a relatively benign fashion, giving people at best a rear-view lens around how much they spend,” says Travers Clarke-Walker, chief marketing officer, Fiserv International.

The technology exists for banks to use this information, with customers’ permission, in a much more incisive manner. One example of this would be to allow customers to see how much money will be in their account in a week’s time, once any regular payments have gone out and salaries or other income come in. “Even that isn’t so relevant, until you add a use case – so will there be enough money in the bank on Saturday to take the kids to the amusement park or do I have to take them to the local park?” says Mr Clarke-Walker.


Another way in which banks could better engage with customers would be to use their location to provide additional services or even offer relevant financial products. “If I were to open a banking application on the forecourt of a car dealership, there’s a pretty good chance that I’m there to look at vehicles,” he adds. “The banking application could allow customers to photograph a vehicle identification number in a windscreen and value that car for them, and then give them a decision around whether or not they would be able to take out a loan.

“A good example of a Fiserv client who is already thinking this way is America First Credit Union. In 2014, the credit union implemented capabilities that enable mobile banking app users to receive location-based offers for retail purchases or apply for a loan from their smartphone. Benign data that is served up in a straightforward way can facilitate a great degree of interaction between a customer’s financial life and their real life.”


Mr Clarke-Walker introduces the concept of “financial DNA”, where banks can use the information they have about individual customers to provide a range of services based on their customer profiles and spending history.

Location-based activity could also be extended to ask customers proactively if they want to change their preferences when they travel overseas. “If you open an app in a different country, it’s perfectly reasonable that the app might ask if you want to limit spending on your card,” he says. “In the United States, they still don’t have chip and PIN particularly well embedded, so you might want to limit it to less than $100.”

Engagement driven through insight and prediction is an enormous market opportunity that can deliver a much richer, deeper and more sustainable experience for the customer

These types of location and insight-based activities can be extended to the fraud management process both behind the scenes and with the customer. A push notification that asks if the customer is actually in a certain city making a specific transition provides reassurance to a customer. The same goes for the simple idea of an app running geo-locational services in the background. The app can confirm to the fraud engine whether or not the customer’s phone is also at the same location, thereby reducing the likelihood of placing a hold on a legitimate transaction.

Banks could even get involved in the kind of behavioural change activities that are now becoming commonplace in other areas. For example, people compete against themselves or others to become fitter, eat more healthily or change their lifestyle. “Fitbit doesn’t do an enormous amount of prediction, but it is incredibly good at nudging you into a behavioural change by saying ‘people like you did more of this yesterday’,” says Mr Clarke-Walker.

“That is also relevant in financial services. It could just be knowledge. It could say, ‘You’ll have £200 left at the end of the month, but if you spent £5 less a day you’d have this amount more left at the end of the month’. Customers could accept the challenge and the app would monitor spend patterns then provide push notifications to help them stay on target.”

The advantages to banks of getting involved in this kind of activity are clear. Firstly, there’s more and better engagement with customers, which in the longer term means more customer loyalty and greater uptake of products. “Most banks would recognise that engagement is born out of the quality of the experience the customer has,” he says. “So if you give customers great experiences, particularly in their mobile banking services, their engagement will be higher.”

Increasingly, banks will also have to offer such services if they are to remain relevant to customers. Mr Clarke-Walker suggests the typical customer may have as many as 50 or 100 apps on their mobile devices, but only regularly use ten. One of these is likely to be a mobile banking application, but these will start to compare unfavourably with more engaging apps if such additional activities are not possible.

“Banking apps are resilient, efficient and fantastic with fraud management. Their growth has been amazing and banks have had to manage that expansion,” he points out. “But if we’re going to start to think about what is next, then engagement driven through insight and prediction is an enormous market opportunity that can deliver a much richer, deeper and more sustainable experience for the customer.”

The good news for most banks and financial institutions is that the technology to engage in such activities already exists, and typically it can be tailored to different budget and resource levels. “Technology can give financial institutions an enormous competitive advantage,” Mr Clarke-Walker concludes. “Most of the experiences we value have in some way already addressed supporting behavioural change, insight or prediction, so this is clearly the direction of travel. The possibilities for financial institutions and their customers are tremendous.”

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