The Panel comprised of CEO's from Mint.com, SmartyPig, LendingClub.com and Credit Karma.
Andy: So with all the intermediary aggregation / content / experience services that are coming into the US market - are banks going to be around for much longer?
Lynette: Yes. Banks still own the money, the relationship and the banking licenses. We will have to be careful how we manage these relationships because these services are starting to intrude on the gaps left by the industry meltdown and ingrained inefficiencies.
Andy: Who do you think is the most exciting web player in the financial services space and why?
Lynette: Mint.com. They use the bank's information to add value and provide relevant content to our customers. It's perceived by customers as adding more value than we are. They take transaction data and turn it into customer engagement. What's happening with your fees? Who has the best credit card in comparison to what you already have? What are your spending / saving patterns? How do your spending / saving patterns compare to others?
Andy: So where's it all going? What direction do the banks need to take to fill the gap and better engage their customers?
Lynette: First step is just to get going. Start now. Don't wait. Have a plan. There are some interesting trends emerging:
- Social Saving / Goal based financial management (eg. save towards a goal, let your friends help you set and maintain goals or even set a goal to decrease spending in a particular category)
- Customer Communities (that allow customers to interact with each other, bypassing regulations around advice, and share knowledge, tips and insights - eg. share trading communities)
- Lending Clubs where customers are obtaining loans from other customers with middle-man services taking a cut (these "clubs" only arise when banks turn customers down due to credit risk).
- Transparency of credit scores and general education. Credit scores are no longer a mystery in the US and intermediary services are empowering customers with the knowledge to understand and manage their credit scores.
- Personal Financial Management. Tools like Mint.com which give users a deep and simple understanding of the financial health. Simplicity is key. This isn't a book of accounts - it's a pie chart and a word cloud. And it's prepopulated.
- Open anonymous aggregation of user data. Allowing users access to behaviour trends and insights that can be gained from transactional data. Eg. Who spends as much on alchol as you do? What are the average bond repayments in your area? What type of loans are taking out and how quickly are they paid off?
Andy: To what extend do bank's need to worry about engagement / social media?
Lynette: Without a plan in place? Banks should be having sleepless nights. You need to be able to communicate on all possible channels. That means from SMS to telephone calls to Twitter. People have their favourite channels and you need to be there. The problem for all banks is how to manage this due to high volumes. Engaging on digital chanels isn't necessarily the same as using a Call Centre. It takes a different kind of person, different processes and different technologies. That menas that it's not going to be a cheap exercise. If it's occuring in the US now - it's round the corner for South African / African institutions.
Andy: Final thoughts so far?
Lynette: The biggest aha moment for me was realising the power of our current relationships with customers. And the threat that those relationships are under. If we allow intermediary services like Mint or SmartyPig to own those relationships, banks will be left with the transactions. Just machines that process data. How much fun would that be?