After a decade of bad experiences with a particular Spanish bank, I moved to First Direct. My prime motivator being that I thought their black cards were cool. (I’d also heard that their customer service had won many awards.) First Direct treated me well. I recommended them to friends and I generally had a great time. But being a bit of a geek with a particular love for apps, dashboards, brilliant shiny things and bulletproof UX design, I wanted better.
When I joined Kyan in April, most people here had a Monzo card... because we are a forward thinking tech agency who will settle for nothing less than brilliant shiny things. Of course, the hot coral pink card was a brave leap from my monochrome wallet sensibilities, but the features, the app, the community and the general excitement around the brand won me over in no time. I trusted my peers and within days I’d gone #fullmonzo.
Four months on, Monzo and I are very happy. Never in 34 years would I think I’d get this excited over a personal finance product. I now genuinely enjoy managing my money, interacting with the Monzo community, and seeing new features added to my banking app on a nearly weekly basis. Honestly, Monzo have achieved more for the user experience in three short years than most big banks have in decades.
But enough Monzo fanboying... there was another itch I was keen to scratch. My pension. Last year I decided to use one of the big publicly-listed pension providers to consolidate my various workplace pensions and current personal pension into one unified pot. If you've changed jobs more than a couple of times, this is worth considering, as you'll have previous pensions dotted about the place and, in my case, some pots that you didn't even know you had. The marketing made it sound easy, but it really wasn’t. (Marketing, eh?) The consolidation took months; there was paperwork, lost post, phone calls ("you are four thousandth in a queue of four thousand"), and worst of all, I had to remember how to use a photocopier.
The app experience was, again, okay. Long loading times, multiple login portals, and poor UI design which just felt like a clunky web interface pulled into some kind of iframe in an iframe in an iframe. So I thought it was about time I ‘did a Monzo’ and looked for a better alternative. I found PensionBee — an app-based solution for consolidating previous pensions. I’d already done the latter part, so the benefit of moving to PensionBee, for me, was purely the interface and the app experience. And maybe in-part, the excitement of managing my income and pension through two relatively new services that were entirely unheard of 4 years ago. Hardly punk, or sticking it to the man, but exciting nonetheless.
PensionBee is plain-speaking and incredibly easy to use. Your pension itself will be with BlackRock, Legal & General, or State Street. So essentially you are really just using a traditional provider through PensionBee’s service. Not a bad thing. In fact, this makes more sense to me. Let the digital experts build the app, let the investment experts handle the pension. But this did make me a little concerned for PensionBee’s longevity, as they don’t actually allow you to take out a new pension unless you are consolidating old ones. But I imagine they operate not too dissimilarly to an IFA, earning commission or a fee on every new pension they open on behalf of their customers.
Now fully set-up with Monzo and PensionBee, it led me to wonder what makes it so seemingly easy* for startups to build great products in industries that have been dominated by slow-moving enterprise businesses for so long.
*I realise it’s not easy at all
Big banks = Legacy systems
Having worked with numerous financial clients and banks in previous roles, I’ve seen too many clunky, multi-tiered systems to count, tied in to long processes and red tape that can ‘get in the way’ of overall innovation. Legacy systems on top of other systems make for an infrastructure that can be incredibly difficult (and expensive) to change. TL;DR: a whole lot of "computer says no".
Risk of alienating customers
The moment you start changing everyday banking products, more matured customers won’t like it and probably won’t immediately recognise the need for change. This is a fairly generalist statement, but if you poll the age range amongst the customers of ‘disruptive’ banks, you’ll see what I mean. Disclaimer: not ageist.
The M word
Millenials are growing up with years of experience already under their belts with using great apps on powerful devices. Your average Joe/Jo can easily identify a good digital experience from a bad one. Who better to build finance apps for homescreens of the future?
Building a fanbase
I touched on the community aspect of Monzo earlier on. They have fostered a cult following who actively engage with the bank through social channels in a way you'd expect to see with a football club, except instead of new players being signed, new features are being rolled out to much hand-clapping. 👏🏼 Personally, I think this kind of rapport with your customer base is invaluable and is a real shift from how banks have held customers at their mercy in the past. However, this isn't unique to Monzo. I spotted the following comment from Metro Bank's CCO, Paul Riseborough, in The Fintech Times.
"Metro Bank has one true north: create fans. This means every decision we make either reinforces the brand and turns customers into fans or it doesn't. Our job is to ensure the decisions we make deliver customer service that is tangibly different to the competition."
Innovation is slooow
Like turning a tanker, it takes a long time to change a product as widespread and embedded as a high street bank’s core app. You need buy-in from multiple stakeholders, you may even need to hire new teams, or secure additional funding. Surprisingly hard even for banks, who literally are money.
There are a dozen analogies I could throw in here. Sticking it to the man. Rooting for the underdog. Etc. I imagine it feels quite good to pick the new kids on the block over the bank that your parents use. It’s a very small act of rebellion, especially amongst the current political climate. For me, at least.
You don’t seem to realise just how relevant and important transparency is until you see it in action for yourself. Monzo’s Twitter feed is refreshingly open and honest, providing information around their service, their roadmap and even their financials. PensionBee go one step further, calling out bad practice in the pension world as it happens. Ballsy.
High street banks are slowly but sure rolling out competing products and features too:
- Artha by First Direct, for customers and non-customers, thanks to Open Banking/PSD2
- This is as far as I got with my list. There really isn't much else out there 🤷🏻♂️
However, I was impressed to see Barclays and Halifax providing services and courses for computer skills, coding for kids, and financial education. More of this please.
Don’t get me wrong, the big guys are doing things very right in many areas. Case in point; Barclaycard. When our card was cloned a couple of years ago, you’d have thought we’d just returned from a peacekeeping mission. Flowers, wine and a warming letter saying sorry, when it wasn’t even their fault. Customer service is great in big banks, because frankly it has to be.
Interesting piece on scaling from @monzo, whose goal is to have one customer ops team per 100,000 customers. The average bank has one per 3,000 customers. That's called having faith in your product. 💪🏽 https://t.co/PMzasV9z9c— Ben Horsley (@benhorsleyco) August 1, 2018
BUT, service is more than just customer service. And that model is set to change anyway, as audiences become inherently more tech savvy and products become more intuitive, there will be a lesser reliance on in-branch and over the phone services. (And hopefully photocopiers too.) The core services that a financial provider offers need to be innovative. Let’s not dress it up as a banking revolution, or the great fight of startups VS enterprises, or amazing breakthrough products. It’s a simple and organic evolution that all businesses need to go through to stay relevant and offer their customers the best overall service. And that’s what I am growing to love so much about the Monzos and the PensionBees — it’s a great product, and a carefully designed service around that product.
It should be a no-brainer for any product team. To echo what our Olly, our Head of Partnerships, says during his Campus talks, “There’s no such thing as fintech.”
Innovate or stagnate.