The birth of life stage banking
Whilst doing my daily trawl of the web, I came across an article that proclaimed how Bank of America (BOA) was turning life stages into products! Well, if you’ve seen me present or have read some of my views on where
banking is going, you’ll know I talk a lot about life stage and lifestyle banking and its where I think a lot of banking is headed.
This isn’t a new concept, but traditionally banks have done nothing more than package some life stage content with existing bank products (e.g. student, young adult, parent, seniors). On closer inspection it turns out that’s exactly what BOA were doing, just better than the author had seen any bank do before.
This is a far cry from really productising a life stage as a product. So, what exactly do I mean by this and is this a fantasy or is anyone really doing this? The best way to explain this is to use an example and for this post I’m going to use StorkCard.
StorkCard focus on the family planning life stages. After buying a house, raising a child is generally the next most expensive investment an adult makes, spending on average £150k between pregnancy and independence. With over 650,000 new-borns last year in the UK, this is a segment not to be underestimated. Diving deeper the main challenge for most is the first three years, before parents are assisted by schools with day care/schooling. In these three years parents face the difficult choice of stopping work and losing an entire income for three years or stumping up an average £1500/month for child care. This is some financial burden when the focus should really be on the joys of parenting not on finance.
Initially they have launched a family planning app that helps you to understand the costs involved in raising a child. Unlike BBVA’s generic planning app, StorkCard is much more advanced in personalising the budget according to the lifestyle and profile of the specific family. Their “active” plan is not a one-off budget, it actually learns from user input to become smarter with recommendations the more the app is used. The plan goes into a fair amount of detail right down to forecasting how many nappies and other regular items are required.
Immediately the difference is the depth of focus that Storkcard are going into to serve a relatively large niche market, where as traditional banks typically provide fairly high-level content wrapped around generic banking products.
Next on the horizon for StorkCard is a debit card that parents can use to track total expenditure on baby products and combining these with relevant discount offers from retailers. There are more financial products to come. Their approach is to identify problems that families don’t know that they are facing or are going to face, so it helps them with bespoke financial products to help solve their immediate problems as well as improving family financial health going forward.
Further still, engagement is at the core of their thinking, they are not here to sell a product and walk away. I love their concept of a family village, which is a social platform for parents to share and discuss parenting. Engagement is a topic I’ve also written about extensively and it’s great to see it in action with a real focus on the specific customer needs of this segment.
Behind the scenes of course there is a strong focus on technology, but they don’t aspire to be a technology company, just to exploit technology to the maximum to truly serve their customer base. Their solution is a mix of own developed and licensed solutions, the focus has been on where they can add value to the customer relationship using tech instead of re-inventing the wheel.
StorkCard aren’t just focused on banking products, its investing in providing valuable services and content and where possible, specialising in individual preferences of the parents. Hence, why it’s a perfect example of an experience driven bank, one that is focused on the total needs of the customer not just their banking needs. One that is service oriented and not just focused on selling product. One that is enabled through data and technology for driving true customer intimacy.
Traditional banks might not be concerned by their niche focus, but as more challengers focus not on “better banking” but to go beyond into experience driven banking they, soon could find themselves out of the majority of customers banking interactions. As I’ve highlighted before, MoneyCado, Hammock, and soon to launch AWSM (more to come on this challenger soon) are green shoots on what could be the real disruption in banking.
I’m not saying traditional banks will disappear, I’m just saying that finally customers will get help in managing their lifestyle or life stages with banking embedded behind a broader service.
Dharmesh Mistry has been in banking for 30 years and has been at the forefront of banking technology and innovation. From the very first internet and mobile banking apps to artificial intelligence (AI) and virtual reality (VR).
He has been on both sides of the fence and he’s not afraid to share his opinions.