Pepper CEO: Banks should provide tools for users’ financial empowerment
EXCLUSIVE: Banks and financial services firms can play an important role in helping their customers in understanding investment, trading, savings and utilising their finances, but must do so through tailored services and empowerment, rather than hand-holding.
That’s what Michal Kissos Hertzog, CEO of digital bank Pepper, tells FinTech Futures.
Pepper, launched by Israeli lender Bank Leumi in 2017, commissioned research into the financial literacy in the UK, and found that 93% of Brits feel that they are under-educated when it comes to personal finance.
The survey also found that 67% do not feel well-equipped to make the best financial decisions for themselves, while 47% believe that it is their bank’s responsibility to help them.
While Hertzog believes that banks should not take over the role of educator from governments and schools, what they can do is provide their users with the right tools.
“Schools, colleges and universities do need to take a role in educating people on finance,” she says. “It’s not a role that banks should take upon themselves. Yet what they can do is give people the tools to have make better decisions regarding their money.
“For example, if a customer is in their overdraft a bank could advise them of ways out. It could say ‘this is the issue, and here are three ways of solving it and getting out’.” The app is giving the tools to make the right decision, not telling the person what to do.
“If the customer wants, they can stay in the overdraft as that is their decision.”
People have turned to technology companies to help them in the scheduling of their daily lives, with reminders for friends’ birthdays and important events, the Pepper report writes, and banks should be careful in thinking that they have a monopoly on consumer trust.
Despite scandals like Cambridge Analytica shaking consumer trust in tech firms, their grip may be hard to break. Hertzog says customers “will [turn to] their banks” but it’s not enough to just lean on that.
“People are trusting and will continue to trust the bigtech firms as they push deeper into finance. I’m sure we’ll see more of that this year. The banks are acting as collaborators with this. Google is with Citibank, Apple is with Goldman Sachs.
“If you’re not flexible enough to react to a changing environment you won’t be relevant anymore. This is why banks are changing, this is why Pepper was built within Leumi.”
For Hertzog, it’s a case of building the services and allowing users to take advantage of them. “If you want your customers to be make more educated decisions, they will be able to figure things out by themselves based on your product. This is why it needs to be simple and easy to understand.”
But banks shouldn’t stop there. “It’s great if you send your customer notifications about their personal finance but if they have loans then you should do that with loans, if they have mortgages then do it with mortgages.”