Banking on spreadsheets
Banking has gone through a huge amount of change when it comes to customer access – from paper “passbooks” and plastic cards to the internet and mobile banking.
However, although the way we access our money and account information has changed, little else has really changed.
Yes, the security is much better. I remember when I first started working for a bank and branches had to check signatures that they held on paper cards at the branch. If you went to a different branch, they had to fax (yes, remember those devices that sent copies of paper documents across phone lines?) the signature card to the other branch to check.
Having only just left college (I never went to university), I asked a dumb question: “What if a member of staff replaces the paper card with one their friend had signed? They could then give them a cheque book and the signature would be verified correctly by whoever was on the cash desk?”
After an intense interview by the branch manager asking why I had imagined such a scenario, I narrowly avoided being fired.
Now we have biometrics and two-factor authentication, but has anything changed about how we bank? I didn’t think so, but there are a few things I no longer do. When I first started banking, I used to check my statement, line by line, every month. I’d ensure I recognised every transaction and the amounts were right. Even with all my household bills my statements were never more than two pages. I used to take £20 out in cash at the start of the week and that was enough to cover ad-hoc expenses for the week (we didn’t really drink as much coffee then).
As plastic was introduced, I set up a separate account for my ad-hoc (discretionary) spend and stopped checking transactions for that account. Today, I don’t get statements and I only really scan my main account to ensure I recognise transactions every now and then.
Internet/mobile banking has negated the need for me to visit a bank, though there are some things you still have to go to a bank branch for and some things I prefer to do in a branch. For example, recently we moved house and I had to go to a branch to complete a paper form for the transfer of my deposit. This gave me some comfort that somebody I could see was checking such a large transaction was being done correctly.
So, what else could be different? What are the neobanks doing that hasn’t been replicated or made almost as easy by traditional banks? I fail to see the compelling reason to switch banks. Especially when trying to get hold of an actual person in a neobank is so difficult, if indeed it is actually possible.
There are a number of neobanks and fintechs providing supposedly better money management features, however my bank had “personal finance management” years ago, and after my initial curiosity this failed to provide me any benefit.
At AskHomey, we recently surveyed our pilot group of users and like me, many of them were still using spreadsheets! Some of us review our “annual financial plan” – what we think costs are going to be over the year. Mainly this helps us to understand what money we have left to save, invest or spend.
Our spreadsheets help us to understand “peak” months of non-discretionary spend, so that we can ensure we have enough in our accounts for colder winters. Some of the group use their sheets to manage spend on a monthly basis, carefully ensuring that enough is in their account and every non-discretionary spend is accounted for.
Some may be lucky enough that they don’t care about how much goes out the door, but that is not the case for the majority. With rising interest rates and the cost of living set to rise significantly, the ability to plan our spend is going to become more important than ever.
However, the budgeting capabilities of fintechs and banks do not mirror the way that many of us manage our money. Why has this problem not been solved? Why are so many deferring to spreadsheets? For those in financial difficulty they can get help with planning from Citizens Advice in the UK and their advisors also use, guess what, a spreadsheet!
I’m not saying nothing has been improved by fintechs or banks. I’m just saying there is more to be done and specifically in helping customers manage their money better. Those with money will see the value of their cash eroded by inflation and will need better investment advice at a time when equities are looking very pricey.
Meanwhile, those with less will need help with financial planning and managing their money as there will not be as much left for discretionary spend. In the UK there are over 250,000 people that start every month knowing their income will not cover their basic needs.
I’m just saying with the dark clouds of inflation and cost of living rises looming, banks and fintechs need to step up their game to serve customers better when it comes to managing their money. I for one would love to stop using spreadsheets!
About the author
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.
He is CEO of AskHomey, which focuses on the experience for households, and an investor and mentor in proptech and fintech.
Follow Dharmesh on Twitter @dharmeshmistry and LinkedIn.
Read all his “I’m just saying” musings here.
I’ve upgraded my basic excel for a pivot table to categorise spend to reflect neo bank offerings 😉
The UK system of “free” in credit banking unduly penalises the 250000 you mentioned e.g. the recent “simplification” of overdrafts that lead to 40% rates. The sad fact is that overdrafts are a reason, but a barrier to switching. When there’s an expectation of obtaining credit, retail banking is a utility business that rarely satisfies its customers. Bnpl & crypto are slo mo car crashes in progress (IMHO).