Beyond the single customer view
Those of you that know me well know I like running.
As a runner, I’ve seen the evolution of running technology, starting with simply using your watch to time how long you’ve been running and judging distance by driving the route in your car if possible.
Next came step counters and then GPS watches. My first GPS watch could just about last for a couple of hours and only tracked my distance and time. Over time, the battery life improved and screens got better, then increasingly they became smartwatches with apps.
My current watch shows maps, gives directions and measures my heart rate, V02 max, stress, sleep and much more! The range of data and features is vast and I’m probably now only using 10% of the available features.
However, even with all this data, I’m still missing a lot when it comes to having a full picture of my health. For that, I’d need another sleep monitor because I don’t wear my watch to bed. I’d need something that understood my mood, something else that tracked my blood glucose levels.
I could go on, but my point is that our finances are quite a bit like this: lots of data about one area, with others covered by different apps/organisations/products.
Let’s say that at some point in the future open finance fixes the issue of islands of data containing our financial information. Does that solve the problem and allow us to manage our finances more easily? Well, no. Firstly, even if we had all the data, we need to be able to understand it, and unfortunately financial literacy is a huge problem.
Still, let’s be optimistic. Let’s say open finance will give us access to all our financial data, and let’s assume we all know how to use it. Would that be enough? Well, again, I believe no. Many of our biggest financial concerns are about broader issues – will I keep my job? Can I pay my mortgage? Do I heat or eat? For that, we need different data. Often that data is not available readily… so have we hit a dead end?
Being an optimist, I would say no. I’d argue you get the data you need by creating engagement with the customer that is valuable for them and which gives you the required data. This is difficult, agreed. But that’s what is needed, and some entrepreneur out there will figure it out and make a fortune. If it was easy, somebody would have already done it. But they haven’t, so therein lies the opportunity.
Tools like personal finance management have been around for decades, so it amazes me when fintechs discuss their ability to help you manage budgets and your money in a better way like what they are doing is new and better.
Recently, I’ve been trying a health programme called Zoe. A large part of it revolves around understanding your body’s reaction to foods by checking your blood sugar responses to them. For this, you wear a real-time blood glucose monitor. You also have to log your food, which is often a point of friction because who wants to do that? However, they have amassed a huge set of data from hundreds of thousands of users, so logging a ready meal from a supermarket brand for example is typically easy. They also allow you to scan the barcode and retrieve the nutritional info they need.
My point here is they recognise the friction and have answers for it. This is an approach that is required for managing our money better, yet I’m still not seeing this from banks and fintechs.
As I’ve discussed before, another key part of the picture is owning specific key customer journeys – like buying a house, for example, or even just saving for the deposit to buy a house. Owning a journey means managing every step, but not necessarily solving every step. If you don’t own a step, you could embed a third-party solution or provide some options from a partner ecosystem. How you approach this is a hugely important decision and not a case of doing what is easiest, cheapest or quickest (banks please take note). The answer really comes from understanding how important that step is to the customer and whether you can add value or whether you can leverage it better through a third party.
This week, I’m just saying that harnessing all the data you can about someone’s financial affairs is not the problem or opportunity that needs to be addressed to help people manage their money better.
This is not one problem, but many that require many solutions wrapped up in a great customer experience. Right now, we have a few things that solve individual money management issues like saving for a house deposit or investing for retirement. However, this approach will again drive data to be fragmented. This could be the problem super-apps solve for us, but the jury is still out on that. My view is that none of the current solutions work. This presents a huge opportunity. The question now is whether a start-up, bank or big tech gets there first.
About the author
Dharmesh Mistry has been in banking for more than 30 years both in senior positions at Tier 1 banks and as a serial entrepreneur. He 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 founded proptech start-up AskHomey (sold to a private investor in spring 2023) and is an investor and mentor in proptech and fintech. He also co-hosts the Demystify Podcast.
Read all his “I’m just saying” musings here.