Dear Fintech, Give People Meaningful Experiences, Not Gold Stars

At Finovate Spring, Moven demoed Bank 4.0. Moven is a reloadable debit card and mobile app. Just like Fitbit tracks your physical activity, Moven tracks your spending by category and will compare your current spending with your past spending behavior. It’s as if a prepaid card had a love child with Mint that grew up to be an older, more mature debit card that is able to track your money in real-time.  I’m not the first person to compare physical activity to financial activity but I think the comparison is really compelling. People are often just as wrong about their physical wellbeing as they are about their financial wellbeing. Early adopters of wearables have proved that the “internet of me” is an effective use of gamification and can significantly impact behavior. The formula is simple; linking users to their own behavior enables them to positively change their behavior.

By engaging people in their own self-interest, Moven has successfully applied the “wearable-model” to money management. Unfortunately, a lot of Fintech players and financial institutions have integrated gamification on a very shallow level (this was the word of the year circa 2011). On one extreme, we have banking apps that reward you with a gold star (carrot) after contributing to your savings account. On the other, we have the more traditional “stick” of overdraft fees; Big Brother Bank tells you to stop overspending. A scheme of rewards for good behavior and fees for bad behavior is more appropriate for cattle than it is for people. Consumers aren’t going to change their behavior by being prodded and pushed. Moven’s approach focuses on positive changes over reactive punishments or rewards. They have delivered on this and two other insights that the rest of the Fintech world would be wise to consider.

  1. Dealing with money is an emotional experience. It will never be enough to simply show someone a string of recent transactions. Successful money management will involve helping the user understand the depth of their decision-making. Prompting questions like “Is this impulsive?” instead of “Is there enough money in your bank account?”.
  2. People are highly visual learners. People can more easily digest data when it is quantified and categorized—especially data within the context of their own lives.

More than any other industry, the banking and financial industry must acknowledge the emotional experiences people have with money. We can no longer engineer products and services without considering the usability and the experience of the user first. How valuable is a gold star to a 40-some-year-old mother trying to budget for groceries? Great, she has a gold-star now that she’s somehow managed to spend less this week and put some money into her savings account. That’s not a meaningful experience. More importantly, it’s not helpful. It’s a gimmick. How is a $36.00 overdraft fee going to help someone who is clearly struggling to keep money in their bank account? Javelin data shows that Y.1, the youngest segment of Millennials (ages 18-24) is the first to leave their bank because of overdraft fees. There is a lot of capital going in to Fintech right now. As we develop these incredible financial tools we must maintain the user’s perspective and keep a focus on an evolving financial well-being over a static financial status.

A Hole in the Balloon Analogy: The Complex Evolution of Card Fraud in the US

As we discussed in MasterCard’s Security Matters, conventional wisdom indicates that card not present fraud will skyrocket as the United States shifts to EMV over the course of the next few years. Typically, this analysis is accompanied by analogies to balloons – as one end of the fraud “balloon” is squeezed, the rest expands. While this commentary correctly predicts the direction of Card Not Present (CNP) fraud, it mistakenly treats fraud as a homogenous mass and assumes that criminals can simply switch between different fraud types as the mood suits them. Point-of-sale (POS) card fraud and CNP fraud each have a notably different modus operandi and require different sets of skills, contributing along with other factors to an evolution of card fraud that will be more gradual in some respects and nuanced than many stakeholders anticipate. Read the rest of this entry »

Finovate Showed That Fintech is Becoming Personal. Will Banks Have the Confidence to Be “Creepy” Too?

Every few years I like to go back and re-read a clever little article called Imagining the Google Future. In 2006, CNN tapped a group of tech gurus and futurists to cook up four visions for the company’s evolution. With a decade of hindsight, a few of the details look a bit silly. But on the whole the article actually has aged well and they got quite a bit right:

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4 Trends to Watch at Finovate

I always circle the spring Finovate show on my calendar because it offers insight into the future of fintech. Inevitably, two questions get asked: First, which of these companies should be on the radar for bankers, investors, and consumers? Second – and this is my favorite part of the hobnobbing and side bets – which one of the startups will exhaust their oxygen and cash first?Finovate.2015.5.6

In short, this is a show about innovation, change, and collapse. The roster of companies at the first Finovate show I attended in 2010 featured disruptors, partnership opportunities, and acquisition targets such as Bill.com, Expensify, Kabbage, Mint, and Pageonce (which rebranded as Check, and then was acquired by Intuit and renamed Mint Bills). But that Finovate class also included Blippy, the media darling that won my vote for first to die…please.

The on show on May 12-13 in San Jose has grown to two days, and it features about 72 companies covering a range of specialties. But as I scope out the field from my vantage point in omnichannel financial services, I am zeroing in on presenters that are taking aim at key trends such as: Read the rest of this entry »

Mobile Wallets Merry-Go-Round

Mobile Wallets Go Up

Apple Pay’s long awaited release last October ignited a furry of moves, announcements, and acquisitions in the mobile wallet space. For a full analysis, check out our new report: 2015 Gang of Five: Apple Pay vs. Android Pay vs Samsung Pay vs PayPal “Pay”?.

 

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The Kids Want Chat

Can you guess Gen Y’s most used feature on a mobile phone? Here’s a hint:  isn’t making phone calls. The most popular mobile feature among Gen Y is texting. Consequentially, the today’s hottest apps cater to Gen Y’s need to talk through their thumbs: Yik Yak, What’s App, Messenger and Kik being just a few examples. Unfortunately, mobile banking providers have missed out on this trend.     Read the rest of this entry »