It sounds prosaic, but “everyday banking” could be a way for retail banks to stay relevant in the digital future.

The idea is that rather than interacting with customers only when they ask to store or move money, the bank becomes their 24 hour financial advisor, almost a life coach. A banking app could, for example, estimate how much a person can afford to spend on a given day to remove the mental calculations needed to decide to buy shoes (as Simple does, a unit of BBVA). It could transfer small amounts of money every few days to a savings account, depending on what its algorithms think a user can afford (like Figure made). It could also signal behavioral changes that would lead to savings (such as wallet.AI working to do).

The case for day-to-day banking goes beyond convenience and brand differentiation. According to some analysts, using technology to help clients manage their money and build wealth would allow banks to continue to to have retail customers.

“As the middle class declines, the bank’s customer base is drying up,” said Ben Jackson, director of prepaid advisory services at Mercator Advisory Group and author of a recent report make the argument. “Yes [banks] want to exist in the future, they will have to do something to reverse the trend. “

Unlike personal financial management tools, which consumers have had access to on desktops for years, day-to-day banking is a concept born in the mobile age. And while traditional PFM software helps users retroactively analyze their spending, everyday banking alerts them before they make imprudent choices, or transfer money on their behalf, or both.

It remains to be seen whether banking apps can become a useful and regularly accessed lifestyle aid rather than delivery mechanisms for overdraft fees. But some see a transformation brewing for banks around the world.

“We’re just starting to provide a glimpse of what a bank will look like in the decades to come,” said Bradley Leimer, innovation manager for Santander North America.

A growing number of startups and financial institutions analyze financial data to try to help consumers adjust their behaviors in order to save time and money at a time when the majority of Americans continue to struggle with their daily finances.

Much of the innovation is driven by the startup community, which advocates for digital features to help consumers manage even the smallest amounts of money. Some of the many fintech companies looking to create experiences that better connect lifestyles to money include Qapital, Moven, and Level Money ?? who have all updated their apps in recent weeks to become more relevant to consumers. Level Money, which is owned by Capital One, now predicts future income and bills for those working irregular hours while Qapital and Moven have updated their software to make savings easier.

Generally speaking, Leimer envisions a day when a financial services app will help develop behaviors to help someone, for example, be more likely to move to an area with better schools by providing the same types of information. and advice high net worth clients receive today.

“It’s not just a one-time thing. It’s a lifestyle change,” Leimer said. “It’s really about monitoring the financial account with a broader mandate to change their desirability.

“We should embrace this message, ‘We will help you save money. We will help you save time. ? We will help you in so many ways financially. “”

A Capital Idea

One of Leimer’s ideas, which he articulated in 2013, recently came to life Capital city. The app now allows consumers to link seemingly disparate areas of their lives so customers can set triggers for, for example, transferring $ 2 to a savings account, after buying coffee from Starbucks or posting something on Facebook. (A company called Piggymojo launched a similar “impulse savings” service a few years ago.)

This capability is the result of Qapital’s partnership with the If This Then That (IFTTT) web service. In doing so, the startup is betting that people want to make money management an integral part of their lifestyle, but without having to think too much about the task.

“These are small amounts that you don’t feel, and all of a sudden it adds up,” said George Friedman, managing director of Qapital, partner of Lincoln Savings Bank in Reinbeck, Iowa.

And the savings account, which is directly tied to goals and wishes, focuses on positive emotions in an area largely ignored by banks: rather than focusing on longer-term goals like retirement, Qapital encourages shorter-term wishes like “going on vacation”.

“We’re focusing on the much bigger pie that’s a bit of a blur for the banks,” Friedman said. “It’s kind of a black hole: where is my money going every day?”

Of course there are checking account balances ?? the most popular mobile banking feature. But that doesn’t exactly answer the real consumer question.

“The question you are trying to answer is not ‘what is my balance,’ said Omar Green, founder and general manager of wallet.AI. “It’s really trying to get to the basic level, ‘Am I better? Or am I less well? ‘ “

Green believes that an app can change the banking model by penalizing people for their mistakes and guiding them to a healthier financial life.

“The promise is there,” Green said.

Some believe that guidance is ultimately meant to come from a bank.

Startups, after all, focus on narrow slices of financial services and lack all the products needed to help someone get something done.

“They can tell you how much to save each month,” said Jackson of Mercator. “They can’t offer you a savings account or the loan.”

Michal Panowicz, senior vice president and deputy director of digital banking at Nordea, believes that banks are in the best position to help people manage their cash flow because they own the many services ?? and therefore data ?? that startups typically miss, like paying bills. He believes mBank, his former employer, embodies some of the themes of everyday banking, such as providing quick offers and loans through an app.

“It’s the everyday bank: it gives you deals and helps you manage your money better,” Panowicz said.



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