What exactly do we as customers want from our banks? Some of the answers are obvious: a safe harbour for our money, fairly priced financial products and convenient alternatives to cash, be they a chequebook or a bank card fitted with contactless “tap” technology.
Some of us want a branch close at hand. Millions of others are more interested in having a state-of-the-art app on our mobile phone that allows us to check our balance in a few seconds, pay bills or apply for an overdraft wherever and whenever we like.
The enthusiasm with which the British public has embraced mobile banking has certainly been staggering. Research from our latest Way We Bank Now report that we published today with EY shows that in March of this year we used apps on smart phones and tablet to transfer £2.9 bn – a 50pc rise on the year before. Apps offered by the major banks have been downloaded 22.9m times by the end of the first quarter of this year – up 8.2m in just 12 months.
We are still only at the beginning of this revolution in how we spend, move and manage our money – and there are some interesting, serious questions about the next generation of technology.
I’m referring to a range of biometric security features that will help us to withdraw cash from an ATM or access our internet or mobile internet banking in a few seconds without having to remember pincodes, passwords or our mother’s maiden name. Then there is wearable technology. This will let us pay for rail fares or groceries with just a tap of a wristband – rather than delving into our pockets for change or our bank card.
Biometric security is set to replace passwords by 2020
More exciting, and more challenging, is how banks could use our data to give us greater insight into our finances and find ways to help make our money go further.
Banks hold vast amounts of data on how and where millions of us spend our money and until now there has been little done with this information. Now, we obviously need to make sure that customers’ data is treated confidentially and only used in this way if they decide to opt in, but the potential is enormous.
In the last few years the cost of processing this data has plummeted and that has made it far easier for banks to offer a host of these new services.
The first of these is Personal Finance Management technology, which breaks down our spending into genres. Using the vast levels of customer data, banks can then give customers a sense of how their spending on certain items – energy or food – compares with people in the same street or of a similar demographic.
If I was paying 20pc more for my broadband than most of the people in my street, I’d want to know that — and also where I could get a better deal.
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One of the leading exponents of this technology is an Icelandic business called Meniga, which offers a range of easy to use and clear graphics setting out what its customers have been spending. Its has proved enormously popular, and some commentators say that it chimed with a nation keen to keep a close eye on its finances after the 2008 banking crisis.
Work is beginning on similar systems here in the UK. RBS and NatWest are currently piloting features that allow customers to see detailed forecasts for what major events such as having a baby, getting married or buying a house will have on our finances.
The second, more exciting development is what can be done when you marry the vast amounts of data banks hold about our spending with the GPS-enabled mobile phone. The possibilities are staggering. You wander into your favourite clothes retailer, say. Your bank knows you are regular customer and can alert the retailer, who can then offer you exclusive extra discounts.
Here’s another example. Say you have arranged a mortgage and were close to completing on a three-bedroom house worth £300,000. The sale fell through and you tell your bank. A few days later you are walking in a park when you receive an alert on your mobile phone. It says there is a property suiting your needs 200 yards away and providing the contact details for the estate agent.
There is enormous potential for small business customers, too. Imagine you are a greengrocer in south-west London looking to find out more about your customers so you can serve them better.
Clear data on when you are most busy will help ensure you have enough staff on at the right time. Receiving secure, anonymised data about where your customers live would give you valuable guidance on where you should open your next outlet. It would even be possible to examine how your turnover or overheads are faring by comparing anonymised data from similar businesses nearby or across the country.
A few months ago, Commonwealth Bank Australia launched a tablet computer for its business customers called Albert, which receives payments from debit and credit cards.
However, the real advantage is that the manager of the business can then pool this data and analyse it – and even develop their own apps tailor-made for their business. This is enormously valuable intelligence, but it also makes life easier for the entrepreneur or her accounts department.
We are already starting to seeing the opening moves of this here in the UK. Earlier this year, we saw the launch of Midata – a system that allows us to upload a year of our current account data to a price comparison site, which will then draw up a table showing the best-value bank account for us.
The new comparison service will help savers choose the most suitable bank account for them
Now, many of us simply will not want any of this – just as there are many of us who have no interest in Twitter or Facebook. However, it’s clear that millions of other people around the world do want timely, relevant offers and alerts. iGaranti, an app offering many of the services outlined above produced by one of Turkey’s banks, has at times been the country’s most downloaded app.
It’s absolutely vital that these services are optional and that they are introduced in a safe, secure manner.
So I go back to my original question: what do you want from your bank? Do we want our banks to become trusted financial guides in our pocket, harnessing our data to spot ways to make our money go further and improve our lives?
That has the potential to be the next wave of the revolution sweeping retail banking.
It could be much more exciting and fundamentally change the relationship between the bank and the customer – and for the better.
Anthony Browne is chief executive of the British Bankers Association
