In a society where we increasingly turn to electronic funds to pay for goods and services, the physicality of money - that clink of change in our pockets, for example - is fast disappearing. While this makes life much more convenient in a whole variety of ways, our capability to keep track of how we are spending has, in many respects, become harder.
A cashless society
In London - like most urban centres - many of us have have been quickly adopting new cashless payment types. This adoption has been accelerated by the intuitive and hassle-free experience of new services - like contactless cards, Apple Pay, and Android Pay.
These new technologies, widely used by big companies like Transport for London, Pret, Costa, Boots and hundreds of thousands more, have provided a fertile ground for the expansion of this new ‘cashless’ reality, where the physicality of money has taken a back seat in many modern daily lives.
Not all companies, though, have kept up - and I am looking at major banks, here. For many large, traditional incumbents, what has resulted is a constant struggle to adapt complex, legacy-heavy infrastructures to the new reality while all around, new players have begun to encroach on banking’s traditional value chain. A number of big players for example, like Barclays, have only recently adopting Apple Pay after they tried (and failed) to create their own alternative.
So where is my money going?
These effortless ways of paying for goods and services create new spending habits - think about the number of online subscriptions you might have, for example, from Netflix to Amazon Prime. In this environment, it’s very easy for people to lose track of how much, and more specifically, where and when they are spending their money. When, suddenly, the physical tokens of money are removed from everyday life, we are left with a fluid, intangible currency that our brains struggle to adjust to.
So if it has never been easier for us to spend our money, and lose track of it, as product designers, we need to create services and solutions that better use historic and contextual data to provide the right information, at the right time. These smart and ethical products can help all of us to spend smarter, and keep a closer eye on where our money goes.
An effortless overview
Given we can now make secure payments based on single tap of our finger, managing my finances should feel intuitive, hassle-free and engaging. I shouldn’t dread opening my bank’s mobile app or website so much that I put off having any control, or being informed on a daily basis about how I am spending my money.
Digital natives have come to expect products to provide a fantastic user experience, and even though legacy has been holding everyone back in the finance world, there is a completely new wave of players emerging. Fintech services like Mondo, Lemon, Atom Bank, or Mint and Simple (both US only) build their services from the ground up based on custom experiences that are tailored to serve the user - and a core part of that is making our spending more visible and easy to understand.
This shift is supported by the implementation of the Payment Service Directive 2 (PSD2). In a nutshell, this new directive means that banks will be legally obliged to open account data to third parties - initially, this will allow third parties to read your financial information in real-time. By 2019, however, it will allow third parties to create modern digital-only products that can not only read data, but also write it and initiate payments directly from a bank. This will allow third parties to craft the types of seamless experiences usually associated with companies like Instagram or Fitbit.
For these new, emergent services, long gone is the basic timeline of transactions with incredibly limited search found in so many of the major banking apps. The new normal is natural language search across your entire financial history, automatic categorisation of spending, contextual insights and proactive financial advice. Think of it like a fully fledged bank clerk in your pocket, at your service 24/7. There is a new status quo being established to serve a primary outcome: I want to see what’s going on with my money, right now.
Having these type of a features available to users in real-time, at-a-glance and from our most personal device provides a good head start in helping each of us get a faster, smarter grip on the state of our money in our cashless society. Furthermore, we are excited about how new consumer products like Amazon Echo or Google Home will integrate with our existing financial services and keep us on the loop in our most personal space - our home.
At TAB, we have been working with several established financial organisations to explore what the future holds for large incumbents. We have also been using our R&D ‘downtime’ to explore the opportunities that PSD2 will open up, examining how we can leverage our mobile native expertise to create the best user-focused services for the new cashless reality.
If you would like to know more about our thinking in this area, get in touch with our team here. Also, feel free to reach me directly on twitter via @h1brd.