🏦 How banks can stay relevant in 2020
Unlocking the potential of the receipt with Personal Finance Management
When Bill Gates, co-founder of Microsoft, made an offer to buy the financial software company Intuit in 1994, he famously said:
“Banking is necessary — banks are not”
— Bill Gates (1994)
The deal fell through because of opposition from the U.S. Department of Justice; nevertheless, his quote lived on because of its prescient qualities.
Banks in 2020 are now struggling to stay relevant. In consumer banking, the incumbents face significant competition from neo-banks, which are digital-only and are better geared towards Gen Y & Z. On top of that, players from other industries like telco and ride-hailing are vying for a piece of the cake. Here in Singapore, with a total of 21 applications, there has been a strong interest in the 5 digital banking licenses that will be awarded in June later this year.
Is the trend irreversible? It depends. If banks are willing to embrace innovation and collaborate with FinTechs, they can still catch up with the Zeitgeist.
In this blog post, I will discuss how banks can seize one of the opportunities — Personal Finance Management — and how collaborating with Maesh can bring them back to the leading edge.
Personal Finance Management
Personal Finance Management (PFM) broadly comprises in-depth spending analysis and advanced budgeting tools. Or more colloquially: It’ll give you a heads up if you have more month than money.
According to an EY study, PFM has seen a significant uptake in use among global consumers from 8% (2015) to 10% (2017) to 29% (2019). Nevertheless, factors like “poor functionality, the difficulty of use, and irrelevance to customers’ every day” still leave enough room for improvement.
Even more so, accurate and more proactive PFM systems could open up all kinds of new business models for banks. Instead of plainly displaying the information, they could start coaching you with actionable recommendations, like setting aside 10% of your savings for retirement. Banks can honestly show that they’ve got your back.
Unlocking the potential of the receipt
One of the reasons for the irrelevance of PFM to customers has been the lack of proper data and the subsequent miscategorization of spending. This ostensibly erodes trust in the tool. I checked my Financial GPS today and 11.4% of my transactions are uncategorized. Even worse, I didn’t have to look hard for a transaction made at a food court that had been labeled as “Health & Fitness”.
No matter how smart the Artificial Intelligence you are throwing at it, if it doesn’t get the right input, you can never accurately categorize spending. Garbage in, garbage out.
This needs improvement. And it is very simple: by unlocking the troves of data encapsulated in receipts. If the transaction not only included the indecipherable “BAT ESSEN&PINNACLE ST3 SI NG 19DEC” but also:
Butter Chicken — S$13
Pappadums — S$4.50
@7%GST
Then it’d be a lot easier to put this payment in the “Dining” bucket (and perhaps scold me for a relatively expensive Butter Chicken).
Maesh — Online Real-Time Payment Gateway
Maesh is currently building Singapore’s first real-time payment gateway for online merchants (relying on PayNow). By being the direct link between online shops and the customer’s bank account, Maesh can not only facilitate the transaction but also help transfer the receipt data from the merchant to the bank.
Interested in (collaborating with) Maesh? Reach out to hello@maesh.io.
