Pete Steel, Commonwealth Bank of Australia

A Helping App

Recently, the Commonwealth Bank of Australia rolled out a number of new app features. Improving and enhancing mobile banking is of course a consistent strategy in financial services as banks embrace the digital world.

According to RFi Group data, banks still have ample of opportunities to improve on existing financial health tools. Among Australians using mobile banking apps only 10 per cent were aware of financial health tools being available on their app. Furthermore, amongst this 10 per cent only 45 per cent were satisfied with this app feature.

Clearly there is scope to improve current app features, however, what was interesting about CBA’s initiative was that the new innovations focused on money management – a first in the Australian market. According to Pete Steel, the initiative was a “real step change for us” and “a new era for the bank”.

“We are going beyond just providing products and services. We want to really help customers to adopt better financial habits,” Steel said. The new features aim to help customers manage their money and meet their financial goals particularly on the back of “some worrying statistics” that emerged from a series of surveys undertaken by CBA.

We are going beyond just providing products and services. We want to really help customers to adopt better financial habits.

The research revealed that more than a third of Australians are spending more than they earn each month. The data also found that more than 56 per cent of people would not have enough savings to handle a temporary loss of income. Moreover, based on 2.7 million customers, where CBA was the primary banking relationship, one in three could not quickly access $500 in cash or credit in an emergency and one in three households would be unable to find $500 in an emergency.

Not only were Australians overspending, but the new data revealed this overspend contributed to a large proportion of Australians struggling with financial wellbeing. Around 46 per cent believe they were not progressing towards their financial goals and just as many (45 per cent) of Australians were uncomfortable with their current level of spending.

The human condition

At the same time, Steel said that further surveys showed that 73 per cent of Australians want banks to do more to understand their needs and concerns and 72 per cent want their bank to help them manage their finances in a rapidly changing world.

“These statistics are actually quite harrowing. A year ago, we decided to do something about it. As Australia’s largest bank we have a role to play in helping people with their finances. We have four million customers logged into our app, which gives us a real opportunity to help people with their financial wellbeing.”

As Australia’s largest bank we have a role to play in helping people with their finances.

The new app features include Transaction Notifications and a Spend Tracker (see images below). Transaction Notifications include real time credit card transaction alerts that give customers insights into their daily spend. The Spend Tracker provides a monthly summary of credit card transactions that are categorised which shows customers where their money is going.

The bank is also triallling a number of other initiatives in the CommBank Lab including a savings challenge which compares a customer’s current transaction account spending against their average for the prior three months so that they can track and improve their savings over time.

A ‘savings jar’ is another initiative being tested which allows customers to set aside “pots of money” for unforeseen events by rounding up daily transactions. Customers will have access to this money whenever they need it.

“These four functions are a direct response to our customers’ concerns and uncertainties. Each product has been designed to ensure we meet a customer need – from account security, to real-time reminders of your spending habits, to helping you save money and paying your bills on time.”

The first two features are already available to customers but the remaining two won’t be widespread given that they are still in experimentation and only targeted to a subset of the bank’s customer base. “This capability allows us to work with and co-create with a subset of customers to make changes. Unlike our main CBA app which needs a lot of care to make it run smoothly, these apps allow us to change things quickly based on the feedback from our customers.” Interestingly, the statistics on financial hardship cut across all demographics, from over 18 years of age, both young and old are spending more than they earn.

“It goes to the human condition. It’s more exciting to purchase products. Understanding money is not really a fun activity. This means that across the board, people are not connected with their money and with the choices they make.”

“We chose an app to address this issue and obviously, the younger demographic tend to use apps. We are working hard with both our young and elderly customers in cities across Australia to address the challenge of spending more than you earn.”

With the older demographic in mind, the new apps will be supported across the bank’s “excellent branch network”. “People need face-to-face conversations. There is no substitute for human contact.”

The CBA move highlights an interesting shift for Australian banks, that is, playing more of a role as a money manager than just simply offering products.

A first mover

According to global research firm Forrester, while Australian banks have done well in terms of offering functional mobile banking features, they have lagged in offering money management functionality in their mobile banking.

“Globally banks are moving beyond the traditional offer of transactional banking. They are now helping their customers with managing their money and financial goals. It’s now about driving deeper customer engagement,” Forrester analyst Zhi Ying Ng said. “We have not really seen this trend in Australia until now. The features offered by CBA has made the bank a first mover in this market.”

According to Steel, CBA has certainly been the first to crack the market in money management. “I can’t speak on behalf of what the other banks have done but as Australia’s largest bank with a big focus on innovation, we would expect to lead on this initiative.”

The strategy also draws on the bank’s growing expertise in behavioural science and analytics. In fact the there is a behavioural sciences group within Steel’s digital team.

“Behavioural sciences and analytics are now part of our business. These approaches are measurable and ensure that our products make a measurable difference to customers’ needs. It’s important to understand why customers behave the way they do and how we can encourage ways to adopt good financial behaviour.

“By providing our customers with these experiences we can show them the consequences of their decisions and perhaps encourage them to change their behaviour by better managing their cash flow for example.”

Forrester’s research also highlighted the growing role of global fintechs as first movers in providing money management tools. One US-based fintech is already offering such tools using artificial intelligence. These fintechs will continue to disrupt the mobile banking sector with Ng noting that Forrester’s research highlighted that customers were open to using fintechs for parts of their banking.

The bank’s vision

Money management tools like this are the next frontier for mobile banking. 

“Money management tools like this are the next frontier for mobile banking. It’s crucial banks move to include these features, otherwise the banks risk losing their customers to the fintechs,” she said.

Steel acknowledges the agility of fintechs and their success in providing a good customer experience. However, in this initiative, CBA has provided a “new level of experience to its customers and quipped “we think fintechs will emulate our functionality”.

Forrester’s Ng also highlighted the broader issue of trust that banks are now grappling in Australia. “The current media focus around issues of trust and culture in banks has not portrayed the sector in the right way. Offering features that go beyond products and services should regain trust and drive a better relationship with customers.”

We are excited that this is a first in Australia. It is in step with the purpose to really help our customers that need us the most by using our scale in analytics and co-creating with them to ensure we are hitting the mark.

For Steel, it simply goes to the “heart of the bank’s vision” to help its customers manage their finances. “We are excited that this is a first in Australia. It is in step with the purpose to really help our customers that need us the most by using our scale in analytics and co-creating with them to ensure we are hitting the mark.”

Steel has spent 12 years with the bank and now leads a team of 900 people that includes “45 customer-focused start-up scrum teams”. The group provides digital support to all the bank’s businesses including retail, insurance, funds management and small business.

He will also be off to the Silicon Valley this month to meet global banks and the “tech innovators who are at the forefront” in customer engagement.

“The bank is going from strength-to-strength with its technology and applying it to address real customer problems. But it’s important not to be complacent. Ultimately our customers will judge us by the extent to which we help them. I like to believe my team is making a positive impact.” 

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