As some of you may have heard, our team formally launched the Movenbank project at SIBOS yesterday. It’s an auspicious start, for a very ambitious project.
The buzz at SIBOS was stellar, with some major support coming from the Twiteratti, from the “InnoTRIBE” and the bloggers in our unique community. Having said that, I’m under no illusion that this was only the start and we’ve got some heavy lifting over the next few months before we launch our consumer service. I thought in the spirit of Innotribe’s theme this year I would talk briefly about what the launch means, and what we’re going to do. But more than that, I wanted to share with you the specific challenges we’ve had to fight to overcome and why I believe we very aptly classify this as a reboot of banking. I don’t want this to be an advertorial for Movenbank – I’d like to expand on what was discussed at SIBOS, and I think sharing our thinking and challenges is instructional if you really want to change the way your institution engages customers.
CRED™ and the Movenbank Ecosystem
We believe that generally the way banks work with customers is totally broken/screwed. How many customers want a more transparent relationship with their bank (and I don’t mean just fees and interest rates?) How many have had a request for credit turned down and scratched their head to understand why? How many wonder what those mystery fees are on their statement, or why they were even charged in the first place? How many have wanted to increase their credit limit on their card or get a loan, but simply didn’t know how? These are questions the average bank consumer asks all the time – let alone questions about complex products, or the dizzying array of choices around asset class, rate, features, etc. The industry talks about ‘educating customers’ so that customers understand products. But we believe if you have to educate customers before they understand your product, you’ve already lost the opportunity.
In trying to find a way to better articulate the day-to-day relationship with customers we realized that lack of trust, the systemic resistance to transparency that has become apparent as a result of social media, etc, the tendency to leverage information scarcity as a revenue/margin tool, and the lack of flexibility in current risk assessment models – all needed to change if we were really going to do something new. Fortunately, the solution manifested itself in the form of CRED™.
In creating a behavioral, social, viral, gamified engagement system, what we were really trying to do was change the way our bank communicates with customers about their relationship, and the way we assess their value to us as an institution. It had to be something visible and easy to understand for consumers, but it had to have enough depth that it could not only accurately assess risk, but also enable us to satisfy the requirements of regulators. Sounds complex right?
Well it turns out that if we ask questions of customers gradually, allow them to transact, and tell us how they spend and save on a daily basis, we can build up not only a complete KYC/CIP profile, but we can also start to help customers manage behavior that is risky. The problem with current credit scoring models is that they only record a failure after it’s happened, but we realized we should be able to anticipate that failure by watching the way customers behave. Rather than being invasive, most of this was available based on the current aggregated data for a ‘banked’ customer. If the customer was unbanked, we were going to have to build it over time.
The final element is really the gamification. What I don’t want to do is give the impression that we’re making banking a ‘game’. We’re using the principles of gamification for engagement. We will have some of the standard bells and whistles like badges, rewards and incentives, but the real secret to understanding CRED gamification is understanding how we will deliver banking products and services. One simple trick – if you want someone to keep a positive balance in their savings account – then allowing them to see that balance or reminding them that a specific transaction or event will take them into negative territory, makes the spend a conscious decision. Is it gamification? It is when you ‘game’ the messaging, and make it frictionless or even fun. We’re playing with that messaging and engagement layer to influence your financial health positively. So maybe we should more accurately call CRED Engagementfication or Contextualization, rather than pure gamification. We’re all about positive persuasion, based on very clear and ethical permission sets.
Getting over the ‘hurdles’ for the new thing…
One of the real questions was should we or shouldn’t we start with our own license and charter, or do we go the BankSimple route and work with partner banks. In the end this decision was really taken out of our hands because there were no guarantees on either the outcome of the license/charter application process or the timing of such. Purely on a commercial basis, if we wanted to go to market, we couldn’t wait on the regulators to make the call. That’s not to say we might not acquire a bank in the future or build our own for purposes of scale.
So what about KYC (Know Your Customers)? It turns out that KYC requirements in most jurisdictions are not that exhaustive – it basically boils down to name, date of birth, physical address, unique identification (Passport, Social Security Number, TIN, etc) and verification of that identity. The rest of the ongoing KYC stuff is typically around transactional behavior (e.g. AML suspicious transaction reporting). The fact is, the workload of this stuff is not erroneous, nor does it require an absolute physical presence (at least the way we read the regs). In fact, we will have much more data on the behavioral side and on the customer’s profile than an average bank. For example, which bank do you know that requires you to have a Twitter or Facebook account and a mobile phone number before you can sign up? That’s much more useful than insisting on utility bills before you open an account in our opinion.
Lastly, on the product side, CRED™ will simplify much of this space as well. In most cases, customers will be engaging with Movenbank for a facility, whether it be a day to day transactional account, a savings ‘bucket’ for a specific goal, or a line of credit for those times you need a bit of extra cash. The utility of banking means that we believe as long as the rates are competitive, you don’t need to describe or understand the features of that product – you just want to use the ‘utility’ of the product. So CRED will be the interface to this, and we’ll turn on and off the utility of those products or services as required. Given we’ll already have all of the KYC up front with CRED as the engine of the relationship, you won’t need any application form, it will just be turning the facility on or off.
The Alpha Release of Movenbank’s site is scheduled for October the 1st, where customers will get their first glimpse of the CRED ecosystem through a financial personality profile. Then we’ll be ramping up for a staged commercial release next year – with broad availability schedule for the summer of 2012 (summer in the Northern Hemisphere that is).
It’s an exciting time. We’d love your feedback and love to have you along for the ride.
Rebooting banking will require your participation as well. Thanks for your support and encouragement.