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Life? It’s complicated …

I grew up with a belief that life should be simple. You get an education; you play sport; you get a job for life; you get a partner; you get married; you buy a house; you have kids; you retire; and then you die. Or something like that. These were the key life events.

It’s not like this anymore. Today, life seems much more complicated:

  • you get an education, but is has to be wider and deeper;
  • your education is augmented by technology and gaming, which is a core part of your life;
  • maybe you play sport or maybe you play online sport;
  • you get a job, but it’s now a gig;
  • you get a partner, but marriage is irrelevant;
  • no one can afford to buy a house, so you rent at a high cost that stops you ever hoping to buy;
  • you decide not to have kids as you focus on career to pay rent, and are concerned that any child would be born into a world where humanity is dying;
  • you can’t afford to retire and the retirement age is now 80, so you have to keep going; and then
  • you die.

The last one is the only certainty. Well, that and taxes.

I then wonder how young people cope today. The cost of living is so high, the wages so low, the stresses are massive, and the ups and downs of life must be taking a toll due to the pandemic, climate change and more. By way of example, I found a report the other day that stated 2 out of 5 16-24 years olds do not want to have children as they believe humanity is doomed.

The world is far different today. It’s complicated.

Why blog about this? Well, I’ve argued that banks should switch from a focus on transactions to a focus upon life events. What are the life events of the iGen and future generations? How do they differ from Millennials and Boomers? The above gives a clue, but I would argue there are still going to be key moments that are predictable. Younger folks are going to have a variety of moments, but these are not sequential. They are over-lapping. Here’s a few I can think of:

  • Leaving home
  • First job(s)
  • Working (this month)
  • Struggling (this month)
  • Being in love (this month)
  • Saving for things (holidays)
  • Renting
  • Moving (possibly to Mars in 2050)
  • Accidents (insurance is still needed)
  • Illness
  • Death
  • Taxes

They all sound like the same as the old processes, but they’re not. They are complicated and different and, most important of all, is that they can be tracked digitally. These things are changing in their cycles, but all firms are starting to think about the way in which the above could be tracked and analysed. For a retailer or financial firm, it is far easier to track and analyse to provide a life event management service than it is for an airline or manufacturer.

In fact, it is maybe not just life events but lifestyles:

We need to think about how our customers are living their lives and the things they need to live their lives better and smarter.

This is where Open APIs step in. Open Banking is about opening bank processes to third parties through APIs. I prefer thinking about how a bank can use third party APIs to offer life events and lifestyle management, based upon the above.

For example, years ago (1990s), I worked with one American bank on data mining customer accounts for the signs of making a move. The fact the customer is regularly refuelling their vehicle; the payment to a removal firm; the hiring of decorators in another state; transactions miles from home. These and more indicated interest in moving, possibly, and the bank knew that every time a customer moved they would often lose their account.

So, the bank focused upon how to provide a home-making service. They would offer a package of services around home-making, including contact with  of the most relevant builders, gardeners, schools, restaurants and other services in the place you want to move to. Oh, and details of simply moving your account from ABC Bank this state to ABC Bank that state. Their customer retention rates bloomed.

I worked with another insurance firm who believe that, by integrating Open APIs, if you have a car accident then the car could alert all to the issues. It could self-diagnose and report to the garage the accident details of damage, as well as to the insurance company; APIs could contact the tow truck and a taxi; the car could even arrange for a replacement to be delivered to my place of choice. And it would all be seamless, frictionless and easy. All I have to do is swipe.

The thing I find sad is that, decades later, I still hear banks talking about lifestyle, life events and home-making services and insurable events coverage, but where are they? Customers don’t want mortgages – they want homes – yet the focus of traditional financial providers, and many new ones is on the financial transaction, and not the end-to-end customer process and experience.

Customers still have car accidents, but it’s down to them to call the insurer, the tow truck and the taxi. Why is it the customers’ responsibility in a world of amazing digital services?

For those who focus upon all life events and build end-to-end management for those moments through Open APIs from all – Google Maps, Zoopla, Trip Advisor, Uber and such like – and not just from financial and FinTech firms, will win over time. They will win if they get it right.

Thing is, it’s complicated.

About Chris M Skinner

Chris Skinner is best known as an independent commentator on the financial markets through his blog, TheFinanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal’s Financial News. To learn more click here...

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