Banking has gone through a huge amount of change when it
comes to customer access – from paper “passbooks” and plastic cards to the
internet and mobile banking.
However, although the way we access our money and account information
has changed, little else has really changed.
Yes, the security is much better. I remember when I first
started working for a bank and branches had to check signatures that they held
on paper cards at the branch. If you went to a different branch, they had to
fax (yes, remember those devices that sent copies of paper documents across
phone lines?) the signature card to the other branch to check.
Having only just left college (I never went to university),
I asked a dumb question: “What if a member of staff replaces the paper card
with one their friend had signed? They could then give them a cheque book and
the signature would be verified correctly by whoever was on the cash desk?”
After an intense interview by the branch manager asking why
I had imagined such a scenario, I narrowly avoided being fired.
Now we have biometrics and two-factor authentication, but
has anything changed about how we bank? I didn’t think so, but there are a few
things I no longer do. When I first started banking, I used to check my
statement, line by line, every month. I’d ensure I recognised every transaction
and the amounts were right. Even with all my household bills my statements were
never more than two pages. I used to take £20 out in cash at the start of the
week and that was enough to cover ad-hoc expenses for the week (we didn’t
really drink as much coffee then).
As plastic was introduced, I set up a separate account for
my ad-hoc (discretionary) spend and stopped checking transactions for that
account. Today, I don’t get statements and I only really scan my main account
to ensure I recognise transactions every now and then.
Internet/mobile banking has negated the need for me to visit
a bank, though there are some things you still have to go to a bank branch for
and some things I prefer to do in a branch. For example, recently we moved
house and I had to go to a branch to complete a paper form for the transfer of
my deposit. This gave me some comfort that somebody I could see was checking
such a large transaction was being done correctly.
So, what else could be different? What are the neobanks
doing that hasn’t been replicated or made almost as easy by traditional banks?
I fail to see the compelling reason to switch banks. Especially when trying to
get hold of an actual person in a neobank is so difficult, if indeed it is
actually possible.
There are a number of neobanks and fintechs providing
supposedly better money management features, however my bank had “personal
finance management” years ago, and after my initial curiosity this failed to
provide me any benefit.
At AskHomey, we recently surveyed our pilot group of users
and like me, many of them were still using spreadsheets! Some of us review our
“annual financial plan” – what we think costs are going to be over the year.
Mainly this helps us to understand what money we have left to save, invest or
spend.
Our spreadsheets help us to understand “peak” months of
non-discretionary spend, so that we can ensure we have enough in our accounts
for colder winters. Some of the group use their sheets to manage spend on a
monthly basis, carefully ensuring that enough is in their account and every
non-discretionary spend is accounted for.
Some may be lucky enough that they don’t care about how much
goes out the door, but that is not the case for the majority. With rising
interest rates and the cost of living set to rise significantly, the ability to
plan our spend is going to become more important than ever.
However, the budgeting capabilities of fintechs and banks do
not mirror the way that many of us manage our money. Why has this problem not
been solved? Why are so many deferring to spreadsheets? For those in financial
difficulty they can get help with planning from Citizens Advice in the UK and
their advisors also use, guess what, a spreadsheet!
I’m not saying nothing has been improved by fintechs or
banks. I’m just saying there is more to be done and specifically in helping
customers manage their money better. Those with money will see the value of
their cash eroded by inflation and will need better investment advice at a time
when equities are looking very pricey.
Meanwhile, those with less will need help with financial
planning and managing their money as there will not be as much left for
discretionary spend. In the UK there are over 250,000 people that start every
month knowing their income will not cover their basic needs.
I’m just saying with the dark clouds of inflation and cost
of living rises looming, banks and fintechs need to step up their game to serve
customers better when it comes to managing their money. I for one would love to
stop using spreadsheets!
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