Author: Dale Eastham
In my last blog, I looked at how digital banking solutions could help banks as we enter a new era of higher interest rates and new regulations. Step into the future with me and discover how digital banking solutions can help customers facing a potential debt shock.
Imagine it’s September 2020. The world has changed considerably over the past few years. Interest rates are now far above the record lows we saw back in 2017.
While James and Julie have felt the pinch, they’ve managed to survive by tightening their purse strings. Now in their early thirties, they grew up in an environment of cheap finance and never felt the need to save. They have no safety net to fall back on.#Digital #banking #solutions can help customers facing a potential #debt shock Click To Tweet
Digital finance shows the way
For James and Julie, digital banking technologies have proved invaluable: the online affordability calculators allow them to see where their money is going each month; the bank partners portal has helped them find new utility, media and insurance service providers that are trustworthy, as well as . They’ve cut their household bills down to size, safe in the knowledge that their new providers are dependable since they are partners of their bank.
More than that, the digital finance app on their smartphone helps them actively monitor their spending patterns. Automated alerts on their smart wearables let them know when they’re getting close to their monthly limits. These help James and Julie decide, on the spot, whether or not they can afford to treat themselves to the occasional takeaway.
A meaningful conversation
But interest rates are expected to continue to rise. James and Julie are under no illusion; they know they have no other means of reigning in their expenditure.
To their dismay, the Bank of England announces yet another rate rise. It’s only 0.25%, but it’s more than they can cope with. Panic sets in. Will they find themselves drowning in debt?
Filled with anxiety, James heads for the digital finance app on his smartwatch. Nervously examining the financial dashboard, he decides to reach out to an advisor for help. A click is all it takes.
Despite being late in the evening, Danny, the virtual advisor, appears in an instant. While Danny is a real person, in the future virtual advisors dealing with less complex issues may actually be ‘bots’.
Danny has all the information he needs about James’ and Julie’s finances at his fingertips. Biometrics confirm the pair’s identities before the conversation proceeds.
Together the three of them walk through possible options with the help of the affordability calculator; analytics tools instantaneously adjusting figures as they play about with options. They are quickly able to decide on a viable refinancing plan.
Conveniently, most of the detailed form the pair then need to fill in in order to apply for refinancing is already filled in: their personal details, address, income, recent transactions and regular outgoings are complete and validated.
Even though they’ve come to a decision, they’re not rushed into pushing it through. James’ and Julie’s application is saved, simply waiting for their fingerprints to approve it in the coming days.
The customers found the experience helpful and engaging and are confidently moving towards a positive outcome.
One step at a time
While this visionary picture I’ve shared with you may seem far off in the future, there are many elements already available today: digital finance apps, affordability calculators and biometric authentication, for instance.
But don’t worry if you’re only just starting to look at digital banking technologies, digital finance is an ongoing journey. You don’t need to adopt all the digital banking technologies in one go.
Produce a digital banking solution roadmap to guide your journey to digital. You don’t need to wait until all digital banking solutions are fully formed to take your first steps. After all, the technologies themselves are continually evolving.
What’s more, an Agile approach will give you the flexibility to adopt the right solutions for you and your customers at the right time.
Have you explored what role digital banking solutions will play in supporting your customers through the next wave of change?