Author: Adrian Buxton
In an earlier blog post, I explored why digital finance needs a fitness band as part of its multi-channel strategy. Read on to find out what that fitness band might look like.#Digital #finance needs a fitness band as part of its #multi-channel strategy Click To Tweet
Imagine a new icon on your fitness band: a pound sign that changes colour to tell you how your finances are doing this month: green means you’re doing well, more like amber and you should keep an eye on them. Beyond amber and you need to take action.
What I’ve described here is a very simple digital financial interface for tracking the health of your finances – at the flick of your wrist. It would be ideal for those individuals who struggle to keep track of the money coming into and going out of their accounts. For people who aren’t very good with numbers, technology, or remembering things, for instance.
The wearer doesn’t need to go through a complex process of setting up their fitness band. They only need to link it to their accounts and commit to wearing and taking notice of the band all day, every day.
A personal trainer
By wearing the band, the wearer is, in effect, inviting their bank into their lives to help them actively manage their finances. The band becomes the wearer’s personal finance trainer, tapping them on their shoulder whenever they’re likely to overspend.
So, what would that look like?
Let’s take a wearer who’s nearing their overdraft limit. They walk into their usual supermarket. Very discretely, the band buzzes in their wrist. As they flick their wrist to read the screen, the icon flashes amber. A simple message suggests an appropriate target for today’s shopping to help them stay out of the red.
If they then enter a shop where they are likely to spend frivolously – clothing, handbags, or gadgets, for instance – the digital finance fitness band flashes again – but this time displaying a friendly caution suggesting they can’t afford to buy anything in this shop today.
It could even go further and give the wearer a small, but harmless, electric shock. After all, a little reminder just at the right moment might stop them from taking the wrong path.
At home, the fitness band could integrate with Alexa, providing a voice interface at home.
When the wearer goes to buy something online, Alexa tells them how much money they’ll have left after the purchase. This extra step would halt an over-spender in the act and make them consider the consequences before going ahead with their purchase.
It could also suggest turning the heating down a notch, for example, if finances were getting a little low.
Behind the scenes, the digital finance fitness band employs machine learning and advanced analytics, making use of not only the wearer’s financial data but also data on typical behaviours for their demographic.
It uses a data feed from their accounts to keep up-to-date on regular income and outgoings along with any recent spend. Advanced analytics can then forecast where the wearer’s finances are heading and exactly how much money they can afford to spend on any given day.
Machine learning studies and takes into account the wearer’s spending patterns – the days, times and places they’re more likely to overspend. One wearer may have a habit of going on a shopping spree the day after they are paid, or on a Saturday morning, while another may tend to be frivolous in certain shops.
Add to that anonymised insight into typical behaviours of the wearer’s demographic. The fitness band could use that to uncover other potential risks to look out for.
Take young parents, as an example, who typically may overspend in the weeks leading up to Christmas. Someone who is on their own, on the other hand, may tend to shop online more as dark nights draw in during the autumn. Others may be at risk of overspending in the weeks leading up to their summer holiday or during the week of their birthday, and a friendly warning beforehand may encourage them to spend less.
In its quest to help the wearer improve their finances, it could also give them some hints and tips to help them improve further. It could suggest alternative mobile phone contracts, for example.
Then how about using the fitness band to set challenges and reward the wearer with badges whenever they’re met? Immediate rewards for good behaviours reinforce good habits one step at a time.
Those challenges could also be extended to a wider group – to family or friends, for example. Banks could mimic the Aviva Drive challenge app, which encourages safer driving.
While a good score might earn the wearer bragging rights with family and friends, it could earn them respect with their bank. If someone with a poor credit score is consistently earning the badges that show they have modified their bad spending habits, they could be rewarded with lower interest rates on loans – simply because they have demonstrated financial responsibility.
A modern, easy-to-use personal fitness band could be the key to turning around bad financial habits someday in the not too distant future. Will you include one in your multi-channel strategy?