PayThink | October 20-22, 2014 | Phoenix

Challenger Brands & Disruptive Ideas: Learning From The NeoBanks

Marketers at banks and credit unions need to take heed. Ignoring players like Moven, Simple and and GoBank is a big mistake that could leave you behind the eight ball.

By Jim Marous, SVP/Corporate Development at New Control

Since the beginning of the year, I have been part of the beta tests for new industry players Simple, GoBank and Moven. While each of these new players have different features and benefits, they differ from traditional banks significantly more than they differ from each other. They are what could be called NeoBanks — those offering retail banking services but without physical locations (what Ron Shevlin originally termed “NeoChecking”). These new competitors are garnering a great deal of industry attention, as much due to their mobile-first positioning as their rapid market penetration.

Subscribe TodayShevlin says that one day NeoBanks like these may very well be rivals at war. But for now, the firms are better off collaborating than fighting. These new players have to educate consumers on what a new type of bank is, will be, or could be. They have to build demand for the new type of bank they’re building. Which is, of course, no easy feat.”

Marketers in the traditional banking space — retail banks and credit unions — need to take heed. Ignoring players like Moven, Simple and Bluebird from Amex is a big mistake. At the very least, traditional banks and credit unions need to learn from what these firms are doing right and apply what they can to their offerings. Failure to give these startups the attention they deserve could yield a huge competitive advantage to them, and leave you behind the eight ball playing catch-up.

Focus on Intuitive Design and Simplicity

When you visit their websites, what is immediately apparent about these NeoBanks is their focus on ease of use, whether you want to open an account, transact business or communicate with the firms on a one-to-one basis.

Instead of websites that are littered with more information than any consumer could digest and awkward processes, these NeoBanks understand the customer experience and create a pleasurable customer journey. When was the last time a customer said that about your bank or credit union?

While there are those who will point out that these banks don’t offer the vast array of products and services that are available at a traditional bank, I would challenge most banks to review their checking account page(s) and compare the user interface of their website to the NeoBanks.

I have also noticed that as Moven, Simple or GoBank add new features, the complexity of my relationship with these banks has not increased. Instead, simplicity is part of the innovation process.

Getty Images | Content Marketing

Opening an Account

While each of the NeoBanks have staggered their market rollout to manage demand and their ability to support new clients (Simple and Moven still have people in virtual queuing lines waiting to open an account), the ease of opening an account at any of these banks is unparalleled (a Virtual Wallet account opening at PNC is close).

Gone are signature cards or lengthy account opening forms that result in a poor branch, online or mobile account opening experience as referenced in the new Javelin Strategy and Research report entitled, “How to Upgrade Online and Mobile Account Openings For An Omnichannel Era.” With any of the NeoBank online opening processes. there are only 4-5 steps, minimizing the potential for abandonment during the process.

( Read More: Online Account Opening Irks Customers, 1 in 4 Abandon the Process )

Tracking Spending

What’s nice about the NeoBanks is that they were built from the ground up with a focus on providing the most dynamic and instantaneous method of tracking spending. By providing real-time feedback, smarter spending decisions can be made.

My GoBank account is set up with the debit card as the focal point of the relationship, whereby Moven and Simple are definitely mobile applications with card access. Moven even provides a PayPass sticker for the back of my mobile device for card-less payments.

While GoBank doesn’t provide the amount of depth of insight into every transaction I do, I still believe the balance bar is the best mobile app in the banking world. While not flashy, it allows me to see my balance with one swipe of the finger without logging into my mobile account if I wish (I had to pre-authorize this capability).

gobank_mobile_banking_app

When viewing transaction history, Simple provides a number of options to provide notations about purchases, including the option to add a memo to the purchase, a picture of what was bought (or where I ate) and even a map of the location. The view on my desktop is very similar to what I can view on my phone.

simple_mobile_banking_app

My Moven account goes a step further than Simple, providing an immediate receipt for each purchase on my phone (or by text/email) as well as giving me insight into how much I have spent in any individual category or at a specific location. Over time, I also get information as to whether my spending in any category (or at a specific location) is on track with previous behavior. Moven has even talked about providing insight into how my spending compares to other people in my behavioral/demographic segment.

moven_mobile_banking_app_and_debit_card

Kiosk & Display | Digital Merchandising for Financial Institutions

Integrated PFM

While the definition and extent of personal financial management (PFM) differs quite a bit between the three banks, the functionality is definitely integrated within the application as opposed to being added on as an accessory. The tools are all very intuitive and in the case of Moven, very feature-rich, with account history, goal setting, budgeting, etc. all front and center with both the online and mobile versions.

What is interesting about the Moven application is that as opposed to providing a ‘rear-view mirror’ look at my finances, Moven looks ahead to what is going to occur and provides immediate insight into my most recent purchase as well as my purchases over time. Without massive charts or graphs, I am able to get a feel for how my spending behavior varies over time.

GoBank also allows me to set funds aside in my Money Vault and combined with my budgeting feature, will tell me if I am buying something that may cause me to be short of funds later. If funds set aside for future bills are not enough to allow a current purchase, the GoBank Fortune Teller will let me know that I may want to reconsider my purchase. This is actually a very fun and helpful tool if the account is actively used.

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Setting Goals

For most people, setting financial goals is more of an ambition than a way of life. I try to set aside money for upcoming events or purchases, but most of the time, I pay for things after I do them (using credit).

With Simple, the process has been made super easy, using virtual version of the envelope method most of us grew up with. Numerous different ‘Goals’ can be set instantaneously using either the online or mobile interface and funds are automatically set aside each day for my larger purchases.
When paired with the ‘Safe-to-Spend’ feature, my amount set aside for Goals and upcoming payments due are subtracted from my available balance to give me an accurate picture of how much I can really spend.
With the mobile version of Goals, I can avoid impulse purchases and set a goal for something I want to purchase when I see it (like for the new iPhone case I have my eye on). When my goal is met, I can then transfer the funds from my goal to the purchase.

( Read More: 7 Reasons to Love GoBank )

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Deposits and Bill Payments

As can be expected, deposits into any of the NeoBanks is done electronically, either by mobile photo deposit or funds transfer. The process is extremely simple (pun intended) and intuitive. The delay for getting credit for the deposits varies, hoever, with GoBank still having the longest hold time for personal check deposits (government and employment auto deposits occur much quicker).

Since none of the NeoBanks provide checks with their account (you can request checks with Bluebird), payments with these institutions is much different than with traditional banks.

For example, Simple provides a way to select the date I want my payment to be received as opposed to the traditional method of selecting the day I want the payment sent. Simple does the math to determine how far in advance the payment should be sent. They write the check (or send via EFT) and I don’t need to worry. In addition, I receive a clear notification of my payments and even a view of what the check will look like before it is sent.

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verizon_check

Simple even notifies me if a payment can’t be made as scheduled because of the lack of funds on the day of the scheduled transfer. As opposed to overdrawing the account, they send a message to inform me that a payment is being delayed due to lack of funds.

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GoBank payments digitizes the check writing process of old with virtual checks being available online to write and have processed. All I need to do is fill in the blanks and the bill is paid.

gobank_pay_a_bill

Getty Images | Content Marketing

P2P

Since each of these new banks were built from a digital perspective, P2P payments are one of the best functionalities. While I have spent as much as an hour trying to set up and then make transfers with most of my traditional banks (some require test payments and/or exact matching of names in the required fields), making a P2P transfer with any of my beta banks provides alternatives and is easy to do. But not all of the banks use the same process.

For instance, with my Simple account, I create a new contacts by simply adding a person’s name, email, phone number, & address. After that, I can request Simple to send my contact a check for any given amount provided I have the funds available to do so. A combination of old school and new school.

At GoBank, it is all new school, with the option of sending money to anyone in my contact database using either their email or the mobile phone number. The recipient will get an email or text message with instructions for claiming their money. If the recipient is a GoBanker, they’ll receive the funds automatically. If the recipient isn’t a GoBanker, they have the option to either open a GoBank account to retrieve the money or transfer the money to their PayPal account. If they don’t pick up the money within 10 days, I get a notification and the money back in my account.

The team at Moven is going even a step further, making payments super simple by mobile phone number, email or through Facebook. What’s great is that when I authorize my contacts to be accessed by Moven, the payment process is only a click away since I won’t need to re-enter any recipient information. In other words, I can pay a friend in seconds as opposed to minutes and can do so from my mobile device. Very cool.

( Read More: Happy Anniversary Simple Bank )

Customer Acquisition

With Simple and GoBank expanding beyond initial beta testing and Moven gaining momentum, each NeoBank is beginning to generate more buzz in the marketplace. None is as aggressive as GoBank, with the placement of applications at RiteAid and Kmarts and the product placement on the show Project Runway.

GoBank also has been the most aggressive with social media and referral programs, using current customers, friends from Facebook and others to promote their new services. While no statistics are available on the success of any of these initiatives, some of the efforts must be exceeding expectations since my screen cleaner shipment was delayed due to demand that quickly exceeded the inventory.

gobank_facebood_promotion

Conclusion

Time will tell as to the ultimate success of these new ventures, but I strongly encourage all bank and credit union marketers to open each of these accounts to view how a mobile-first mentality can change product development, product delivery and even customer communication. I for one have been very impressed with each of these offerings and have used the accounts significantly more than any previous ‘shopper’ account I have opened due to the ease of use and the fun I have had banking.


Jim MarousJim Marous is a recognized financial industry strategist and publisher of Retail Banking Strategies for The Financial Brand. Marous publishes the Digital Banking Report and is a consistently highly rated speaker worldwide, presenting on global trends, distribution strategies, customer experience, digital banking, advanced marketing and marketplace disruption. You can follow Jim on Twitter and LinkedIn.

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Comments

  1. The interesting point Moven, Simple and GoBank bring is they have invested in digital systems, not physical systems. Working through creating a simplified digital user experience, optimized for mobile, they have disrupted the way consumers can interact and engage with their money.

    Others simplifying the digital (and mobile) experience, while not financially related but worth noting, include Zappos.

    Like Jim noted, I also encourage credit union execs to open accounts at Simple, Moven and GoBank to enjoy and play with a simplified user experience.

    As humans, we tend to make things more complex over time, even when we have the best intentions to make things easier for others around. According to the astronomer Johannes Kepler, “Nature loves simplicity.” Even Henry David Thoreau in Walden challenges us with, “Simplicity, simplicity, simplicity! I say, let your affairs be as two or three, and not a hundred or a thousand; instead of a million count half a dozen, and keep your accounts on your thumb nail.”

    How are you making things simpler at your credit union?

  2. Jim –

    Great points regarding the rise of the NeoBanks and a simpler approach to the digital delivery of financial services. My opinion is that the industry is watching these players with interest from the fringes (and not enough of us are tuned in).

    We are underestimating the aggregate impact of this shift toward simpler experiences – and it will be at the peril of those financial institutions that aren’t agile enough to deliver on the promise of a simpler, more transparent, more personalized experience…things are changing, consumer expectations have shifted. Technology is driving the next iteration of financial services.

    Welcome to bank 2.0. Indeed.

    Great work (as always),

    Brad @Leimer

  3. @ Bradley – i can confirm your point about industry leaders lack of knowledge for these non-traditional players. When I speak at events around the country and reference them, I ask credit union leaders in attendance who has heard of them (Moven, Simple, GoBank) and what they are doing. On average 75%-85% don’t have a clue. Sometimes Square is still even a new concept.

    It is exciting to share a new thought or idea with an audience but also frightening at the same time simply for the fact of the rapid speed things are and will continue to change.

  4. Jon Reske says:

    In looking at GoBank I will say they have some slick marketing.

    But here are the comments from my marketing staff of twenty somethings I asked to review this brand website…

    Great marketing. The big thing that comes to mind is – why do they have a monthly membership fee if you can pay $0-9?? Seems a bit odd.

    The reason I said “great marketing” is because when you dig to any level of depth you realize the products are somewhat lacking.

    1. No Overdrafts – that’s because they don’t give you checks, right? So you can’t really overdraft. They are just going to let you bounce the check and get hit with a merchant fee or worse. We can offer no overdrafts too. Just don’t sign up for overdraft protection!
    2. Access to over 40,000 ATMs for FREE. Well, that’s all well and good, except that if you do not use a free ATM, Go Bank will charge you $2.50, on top of whatever the ATM provider charges you. An unwitting student is not going to appreciate that discovery.
    3. The monthly fee. We can easily beat that because we don’t ask for a monthly fee ever, even if it’s optional.

    So yes I think they have good presentation and it will be great to take notes and keep an eye on them but I think they have an uphill battle. If I signed up for this bank as it currently stands when I was a student I would feel pretty disappointed when I first got a fee.

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