Anticipatory Banking: can FinTech feed forward?

Despite the clamour about FinTech innovation, there’s still a gap in the market for fully-fledged Anticipatory Banking: banking and financial services that accurately predict your money flows and nudges you to act to minimise disruption. For example, if my bank can accurately estimate that I’m likely to go into the red in the near future , I’d like a nudge to suggest I transfer some £ to my current account. The nudge should contain simple tools to customise the suggested action, and a “go” button that enables me to seamlessly authorise the suggestion.

Is this too much to ask? Although traditional banks are starting to provide feedback on spending (finally! what is this, 1997 again?) , I am a lazy customer. I don’t want to have to download my data and pick through it to figure out my spending trends. I don’t even want to have to fiddle with data dashboards either, particularly not on a mobile device. I want feedforward, not feedback: I want my bank to do my smart thinking for me, and anticipate when I might need to act. And make it super easy to act and to tweak the suggestions.

The anticipatory approach needs to be context-aware. My bank will know what money will definitely be leaving my account in the near future (direct debits etc..) and can use the historical data it has on me, plus contextual data like the season, weather and working pattern to predict a probable spend.

In the future, given that FinTech is experimenting with psychometric testing, I’d like the context-awareness to include physiological monitoring. I may well be unaware of any links between my physiological or psychometric markers and my spending. It would be helpful if my banking system can both figure it out and transparently show me how it’s creating its predictions. My bank could then warn me when, say, my stress levels are high and I’m at risk of major spending, without me having to laboriously set up if-then rules, either (if I am stressed, then I might spend more). And while I’m comfortable having a faceless algorithm knowing my secret spending habits, I’ll want a cast-iron guarantee that my bank isn’t going to share them, even with its own staff.

The first problem with this approach is that the needs of the user may conflict with the bottom-line aims of the bank: customers that accidentally go overdrawn make them money, so helping users avoid this may hurt profits. This functonality will only emerge if the profit from new users attracted by shiny anticipatory banking support can offset the lost profits from reducing money management-slips.

Secondly, there’s an habituation problem: I might get so used to my bank doing all my money-related thinking for me, that I no longer bother to check that it has my best interests at heart (hint: it doesn’t) and blitheley click “go” without really thinking it through. Good for the bank, possibly not so good for me.

Thirdly, there’s an attribution problem: if I follow the bank’s advice, and still lose money, who is actually responsible, and who should pay?

Looks like new FinTech services Starling and Tandem are moving in this direction, and have raised a lot of money. It will be interesting to see how their anticipatory services pan out on launch and over the longer term. If they get any serious customer traction, their innovations will leak into the more traditional banks, probably via the hubs/accelerators that the old-schoolers are using to overcome their internal barriers to innovation – see Lloyds, Barclays, Kickstart etc..