Since the banking crash of 2009, German investors have massively lost trust in the entire world of finance. They had to realize that they were paying for giant overheads disguised as transaction fees in their financial products. Retail banking customers understood that there are few asset managers that can beat the market. In the current low interest environment, their return assumptions drop to zero.
Investors’ fear that many companies and institutes may collapse is, therefore, justified. Reading the daily news and witnessing increased sales efforts on the part of asset managers and independent financial advisors, customers felt their nervousness multiply. The rise of web based fintech encourages the non-risk averse to make their first crowd investments and worsens intransparency in the market for the short term.
The result: A large share of German retail banking customers is withdrawing and turning to manageable and tangible real estate investment. We, therefore, asked ourselves how one might revive the success of financial advice within the banking sector. At this point, we remembered what we ourselves had to learn over the past ten years in consulting: Provide services in advance of payment, simplify complexities, make your approach transparent – and one of our most important learnings: Share the objectives of your customers.
Knowing what others are planning makes it far easier to help them achieve their objectives. So the one who knows early on what customers are willing to spend their money on and why, will best be able to advise them on saving in due time. Saving means abstinence. Abstinence, however, for most, is only attractive if there is praise, approval or reward for it in return.
The running app Runtastic praises you for every additional kilometer. But when was the last time that your bank statement praised you? Ekoio, an app for ecological driving, encourages you to stay calm. Why doesn’t the robot of your stock deposit? Why is investing not fun? Is postponing consumption outdated? Many savings and insurance targets, labeled retirement provisions, are far too abstract for the on-demand-generation. In a time of functionalism all personal data is surrendered euphorically. The wish for fascinating offers that anticipate and surprise is growing steadily.
Why aren’t banks advertising on every online search for consumption products, offering financing services? This would be possible for big investments (e.g. house, car) as well as spending on services (e.g. travel, health). This would immediately give us a concrete objective, connecting us to our customers. Saving money ought to be fun again.
And so we kept on thinking: Is it sufficient, in a society hard-pressed for time, only to focus on investing money? Our conclusion: An institute offering customers advice on how to spend money efficiently will be better equipped for advising them on how to accumulate it efficiently too. Curating expenses for customers does not only save them valuable time, but will help build a closer relationship than any other financial advisor can hope for.
Banks should therefore advise in equal parts on the issues of efficient consumption and efficient saving. Of course, everyone wants to invest in assets that are stable in value. But is it possible to help people spend money in a way that preserves value? Value has to be recognized. Three standard suitcases are not as valuable as one Samsonite, and one Bulthaupt kitchen is more valuable than three do-it-yourself kitchens. Finding the right house is vastly more time consuming than finding the right way of financing it.
We are convinced that retail banking customers will entrust with their money whoever understands their needs and helps them to live their preferred lifestyles. If a bank successfully combines achieving the objectives of its investors with offering experiences that “money can’t buy”, it is going to earn trust and enthusiasm. No matter if investment or spending – the important thing is that bank advisers stay true to their ambition of finding the best fit.
If you enjoy thinking about new ways to position your company, write us or give us a call. We are looking forward to meeting you.
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