Financial Management & Digital Banking: A New Proposition (Part 5)
Previous chapter: Part 4: Product-Market Fit Strategy
The business model will be based on freemium model. This means that we position our product as a one-stop digital banking and financial management application that users can test for free (provide them with the basic bundle). The free, basic bundle will be selling Financial Management Application which offers basic services such as:
- Spending tracking
- Basic financial wellness report (based on weekly, monthly spending tracking performance)
- Relevant banking product/service offers based on user needs and goals
- Engagement through media and entertainment platform (in house content that serves as company branding and customer engagement, offering relevant financial, economy, lifestyle and topical news, stories targeted to millennials)
- Engagement through community (user generated content and forum)
Why freemium and bundling?
As shown in the previous research, the switching cost / acquisition cost of banking customer is high. Even for millennials, they still place high levels of trust to established major banks to fulfil their financial service and needs. This is especially true for opening checking, savings and deposit accounts.
To mitigate these costs, we will try a combination of freemium model and bundling that can lesser the pain/risk of purchase and to change the perceived value of the products. These advantages are proven from different researches (banking cross-selling strategy here, and marketing strategies research by different authors here, here, and here):
Bundling can serve to reduce the “pain of paying” because it makes it harder for consumers to know what the “right” price is for the products. And it is helpful in encouraging customers to sample new or less popular products by making them part of a bundle.
Creating attractive bundles can also increase the average sale amount, as well as increasing the perceived value of the product. However, this must be done carefully especially when we mix differently priced products, because we may run the risk of devaluing the whole package (because customers tend to think in categorical comparison when comparing different products based on price alone).
That’s why instead of focusing the price or value of the product, focus on non-price attributes of the product (e.g., durability or comfort) — researchers say this will reduce the devaluation effect from mixed-value items.
So, by using these models, we get the benefit of:
- Using financial management app as a single location to conveniently purchase multiple products and services
- Bundles encourage product sampling and exploration → which give us the opportunity toincrease the size of the order/purchase and increase the number of repeat purchases.
- Bundles will be presented as a whole package where the product and its additional services/product complement each other, offered as a single value proposition that catered to specific segment and needs (ex: the deposit bundle is offered as an investment product with financial management and advisory for users who needs a savings plan and a tool to manage their finance)
- The bundle includes other form of services outside traditional banking services (such as financial advisory, media and entertainment) that cater to customer lifestyles and needs as well as a way for customer engagement
- These additional services and customer engagement help create customer stickiness and retention
The Products and Service We Sell
The Products Strategy
As it will be a very long and time-consuming process to complete all three products, this time I’ll be focusing on the first product only: Financial Management App (FMA). But due to time constraint, I will only try to flesh out:
- the feature concepts,
- the structure and relationship of each feature,
- and basic overview of the UI and UX
to give some ideas how my mind imagines what this product will be realised in real life.
This is the concept model that shows the structure and connection of each feature. I used this to map out how the feature will be structured. Basically, the app will have four major features:
- Main dashboard (or Beranda) is the first screen that users see when they finish registering or login into their account. The dashboard shows their achievements that they have achieved, or the goals they are currently pursuing. It also presents other products / level that users can try to upgrade the level of experience and widen their feature (Senyumku checking account and Senyumku Deposito are presented as premium products that can provide wider range of financial services access and facilities for their daily or future goals).
- Financial Management (Pencatatan) is the menu where users can add their transaction entries (spending tracking), as well to see the report and insight of their financial behavior. It’s a very rich feature because user can see the detailed report of their spending by tapping and filtering the report based on the category (cash flow, balance, spending by category, spending by dates, etc).
- Social Feeds (Social Media) is the menu where users can consume the content made by internal team and other user generated content. As mentioned previously, the purpose of this feature is to boost user engagement, so that there is another ‘hook’ that can pull users back to the app (other than the financial management feature itself).
- Profile is the account management where users can edit their profile information, change the settings of their notification, spending tracking template / configuration, etc.
This is the general flow of the onboarding process. I divided it to three parts:
- Personal data to gather user’s profile information: which will be helpful when we analyze their user behavior and will be utilized to give an insightful, personal financial advice for them.
- Spending Tracking Configuration: this is to help users setup their preferences and habitual spending, so that we can give a personalized and customized ‘template’ when users add their transaction entries. By giving them a template that matches with their habit and preference, we are making the spending tracking activity much easier and efficient for them.
- Notification setting: right from the start, we want users to set the reminder based on their personal habits. This is to match with their behavior, as well to ensure that the reminders will come every day, prompting users to engage with the app and use it in their daily lives.
The dashboard is presented just like a game dashboard where users can see their achievement and progress of their current goals, as well as other goals and products that they haven’t tried out yet.
This is done purposefully and consciously to evoke the nature and sense of a game (gamification), to make users feel that the process and activities of financial management itself (spending tracking, budgeting, saving, etc) are something that they can take delight in. The activity should feel like it’s something that not only important, but also enjoyable and something that they can look forward to.
As seen above, to persuade user into doing something that maybe unfamiliar for them (in this case, creating a budgeting goal), we need to remove the hurdles and make it engaging:
- First, make it simple and easy for user to create the goal. We take the burden of budgeting logic by breaking down the process into simple, straightforward steps that users can follow. We ask them the gist of their goals (the amount target, the date, etc). Then, based on the information we tell them how much they need to cut each week, and ask them which spending categories they want to cut/limit to reach their limit.
- Secondly, by presenting it clearly and simulating the budgeting projection, we help users imagine it and thus giving them a clarity in how to achieve the goals. By showing it clearly and in an informative manner, it can help in boosting users’ confidence, because they can picture it in their head how they will reach their target.
- Thirdly, give triggers to repeat actions by giving reminders and positive reinforcement (with congratulatory messages, badges, etc). Giving positive reinforcement and rewarding user for their actions will motivate them to keep doing and repeating the activities, thus helping users in forming the habit.
Spending Tracking & Financial Wellness
As mentioned previously, users can access Pencatatan to add transaction entries and monitor their financial health report. The financial report does not only shows their current state of their balance and cash flow, but it also compares them with their previous financial condition to give them a better picture of their progression:
- are they improving when compared to previous months’ finance?
- or are they regressing by having bigger consumption this month?
This comparison serves not only as a factual information, but also to prompt user to keep the positive behavior (less spending) and to cut out the negative ones (cut the increasing spending on some categories).
Furthermore, the more information we gather, the more detailed and insightful advices that we can provide to users. In this case, a simple example is showing that compared to their average spending, this month is spending is up by 50% in grocery shopping category.
For a more detailed insight and personalized advice, we will tell them that it is available in premium products (when users upgrade by opening Senyumku or Senyumku Deposito account), thus increasing users’ willingness to try other products.
This is the basic visualization of the social feed: a menu that serves as a platform where users can consume educational yet interesting bite-sized financial and lifestyle contents. The news feed functions as an entertainment that doubles as a form of user engagement and company branding, as well to create a community around the product:
- User engagement: user can engage passively (by reading and following certain topics or content writers), but they are also encouraged to engage actively by sharing their own stories and creating contents for our marketing campaigns. This reinforcement is done in the form of rewarding active behaviors with achievement badges, showing the campaign winners’ content and profile stories in the community (Komunitas) section, and by displaying the MVP members (users who achieved the most goals each month) in the leaderboard.
- Company branding: the content serves as a soft selling form of company internal communication, where we show our dedication in boosting financial literacy. However, the content can also be used for ‘soft’ form of sales as well, by integrating advertised message (selling our product) in the content as well (advertorial).
- Community: as mentioned in the first point, we can try form a community by having members sharing their personal stories, opinions and enabling them to follow their friends or other writers. We also use the leaderboard to create a sense of healthy competition in fellow members, that will be useful in boosting user motivation and willingness to keep pursuing their goals (as they are motivated by the progress and achievement of other members). However, this is still a basic concept that we need to explore further.
Well, that’s all for now. All in all, this is a very interesting product concept that I want to explore and flesh out further. What will be more challenging is the integration and upgrade mechanism to the premium product: Senyumku account and Senyumku Deposito. What will the product and its feature (the architecture, information structure, branding, etc) look like?
It will be a challenging yet engrossing endeavour for sure. However, due to time constraint (for the design challenge) right now, this will be the ending point of my current exploration. Anyway, thank you for your interest and time. Any advice and feedback will be greatly appreciated!