The Future of Financial Services

The banker. That enigmatic figure that lurks, with their monogrammed suitcase, down Wall St and Bishopsgate.Yet, a ten-minute walk from our offices to Liverpool St will show you that this deep-ingrained image of the self-serving financial worker is outdated. Sure, banks like Nationwide will still use it as a stick to beat other competitors, but the archetypal figure of Patrick Bateman – addicted to sex, drugs, and conspicuous consumption – is outdated. You’re more likely to find Gordon Gekko at Glasto Glamping. The Wolf of Wall Street is getting quite accustomed to its sheep’s clothing.This is something we’ve previously discussed at MOF HQ. Whether it’s putting faith back into financial services by prioritising the bold over the boring or reimagining the notion of wealth, our standpoint is clear – the realm of wealth management could do with a facelift.Why? The obvious factors: the increasingly inadequately named “cost-of-living crisis”, an extended period of war and turmoil, and the continuing reverberations of the pandemic are all financial challenges that consumers are dealing with, but do they trust the options out there? The figures are damning. It’s not quite 2008 levels, but according to Frontify, 53% of millennials don’t think their bank offers anything unique, with 1-in-3 open to switching banks in the next 90 days. Evidently, when financial services seem to be riding the same gravy train, brand loyalty becomes a completely fruitless endeavour.It shouldn't be so. Moreover, making your company distinct has never been more pressing. Over the next 40 years, the World Economic Forum predicts that the Great Wealth Transfer will move $40tn from the boomers to the millennials. Add to that the ⅓ of financial advisors approaching retirement age and we’re looking at a growing chasm between ‘the way it always has been’ and the future. The challenges of modern-day finance are not purely limited to those with financial troubles, those with significant wealth should also know that the times they are a-changin’.But friction and change are good. Hot-beds for innovation even. The following stats from EY attest to fintech thriving: 32% of traditional banks consider their current partnerships very important, with 55% anticipating that they’ll be so in the next 3 years. And while we would never discourage healthy collaboration between more traditional institutions and clever new upstarts, there is still plenty of white space where brands can innovate. When Monzo ushered in a new age of banking – taking it from “someone will do it for me”-service to a more design-led, user-first service, it signalled an intention to keep up with the times. It fell in line with the digital revolution of making services hyper-personalised, driven by data and social interaction.Wise, the London-based fintech company who disrupted the international money transfer scene, are another example of user-centric design and servicing. They identified a tension in the market (exorbitant transfer fees), provided a user-friendly experience alongside an enticing financial package, and the result? 16 million customers from traditional players – evidence that innovation isn’t simply something financial institutions need to do to keep up appearances. Crudely, the question for financial companies in the face of the Great Wealth Transfer is: how can I get the biggest slice of the pie?Brands looking to emulate the recent success of Monzo & Wise should be focusing on creating user-friendly interactions. Be that websites, apps or any other variety of customer touchpoints, the emphasis should be on vibrance and ease of use. Why? Well, the reason these young upstarts have great success through bold, innovative UI is, in part, thanks to the great majority of financial services with websites that can only be generously described as prosaic, boring and stuffy. The apps are even worse. The veneer of privacy and discretion seems less like a mark of elegance and more like an act of ignorance.However, it is not simply a case of choosing some left-field Hex codes and inputting zany animations. Design in the absence of context is styling, and financial institutions need to know what they are trying to innovate, and which direction they’re trying to take before they start to create something more youthful-looking.Take Swiss bank Bergos as an example. At first glance, this is a breath of fresh air. No gimmicky cartoons. No soulless stock imagery. One navigation bar compared to the 3 (or even 4 or 5) navigation menus you can find on Natwest’s website, for example. Objectively speaking, Bergos’ editorial approach sets it apart from several competitors by dint of it being nice to look at. You’d imagine the thinking behind this eye-catching rebrand was to appeal as a refined, elevated option for those looking for a Swiss bank. However, after five minutes of scrolling through the website you realise, for all its glamour, the website is surprisingly difficult to navigate. The parallax animations make it difficult to use. Idem with the hover states. Ultimately, the impression you are left with is that this website is perfectly reflective of what the common assumption about a Swiss financial institution is – if you don’t know what’s going on, it’s not for you.Despite what some culture-war agitators might say, making banking inclusive goes way further than being a “woke tick-box exercise.” In fact, in spite of it being a crucial part of our lives, the financial sector remains quite exclusionary.According to Mastercard, 54% of people with disabilities lack accessible features from paying bills or executing tasks. Add onto that the 58% of black Americans who have experienced at least one negative experience while engaging with financial services vs 34% of white Americans. In the words of Janet Yellen, US treasury secretary, “our economy has never worked fairly for Black Americans – or really for any American of colour.” Beyond this being a frankly damning admission for someone in a government position to make, this demonstrates that there is ample room for conscious innovation that can work for the more disadvantaged in society.I add the word conscious there because there is even a growing fear that, in the midst of technological advances in the form of AI, LLMs and god-knows-what-else, these machines will be biased against minorities. With their databases being pulled from existing data and information, a machine that learns from a disparate society will make disparate decisions. The Markup found out the following: in US households with similar financial and credit backgrounds, Black families were found to be 80% more likely to be denied a home loan than white families by loan-approval software. For Native American (+70%), Asian (+50%) and Latinx applicants (+40%) the stats don’t look much better.Much like we mentioned before, fintechs have been rushing into this space to address the inequality. There’s GoWomen, a fintech company designed for women of colour; Greenwood, a digital experience for Black and Latino customers, or Cheese, a banking app designed for Asian Americans. Your Juno’s tagline “Where finance meets feminism” may not be exactly what Simone de Beauvoir had in mind when it comes to emancipation, but it is certainly a step towards financial equality and representation. As Berna Anat, a financial influencer, says: “Why should [older white men] be the ones teaching us about financial freedom when (1) it’s folks like them that created and uphold the exclusive, oppressive structures that got us BIPOC here, and (2) they don’t look, talk or live like me at all?”.¼ of crypto owners are LatinX (Morning Consult, 2022). Accounts like “Black Bitcoin Billionaire” have over 350k followers. An inclusive brand is not only one that is helping fight disparity in the financial sector but one that can appeal to wealth in all its shapes and sizes. Another way the financial sector can turn the current economic climate on its head is via education. Recent scandals such as the NFT bubble-bursting, or the collapse of FTX has demonstrated that the road less travelled can often be gilded in precarity, or egotistical con artists. It’s understandable that traditional big players were initially tentative with crypto-currencies as they are an unbelievably volatile market but if you were to take 15 minutes scrolling through the social media feeds of a Gen Z or millennial, you’d find that every man and his dog has an opinion on finance.Podcasts, reels, programmes, discount codes, apps – you name it – exalt the next thing you have to be investing in. Some players are genuine, the Gamestop short squeeze was an example of the internet’s combined wealth of the many winning against the financial power of the few, but the grand majority are, politely, mumbo jumbo. And yet they work, because they prey on two factors: the general public’s enthusiasm for investing, and their lack of knowledge about it.Again, there are already players trying to bring financial education or budgeting/investing advice to the general public. Cleo, an AI-driven budgeting tool, has a jovial ‘roast mode’ that will light-heartedly mock your spending habits. Likewise, Google is developing an array of life coaching modes in its DeepMind model, one of which will be advice for budgeting and investing money in the right way. However, as is often the case with AI-generated content, this isn’t advice that works for the individual, but general advice that works for the masses. As Einstein once said, “education is what remains after one has forgotten everything learnt at school”, and yet according to Santander, only 38% of British kids receive financial advice at school. Despite the enthusiasm of the younger generations (65% of Gen Zers use investment apps to trade according to the CFA), we have in the UK, at least, “24 million adults who don’t feel confident managing their money”, despite the vast majority (85%) of 17/18yr olds who want to learn about money in school (Raconteur.net).So when we think about innovative ways to encourage brand loyalty, to the generations that are about to inherit $40tn over the coming years, why not consider offering an educational platform, or content to entice their engagement with your brand? If you consider the success of Duolingo, an app that has transformed the way eager learners can access languages in a more accessible and fun way, you’d imagine a similar feat would be possible with finances. In fact, Zogo has already tried to capture this white space themselves, but there is certainly a more specified space for businesses tailored to HNWIs to move into.Much like a language, there’s understanding the basics of finances, and then there’s being able to act confidently in the sector. Moving into the more specialised and premium realms is something that investment banks already pride themselves on. And while some expertise may often be held secret as it is essentially an investor’s ‘mojo’, sharing educational resources with a cohort more interested in spending its money on apps could be an innovative way of retaining customer and brand loyalty.Additionally, it would be a good way of converging ESG interests with business ones. While Gen-Z is a generation that prioritises wellbeing over wealth, 80% of this cohort say that success is financial freedom (Intuit, 2023). Who wouldn’t be loyal to a brand that helped them achieve that? We’ve already gone over financial communities. We know people are willing to talk about investments, for better or for worse, but there still seems to be a desire to break the taboo of talking about finance without having to declare the next California Gold Rush. What are the blockers?Firstly, the internet is the Wild West and therefore talking about investment options with the greater public is much like speaking into the void and getting a million voices in feedback. Secondly, when it comes to private wealth, especially in the upper echelons of society, anonymity and discretion are vitally important. It takes a brave (and perhaps foolish) person to openly discuss their wealth on the public forum.Once again, there are innovators trying to counteract this barrier to discussion. Shares, a UK-based startup, is essentially Twitter for investors. Users can share their tips and tricks of the trade, while there is also the ability to directly invest in the app and access a large database of information on stock etc. Again, however, with the app open to anyone, there are issues over security, privacy and the quality of information.Here lies the opportunity for timeless brands: the status of financial institutions could elevate this concept to that of a virtual member’s club. There is already a gravitas that comes with banking with certain institutions so it tracks that there would naturally be an equal desire to be part of a platform offered by said institutions – one that offers the ability to communicate with fellow clients under the cloak of anonymity. Employees could mingle with clients seamlessly, you could encourage private and public discussions among clients and give them the space to foster new engagements or conversations without having to compromise their security.This would also appeal to the fresher generations, who may have the inclination to invest more ethically. Ethical questions around Bitcoin, for example, which has the carbon footprint of a small country and is also used by criminals around the world to fund their activities, could be eased through discussion with like-minded individuals. Likewise with the proliferation of forensic examination of investments from startups like MyMotherTree, which ranks banks against their environmental impact, places for people to collaborate to make a difference have never been more important. See it like Soho House, for the contrast collar shirt. Ultimately, in times of great turbulence, many brands will flock down the road well travelled in order to guarantee stability for their customers. However, there is ample white space for timeless brands to exploit in the financial sector, especially with their greater might compared to start-ups. Strong, strategically-driven innovation is a fantastic opportunity to position brands in a way that is more accessible, inclusive and impactful to the investors of today, and of tomorrow. It is a great way of sustainably enhancing brands visually and verbally to cut through the noise. Financial institutions don’t need to cede the white space to technologically-driven startups, nor should they feel reticent about dominating the challenger space, but instead boldly position their brand as a bank that is willing to zig when others zag.There is no doubt that the banker of yesteryear is fading away into obscurity, and perhaps it is time to also retire the bland, secretive branding too. Finance is exciting, dynamic, diverse and ever-changing – it’s about time more brands reflected that. With stat-backed strategies for financial innovation, from inclusion and education to conversation and community, MOF Strategist Louis Cardoe paints a picture of the sector's future.

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