What Engagement Banking Needs Is Less Engagement

For better or worse, personal finance management tools dominated this fall's Finovate conference with gamification, customer interaction and do-it-yourself asset management persisting as themes.

Many of the pitched products are undoubtedly pretty. (Behold: some tweets about how nice some of the new interfaces look!)  Admittedly, they fill a market demand. Logic dictates a global financial crisis will inspire consumers to play a more active role in managing their money.

Still, I can't help thinking the money management moment has passed and that, moving forward, engagement banking – a future model for the industry that PFM is a big part of – would benefit from less engagement.

This might reflect my lifelong aversion to charts and graphs. Or it could be related to a suspicion that many financial firms want to "engage" with me simply to obtain information marketable to a third party. Facebook, which uses personal information to sell targeted ads, was name-dropped during more than one demo session at the conference.

(An aside:  The notion of Facebook as an inspiration for new banking models terrifies me. While younger demographics respond to social media, there are legitimate reasons not to encourage sharing such sensitive financial information. And, from a commoditization standpoint, there are signs that the social network's advertising strategy, while currently profitable, could ultimately alienate users. )

More likely, my call for a "less-is-more" strategy could be a natural outgrowth of my philosophy regarding technology. I expect it to do things for me as soon as I need them done. Push the button, check gets cashed. Click the mouse, save a penny. Tweet a hashtag, lower the balance on your credit card statement.  

This is why SavedPlus, an app that automatically transfers money into an account after someone buys something, is one of the only tools discussed at the conference I could imagine using. The other is Yodlee's Tandem, which allows for collaborative money management and was pitched, in part, as a way to pay bills without having to deal with an estranged friend or family member, like an ex-spouse.  

Tandem's pitch illustrates how customers sometimes prefer less interaction. Also, the app performs a service that customers would conceivably not just adopt, but actually pay for. (For all the bells and whistles, PFM adoption rates, particularly at banks and credit unions, disappoint.)

Don't take my word for it. I'm hardly the only person who opts for function over form when it comes to digital advancements. A 2012 study by the public-relations firm Ketchum found that 46% of consumers want technology to simplify their lives, while only 35% want it to entertain them. Furthermore, 76% of customers said they were "not very satisfied" with the ability of personal technology products to simplify their lives – indicating opportunities financial firms can capitalize on.

In his excellent post in our Future Model of Banking series, Bradley Leimer applies a very broad definition of engagement banking and suggests the concept is just as much about customization and control as it is about fulfilling a customer's desire to interact with their computers and smartphones. (Another aside: This could be one more instance where terminology is failing the industry, given that the word "engagement" denotes a level of commitment not all consumers may be looking for in their banking relationships. Maybe something like "empowerment banking" or "choice banking" would be a better descriptor.)

Judging from what I saw at Finovate, startups seem to have a lock on the gee-wiz tech side of engagement. Instead of looking to partner with PFM providers or improve their PFM tools – which can only generate revenue if customers use them – banks should focus on developing products and services that make accountholders' lives easier. This would be a departure from many existing bank business models, which draw revenue from punitive fees and/or charging for services a customer is unlikely to benefit from.

As such, I encourage aspiring innovators to focus on the overlooked aspects of engagement banking: functionality, control and customization. Want me to engage with your financial firm? Don't Candy Crush my finances; find a new way to do my banking for me.

Jeanine Skowronski is the deputy editor of BankThink. You can contact her at Jeanine.skowronski@sourcemedia.com or follow her at Twitter @JeanineSko.