Money management

More saving than spending

As part of their customer trust-building strategies, banks are going online to help hard-pressed households manage their money better. ANDREW STONE reports.

In the face of tough economic times, higher inflation and meagre wage rises, Britain’s bank customers need more help than ever in managing their money. It is a call many of the UK’s banks are answering.

Lloyds TSB, RBS and the Yorkshire and Clydesdale banks have all launched new services and tools aimed at helping customers keep on top of their finances.

Lloyds has been busy with a national promotion of the Money Manager tool it launched in 2011. The free service provides customers with information on their spending habits. It lets them see what things they spend their money on and how that trends over time. User-friendly interfaces, charts and graphs help them visualise and analyse these spending and earning patterns.

RBS and NatWest, meanwhile, are offering their customers the “Your Savings Goal”, designed to help them save for a specific purchase such as a car or house deposit. The tool enables customers to set up one or more goals or savings “pots” and track their progress.

The Yorkshire and Clydesdale banks have also been helping their customers manage their finances with an online Money Guide after customers expressed a need for help in this area, says Steve Reid, the banks’ Retail Director. “It was in response to the economic environment really,” says Reid. “We had more customers telling us they appreciate our help and support around a number of areas: in terms of managing debt, how to make more of their money, and where our customers had lost jobs, what we could do to help. It’s proving very popular.”

The guide is designed with a range of users in mind, such as those worried about their finances getting out of control, those looking for help and support to reduce their outgoings, and customers wanting help to save, says Reid. “Customers can quickly input their outgoings and income to give them a bespoke budgeting guide.”

The anonymity of an online guide is especially valued, he says. “In many cases they are embarrassed to talk about their finances face to face.

It was something that provided assistance they were struggling to get elsewhere. Being able to get information online allows them to do own their own self-diagnostics.”

Lloyds TSB developed its tool after research showed the traditional means its customers had used to get money management advice from the bank were working less well for them, says Jatin Patel, Lloyds TSB Current Account Director. “Seeking advice used to mean going into the branch and talking to the bank manager. Times have moved on and there’s a growing set of customers for whom that model no longer works. They have less time to spare and want to do things on a more selfservice basis.”

An online tool can also be more dynamic and responsive, helping them with future planning offering, for example, a financial view of the coming month, says Patel. “When you’re spending today, you need a good view of what your balance will be next week. We also took account of the fact that customers bank in different ways. Not everyone uses their current account to do all of their household spending. Money Manager tries to take a holistic view of their spending across all accounts with us.”

Is there a danger that such services might make some customers less lucrative ones, for example by incurring fewer overdraft fees? Patel says this is not a concern.

“The primary objective is to engage existing customers and make them more likely to recommend us and remain loyal.

“If our customers manage their money sensibly and effectively, it not only helps them but it helps us. We want to help as many as possible avoid a spiral of debt. Services like SMS alerts do help customers manage their money better and they may help to avoid fees, but to us that’s a cost of doing business and customers will remain more loyal.”

The feedback on Money Manager has been positive and its take-up continues to grow, says Patel. The tool has already been registered for use by 10 per cent of Lloyds’ internet bank base and those that use it are much more likely to recommend the bank to friends and family, he adds. The service also offers a means of deepening customer relationships in a number of ways, says Patel. “One of our key objectives is how we deepen and build on existing relationships.”

Retaining customers is also one of the objectives for Clydesdale and Yorkshire banks, says Reid. “If our own customers don’t feel the need to go anywhere else – if we can give them a one-stop shop on our website, whether it’s for advice on a debt issue or on saving better – it helps with customer retention. It’s also helping attract new customers who may come to us through web searches on money guides.”

Providing good advice offers a further benefit, says Reid. “If we are helping customers avoid getting into financial difficulty there is a benefit to us as it also helps reduce our bad debt.” The new generation of money management tools released this year will not be the last either, says Reid. “The ease with which you can develop online tools is undoubtedly changing the way banks engage with customers. We will see more of these budgeting, money and wealth management tools.

“It started with mortgage and personal loan calculators and is now developing into more sophisticated lifestyle planning tools.”

For Lloyds, continuing to develop innovative money management tools forms a vital part of its strategy of securing long-term customer relationships, says Patel. “Coming out with catchy new price incentives and cash offers is not in my view the way we will generate positive long-term behaviour from our customers. It’s very much a journey for us. We are keen to find as many ways as possible to generate loyalty and trust in the brand for long-term relationships. We need to do more to differentiate ourselves from the competition. The story does not end here.”

ANDREW STONE is a business journalist.

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