From fixed to floating: Kiwibank’s works of friction
At the recent South by South West festival in Texas, Steve Selzer, experience design manager at Airbnb, spoke about the importance of bringing back ‘friction’ in a world of increasingly seamless service delivery. What Airbnb found is if the hirer and the renter of a house never met, there was a much greater level of dissatisfaction. So they made it mandatory for the two to meet to pick up the keys and, voila, friction by design, for the good of humanity.
Regan Savage, Kiwibank’s head of marketing communications and content, attended that conference and says this concept of friction is something Kiwibank is harnessing with a number of new digital tools.
“We’re trying to deliver on our purpose of making Kiwis better off by creating experiences, digitally, that help people understand the long term implications of their financial decisions, and giving them the ability to change long term outcomes,” he says. “That’s what this age of digital interaction allows us to do – put more power into the hands of customers.”
One example was using data and technology to create an annual home loan review electronic direct marketing campaign. Kiwibank went to home loan customers and, using data available from third-party providers, told them the estimated value of their property, what they owed, their equity ratio, and prepared some scenarios around how much they could save if they increased their payments.
“So rather than just going out to bang the drum about home loans, we give people a thoughtful experience about what it could mean to them if they paid off an extra $50 per fortnight,” Savage says.
This added friction may not pay off for the bank in the short term – higher repayments mean faster repayment and that means less interest for the bank. But Kiwibank is taking a long term view of the value of the business.
“Yes, if they pay it off faster we’ll get less profit, but it might enable them to upsize their house, or it might encourage them to consider us for other products and services,” he argues.
Other tools for friction include a scenario planner for Kiwisaver, so people can play around and understand the Kiwisaver investment in more depth. Then there’s the new feature within the Kiwibank app that allows people to create and manage goals for their savings accounts.
It’s harder than simply starting an automatic payment and just letting it flow, but that’s what friction is about: learning and creating added value within the app.
Savage compares the model to fellow Kiwi business My Food Bag, which reverses the convenience model of heat-and-eat meals, instead delivering the raw ingredients of a meal that you can make yourself, with the help of a provided recipe.
“There is friction between ordering the food and getting to eat it, but you benefit from that and get to learn. It’s designing for skill building.”
Savage says these value-add technology offerings seem to be resonating with New Zealanders. As of 30 June 2015 the bank had 920,000 customers and 435,000 main bank customers, which is 12.1 percent market share, with the highest level of satisfaction according to Roy Morgan surveys.
“We are bigger than we were before, but we still believe our purpose is unique,” he says. “We are solely focused on meeting the unique needs of New Zealanders and helping them to make better, more informed decisions.”
And technology is playing a key role in making that mission a reality.