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The Rise of the Connected Financial Ecosystem

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It's time to offer a truly holistic financial experience across products and business units. Consumers are no longer satisfied stitching together disjointed accounts from multiple brands just to keep their financial lives in order. They crave better and they want simplicity and connections across their accounts. They want their money to move around between the right accounts at the right time, without so much impetus being put on them to make all of those decisions.

But how can you truly achieve financial interconnectedness? It's not easy, but we have a few tips.

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The Rise of the Connected Financial Ecosystem

  1. 1. Financial Services Practice Re-imagining Financial Services around Customer Needs, Not Financial Products
  2. 2. 2 PROPRIETARY & CONFIDENTIAL solstice.com It’s payday! Woohoo! You’ve earned it. But now you’ve got a problem…
  3. 3. 3 PROPRIETARY & CONFIDENTIAL solstice.com Common things you have to do after you get paid: • Ensure you have enough in your checking account to cover your bills and mortgage or rent. • Strategically distribute what’s left over across your accounts. • Decide how much money to allocate to each of your goals. • Determine if you should talk to any financial professionals for advice. *Survey done on Nov. 2018. n=126, Respondents are ages 23-65, HHI $50k-$200k. of people are somewhat to extremely stressed about managing all of their financial accounts* 59%
  4. 4. You must manage the plumbing of your finances because of the siloed and product-centric nature of the financial world today. You must continually move your money around to meet your wants and needs. However, a shift has begun. 4 PROPRIETARY & CONFIDENTIAL solstice.com of people are using any automatic or recurring transfers to manage their money.* Only 24% *Survey done on Nov. 2018. n=126, Respondents are ages 23-65, HHI $50k-$200k.
  5. 5. 5 PROPRIETARY & CONFIDENTIAL solstice.com Digitalization is taking humanity through a semantic shiftanity through a semantic shift
  6. 6. 6 PROPRIETARY & CONFIDENTIAL solstice.com You “roll-up the car window,” but there is no hand-crank to roll anymore. You “film” things with your smartphone, but there is no film involved. You hardly write checks anymore, yet retail banks’ most common product is a “checking account.” You haven’t used a floppy disk in 20 years, but we still use it as the “save” icon.
  7. 7. 7 PROPRIETARY & CONFIDENTIAL solstice.com The point here is not that we should rename “checking accounts” to something more relevant. The real question is, “Are checking and savings accounts still the right way to facilitate our financial lives?” The digitally transformed version of a checking account is not just a clever new name and a slick digital experience. If we reimagine these accounts as serving the users’ jobs-to-be-done, we can free customers from the financial plumbing, of moving money around and overdrafts. Instead, the customer should be enabled to focus on their goals. 79% of people seek financial advice from family and friends. Only 37% of people seek advice from financial firms. There is an opportunity for financial firms to be more of a coach that connects the big picture, not just a set of financial products and services.* *Survey done on Nov. 2018. n=126, Respondents are ages 23-65, HHI $50k-$200k.
  8. 8. “In the long-term, credit card companies will just become a network of pipes” -F500 FinServ SVP 8 PROPRIETARY & CONFIDENTIAL solstice.com
  9. 9. PROPRIETARY & CONFIDENTIAL 9 solstice.com Brokerage Bank IRAs 401k Credit Score Credit Cards These siloed digital experiences focus on the financial products they complement, but none can intelligently act across product lines. This is digitization — NOT digital transformation. of people think it is somewhat simpler or much simpler when all their financial accounts are with one institution* 80% *Survey done on Nov. 2018. n=105, Respondents are ages 23-65, HHI $50k-$200k
  10. 10. PROPRIETARY & CONFIDENTIAL 10 solstice.com 12% 9% 10% 18% 27%24% There isn't much left over Checking account Savings account Savings and tax-advantaged accounts Savings, taxable and tax-advantaged accounts Somewhere else *Survey done on Nov. 2018. n=126, Respondents are ages 23-65, HHI $50k-$200k. Where does your money go after your bills are paid?* The most common answer is that after their bills are paid, people just leave the leftover money in their checking accounts. There is an opportunity to help people move their money to where it helps them the most.
  11. 11. PROPRIETARY & CONFIDENTIAL 11 solstice.com • Provide for family • Housing • Retirement • Lifestyle Mortgage / Rent Credit Card 401k IRAs Brokerage account Savings Account Checking accounts Loans (car, personal, etc.) Paycheck Insurance (health, life, disability, etc.) In Today’s Financial Product-Centric World, You Have to Manually Move Money Between Pipes Credit Score
  12. 12. Read-Only Aggregators Cannot Take Actions for You Across Financial Products PROPRIETARY & CONFIDENTIAL 12 solstice.com Mortgage / Rent Credit Card 401k IRAs Brokerage account Savings Account Checking accounts Loans (car, personal, etc.) Paycheck Insurance (health, life, disability, etc.) • Provide for family • Housing • Retirement • Lifestyle Credit Score
  13. 13. PROPRIETARY & CONFIDENTIAL 13 solstice.com Mortgage / Rent Credit Card 401k IRAs Brokerage account Savings Account Checking accounts Loans (car, personal, etc.) Paycheck Insurance (health, life, disability, etc.) In a Connected Financial Ecosystem, the Plumbing is Handled For You • Provide for family • Housing • Retirement • Lifestyle Whoever owns this layer first wins. Credit Score
  14. 14. A larger financial institution that already offers a wide swath of financial products, like Chase, could use partners to fill in the gaps in its offerings. But from the users’ perspective, it all looks and feels like a Chase experience. 14 PROPRIETARY & CONFIDENTIAL solstice.com Checking Savings Financial Advisor 401k Brokerage Credit Score IRAs Ecosystem of aggregated financial products built internally or sourced from partners Orchestration across all financial products Life Insurance Mortgage Homeowners Insurance Credit Card Retirement
  15. 15. 15 PROPRIETARY & CONFIDENTIAL solstice.com A customer experience leader could leverage more services from partners, but would be freed to focus more on the experience and less on actually managing any money. Financial Advisor 401k Brokerage Retirement Credit Score Life Insurance Orchestration across all financial products Checking Savings Credit Card Homeowners Insurance IRAs Mortgage Ecosystem of aggregated financial products built internally or sourced from partners
  16. 16. 16 PROPRIETARY & CONFIDENTIAL solstice.com Imagine being freed from managing the plumbing of your finances. Instead, a Connected Financial Ecosystem automatically moves money between accounts to optimally achieve your goals, saving time, mental effort, and stress. You’ve spent $12 of the $19 budgeted for today. Keep it up to get yellow goals back on track within 3 months. Dream house fund is off track On track to retire in 2045 6 months of cash reserves 529 plan is at risk Get into the yellow by staying within your daily spend budget. We’ll put money here after you get on track with your vacation fund and 529 plan. On track to own home in 2047 Vacation fund is at risk Net worth: $464,766 2020e2019e20182017 Needs and Goals Today
  17. 17. 17 PROPRIETARY & CONFIDENTIAL solstice.com No financial services company links your micro- level view of your daily spend with your macro-level view of your goals. By drawing a direct correlation between your current lifestyle and spend versus your long-term goals, you see how what you do now affects future you.• A phone call has been scheduled with a tax planner to discuss your upcoming bonus. • You have more life insurance than is needed due to your new job’s benefits. Your life insurance policy will be auto-downgraded to relocate money for retirement. • Your Internet bill was auto-negotiated lower for you. Today Current path Eat out 75% less and spend 50% less on clothes for dream house by 2025 Eat out 50% less to get all goals green Jul. Aug. Sept. Oct. Nov. Dec. Next Steps Your Spend vs. Your Goals You’ve spent $12 of the $19 you have budgeted for today to get yellow goals back on track.
  18. 18. 18 PROPRIETARY & CONFIDENTIAL solstice.com THREE STRATEGIES TO OFFER YOUR CUSTOMERS A CONNECTED FINANCIAL ECOSYSTEM Build It Borrow It Serve It Build the other financial products that you have not previously offered so your customers can complete their financial life journey with your brand, because you have everything they need. This can mean either hiring the talent to build it in-house, or hiring a consultancy to build it for you. Don’t want to build the infrastructure and deal with regulations? Create partnerships with other players that offer APIs, so you can re-label their financial products and pull them into your holistic offering. To your customers, it will look like your brand offers all the financial products they need. Look for finservs using the “Serve It” strategy. If you have the scale, serve other players who want to borrow your capabilities so they don’t have to build the products themselves. Your addressable market is finservs using the “Borrow It” strategy. 1 2 3
  19. 19. 19 PROPRIETARY & CONFIDENTIAL solstice.com “The secret of change is to focus all of your energy, not on fighting the old, but on building the new.” How does your customer experience need to change to reduce the stress your customers feel from managing all of their financial accounts? Which is the right strategy for you to provide a connected financial experience, not just financial products?
  20. 20. PROPRIETARY & CONFIDENTIAL 20 solstice.com Reimagine your business around customer needs, not financial products Jared Johnson Financial Services Strategist, Solstice jjohnson@solstice.com @JRJ2 solstice.com

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