Fintech R&R☕️🎯 - 2024 fintech resolutions, predictions, and psychology of goal setting

Some realistic predictions for 2024, the psychology behind why resolutions fail, resolutions that fintechs should make, and some insights from my end of year quiz

Hey Fintechers and Fintech newbies 👋🏽

Welcome to 2024 for those on the Gregorian calendar, and I hope you all had a great New Year celebration if that's your cup of tea! The 14th January is my usual cutoff for wishing folks a Happy New Year, so I'm well within my acceptable timeframe. Larry David thinks differently though…

To those of you who read my end-of-year quiz edition, you'll notice that I said, 'See you in three weeks!' but I'm dropping this bonus edition to add some context to a sometimes divisive subject, new year's resolutions and to add my two cents to the 2024 fintech predictions/outlook/hopes and dreams flying around because I've seen some great takes but also some very generic ones. 

So, this week's bonus edition includes the following:

• The psychology behind New Year's resolutions

• Two resolutions I hope firms have made this year

• Predictions for the 2024 and beyond

• The complete answers to the Big Fintech Quiz of the Year

• Some interesting insights from the quiz answers

Let's get into this special Monday edition.

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New Year, New Me! 🏋🏽‍♀️🥗🏠🏖

Some of us have heard this phrase before. 

The New Year's Day battle cry of famous Essex socialites or L.A IT girls (that's IT, not I.T.). "New Year, New Me" is a phrase associated with lifestyle changes that use a new year as a convenient way to signal the change. Things like Dry January, a health drive, an effort to spend more time with friends, save more, get a better job, and a host of other positive changes from the previous year are all "New Year, New Me" initiatives.

Most of us know these start-of-year lifestyle changes as New Year's Resolutions, a commitment to change an undesired trait, achieving a goal, or continuing the work on a previous goal that kicks off at the beginning of the calendar year. But recently, there has been a bit of divisiveness in the resolution setting, with some refusing to set resolutions on the basis that historically, they have failed to keep them. 

There's some logic behind this reason not to set resolutions based on failure, as according to research, only 10% of people who set resolutions keep them beyond a few months. That means by March, 90% of people have failed in their efforts to get healthier, drink less, and save more. 

That's not stopping Gen-Z and Millennials from continuing to set them, with 97% of Gen-Z, and 86% of Millenials predicted to set resolutions, according to research from Finder.com. Their research also shows the different areas of resolutions, with health resolutions, unsurprisingly, as the most popular category and money-related goals following a close second. 

Source: Finder.com

There are reasons I'm bringing up the subject of resolutions aside from the timely nature of this newsletter.

Reason #1 - It's the perfect opportunity for fintechs to grow customer bases and bring value to customers

This research indicates that the new year is an excellent time for fintech and financial services products that offer budgeting, transaction analysis, savings, investment and general financial management services to go hard on marketing to those looking to make changes early in the year. This involves establishing customer personas, building out a clear marketing strategy, building out a low-cost referral mechanism and kicking off the year by gaining valuable brand advocates and customer growth. If I were leading Product in any of these types of firms (and I have), I'd be tracking customer growth numbers very closely, looking for any ways to maximise marketing impact as well as spending, and going hard on paid and organic content to get the products in front of customers during a period where conversion is likely to be higher than usual. 

NB: I advised a couple of fintechs I'm working with to do exactly that.

So it's a great way for fintechs to start the year, get broader exposure with their target customer base (assuming they are millennials and Gen-Z), and give value to the money-conscious.

Reason #2 - Understanding why resolutions fail is essential for everyone

Although the research shows that many abandon their resolutions within just a few months, there are reasons why many struggle. Clarifying the reasons could make personal and company resolutions more likely to stick. Here are just some of the reasons.

Lofty Ambitions ✈️

The first apparent reason resolutions fail is that they are too big. 

A common fitness goal is to 'get a six pack by the summer' or 'get beach bod ready'. These are lofty and very ambitious goals, especially for those who have historically struggled with fitness goals. 

Common financial goals that repeat year on year and are confirmed by Fidelity's 2024 Resolution study are:

1. Save More

2. Spend Less

3. Pay Down Debt

Other, slightly more specific goals include Improve My Credit Score, Create a Personal Budget, Pay Off Credit Card Debt, and Track My Credit Card Applications. 

Regardless of the specificity (yes, it is a word, and I have used it in the right context), just having a goal that is so broad and lofty reduces the likelihood of success. 

So, instead, it's better to break these lofty resolutions into smaller, more achievable mini-goals that feed into the overarching one. Instead of just 'Saving More', save progressively more each month, starting with an attainable number. Like £200 in January, then £250 in February, £300 in March, and so on. 

PSA: Setting unrealistic resolutions is the main reason for failure, so watch out everyone!

SMARTen Up 🧠

Most of us who have had any end-of-year goal setting (which is most people who have worked in any corporate environment) have come across SMART goals, and it's one of the factors in resolution success.  

It sounds obvious, but creating Specific, Measurable, Achievable, Relevant, and Time-bound resolutions increases the likelihood of hitting the resolution and at least keeping it going beyond March.

For example, Spend Less is one of the common money-related resolutions, but it's not a SMART resolution, so many trying to achieve this will probably falter by Q2. An example SMARTer version of this would be to 'reduce discretionary spending by 70% vs the previous year and put the saved amount into an instant access saver'. 

The difference between making a resolution stick and faltering at the first step is making it at SMART resolution.

Look back, then move forward 👉🏽

Another major mistake many make is setting the same resolution year after year that has previously failed and not looking into why it failed before. 

Trauma Specialist and author of The Science of Stuck, Britt Frank, says this about yearly goal setting:

"We often set lofty goals for the future without honestly assessing why we've struggled in the past," 

"Without examining where we are resistant to change ... the cycle of resolve, relapse, repeat continues year after year."

This sounds obvious, but many will set the same resolution year on year and fail in consecutive years. It's partly why I wrote up an end-of-year edition before the Christmas break to pull together the significant events of 2023 to understand better what will happen in 2024. 

In product development, a retrospective is part and parcel of building a product. Understanding what went well, what didn't go so well, and areas of improvement, is vital to moving forward and continuously improving. These are standard retro questions that the whole team will feed into that not only help to continuously improve but also give a great idea of the pulse of the team: are they gelling? Is the team all frustrated about the same thing? Is everyone too disjointed to see each other's problems? 

A retrospective review of how close you were to that financial target, any specific reasons they weren't hit, how many extra months it would have taken you to hit the goal, and any adjustments that can be made will increase the likelihood of success the next time round.

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There's a motive behind calling these two resolution-related reasons out specifically:

Firstly, because the opportunity for PFMs, banks, investment platforms, and savings fintechs has been somewhat missed. The start of the year is a great time to capture the eyes and ears of eager resolution setters and create a clear value exchange. I give you the tools and products to enable you to achieve your resolution, and you give me a monthly fee/data/deposits.

But I'd like to see more interesting targeted marketing, specific resolution-related assistance or bespoke in-app features. There are lots of independent articles from the likes of The Guardian, CNBC, BBC, etc, but not the service providers themselves (except Emma and Plum, from what I've seen). PFMs who have a shorter development cycle and the ability to build something that resembles a 'Resolution Toolkit' with linked products that help manage and achieve these lofty resolutions have missed a trick here. 

There's always next year, I guess…

Secondly, I don't believe that resolutions are just for people. Fintechs can take some of the power of resolutions and apply them to their own organisations. On that note and with a seamless transition, here are a couple resolutions I hope organisations will make in 2024. 

NB: These aren't SMART goals, as SMARTness comes from tailoring and understanding each individual organisation.

Fintech Resolutions 🎯

Give customers knowledge, not just data & information 🤔

Anyone who has met me in person and raised the topic of transaction feeds and spending categories will know I have a real gripe about organisations not clearly understanding the difference between data, information, and knowledge.

The difference between the three is something you learn early in 11+ I.T. and further cemented in a Computer Science degree, but it's clear to me that the definitions of the three have not yet entered the mainstream, so let's clarify this pyramid now.

💾 Data: Raw, unprocessed facts and figures which, without context have very little meaning, e.g. a list of 100m sprint times or the number of students in a class

💿 Information: Data that has been cleaned and processed in a way that makes it easier to measure, visualise and analyse for a specific purpose. Common ways of translating data involve using data for calculations, categorising data into groups and summarising data to be more concise. e.g., 100m sprint times with racer names and countries sorted by fastest to slowest.

🧠 Knowledge: A fluid mix of framed experience, values, contextual information, expert insight and grounded intuition that provides an environment and framework for evaluating and incorporating new experiences and information. It originates and is applied in the minds of knowers, takes data & information and uses it to embed changes in routines, processes, practices, and norms of individuals, e.g. Presenting the 100m sprint times in order of time, racer names, backgrounds, training programs that means viewers understand the qualities, training and common background of successful sprinters and enables them to predict future successful sprinters.

There's also Wisdom that sits atop the Data, Information, and Knowledge pyramid, but I'll save that for another time. 

Source: Ontodata

What does it look like in practical banking terms?

💾 Data: A list of transactions amounts from an individual's bank account

💿 Information: A set of transactions sorted by date, tagged with merchant and type, with the ability to group by different merchants or types to see the biggest areas of spending

🧠 Knowledge: Transactions sorted by date, tagged with enriched data used for grouping and categorisation to see the biggest areas of spending with additional insights linked with the individuals goals and information like expert insights and walkthroughs that the customer can use to instil behaviour change. If the goal is to save an additional £5,000, showing customers the biggest areas of saving based on transactions and lifestyle sacrifices, surfacing the best savings and investment accounts and regularly monitoring transactions and habits to ensure there is a continuous behaviour change and growth in knowledge.

Many PFMs, banks, investment platforms, and savings fintechs are still displaying information and calling it knowledge. 

Transaction categorisation itself does not give customers knowledge; it's information. 

Displaying the areas of highest spending does not give customers knowledge; it's information.

Showing a list of upcoming bills does not give customers knowledge; it's information. 

Organisations need to take the extra steps to turn information into knowledge that customers can use to change behaviours. 

I hope that this is a resolution many fintechs have made. 

Engage with customers more to help solve deeper problems 🗣

This applies to everyone. Banks, fintechs, investment platforms, and insurance providers. 

Many think the majority of the customer discovery happens during the early development of a product. A lot of important discovery does happen in early-stage product development but in terms of the amount of data, number of customers interviewed and value of insights gained, the majority of this occurs when the product is live and real people are using it. 

Engaging with customers can mean a lot of things. Asking them to fill out surveys. Speaking to them during a support request. Sending them a weekly update via a newsletter. 

The best way take the pulse of customers with the least amount of bias is to reach out to individuals from different personas (if you don't have customer personas then segment customers based on feature usage until you do) and set 1:1 meetings with them to find out how they are doing individually, how they use the product, if it's benefiting them, and any other problems they face that could be solved by some product evolution. 

No script. Just some key points to talk about and a conversation with customers. 

In each conversation, there will be at least one gold gem. 

Don't get me wrong. In-app metrics are a great indicator of the pulse of the product, but only direct interviews will get an accurate check on the pulse of the customer.

If more organisations do this, they will create stronger bonds with customers, create greater customer retention and develop better products. 

2024 Predictions 🔮

My realistic predictions for 2024…

1. PFM consolidation and increased customer numbers

Last year saw some interesting news in the PFM space with the popular US money management app Mint merging into Credit Karma and Money Dashboard here in the UK, closing their doors, citing difficulty finding a viable business model.

While the first few months of the year will naturally give PFMs a slight boost in customers because of their desire to make change in the new year, as we head deeper into 2024, we'll start to see a consolidation with the feature-rich cream of PFMs, revenue diverse money managers (a blended referral subscription model) rising to the top and less diverse apps being swallowed up, either by these well-rounder products such as Plum, Chip, and MoneyBox or by banks and other financial services firms looking to port customers over to their respective digital platforms.

2. A2A payment growth and broader consumer understanding

I've had some heated conversations on Open Banking account-to-account payments, specifically Pay by Bank, recently. I've heard many say that card payments are just better overall for customers, and no other method will get close, especially for in-person transactions. 

I'm afraid I have to disagree with this as it's a very broad stroke. 

Cards will still dominate payments where speed and convenience are customers' overwhelming priorities at supermarkets, tubes, trains, and certain retailers.

However, it's important to note that not all spending is speed-focused and transactional (although everything that shows up in your bank feed is called a transaction). Many, like the above, are transactional, where customers want to get their goods or services and leave, but there are many other areas where spending is more experiential. 

Like at a restaurant where a payment can be parcelled up with a tip, a review and maybe a sign-up to the restaurant's newsletter. Or up-scale retailers where the in-person payment experience can include bespoke offers and loyalty programs sign up, all with a branded end-to-end payment experience and using a Pay by Bank flow. 

Granted, more evolution is needed to the account-to-account payment flow to make it smoother for customers, especially the in-person payment flow. However, I think there are many areas where Pay by Bank for both in-person and online transactions will be a better fit for the overall experience and more secure. 

This in-person growth of Pay by Bank will drive broader consumer understanding. 

3. Apple to continue their A/B testing using Open Banking and then launch Pay Later in the UK

My prediction for Apple is that they are using their new Open Banking wallet feature to gather data of the best eligible customers to test Apple Pay Later in the UK. I said a while back that their acquisition of Credit Kudos will be used as an on-ramp for a lending product, and I think getting customers to connect their account data and make the transactions available for review is a great way to create a beta list of customers eligible for a UK Apple Pay Later launch.

The surfacing of balance and transactions of respective accounts is a simple positive for customers in terms of knowing which cards are best to use for Apple Pay spend, but also, if the proposed BNPL regulation comes into play, which will involve carrying out affordability checks on customers before offering BNPL products, Apple will have the ability to perform real-time and pro-active checks on customers affordability. They will, therefore, be able to use this data to only expose the Pay Later options to customers who are eligible and can afford the repayments.

Gathering transaction data from customers is an easy way to create personas for customers in the UK market and better understand spending habits, problems customers face and the financial products they'll be open to, allowing for A/B testing of further financial products from the giant. 

This will also be a step towards a full-blown Apple-branded personal finance manager within the wallet or in a separate app preloaded in every iPhone…

4. Digital Identity to enter the mainstream and become useful

2023 saw some big strides in digital identity. Natwest partnered with digital identity firm OneId to launch its Customer Attribute Sharing service, enabling faster onboarding and data transferability for its SMEs. 

Lloyds partnered with and invested in digital identity fintech Yoti to help develop its portable digital identity product, which it launched in October. HSBC also funded Yoti's growth in October to the tune of £20m.

I wrote about this in a lot more detail back in May.

I predict 2024 will be the year portable digital identity will enter the mainstream of SME onboarding (at least for Natwest and Lloyds that are required to KYC/KYB their customers), and Natwest and Lloyds customers will see the benefit of onboarding once and being able to port over the identity and KYC record created to quickly and securely onboard onto other products and services. 

I'll follow up on the progress of both Natwest's and Lloyds's digital identity initiatives in due course.

5. FinPropTech

This final one is more hopeful and speculative than the others. 

There's been a lot of negative news in the property market over the past 12-24 months. 

Interest rates shot up to levels not seen for over a decade. 

Housing shortages were felt in many areas. 

Rents skyrocketed, leading to protests and calls for reform. 

And house prices increased so much that the housing affordability ratio in England (house prices divided by income), hit a high of 9.06, meaning house prices were, on average, 9x more than annual incomes. 

Source: ONS

While there are many institutional and legislative changes that need to happen to ensure house prices don't continue to increase to many multiples of salaries and more houses get built, fintech has a role to play in the interim. 

Fintechs that help people understand the mechanics of a property purchase, help with building a deposit, report rent to help build a better credit score and get a better mortgage rate, and provide renters with zero deposit programs that give guarantees to landlords all have a part to play. 

As we wait for the long-term legislative changes to happen, FinPropTech has a part to play for both renters & homeowners and investors looking to make positive changes in the market, like those converting empty homes into habitable social housing. 

I expect more innovation in this space in 2024 as more people feel the pain of renting and homeownership in a turbulent time.

Big Fintech Quiz of the Year 🎉

For those who missed last year's final edition, there is another opportunity to take the big fintech quiz of 2023!

WARNING: If you haven't taken the quiz yet and would like to, click the image below and scroll no further, as the answers and some stats about the quiz are beneath it   

Here are some quick stats from the quiz so far based on the 60+ folks who completed it.

👉🏽The most split question (participants selected a range of answers) was the question about DAN in relation to ApplePay, with around a 20% selection for each answer. My ApplePay deep dive should up-skill folks who didn't quite get the answer. 

👉🏽Most people didn't know that Money Dashboard closed their doors in October of this year.

👉🏽The toughest question that received overwhelmingly incorrect answers was about the purchase amount of CreditKarma by Mint in 2022. It was a tricky one, in fairness. 

👉🏽The 'easiest' question with the most correct answers was about which BaaS platform the FCA has asked to halt onboarding customers temporarily.

👉🏽The second easiest was asking what GPT stands for, with 67% of participants selecting the right answer. Shows the impact of AI this year

👉🏽The highest score out of the 25 questions, which only two people managed, was 22!

👉🏽The mean average score was 11

You can check out the full anonymised response percentages here and the answers are below.

1. Power, 2. TS Anil, 3. 1033, 4. Griffin, 5. Acorns, 6. Curve, 7. $7Billion, 8. Allica Bank, 9. Monese, 10. ApplePay, 11. Generative Pre-trained transformer, 12. Mercedes-Benz, 13. Yoti, 14. Yonder, 15. Device Account Number, 16. Ryan Reynolds, 17. Modulr, 18. Unified Payments Interface, 19. Public, 20. Jeremy Hunt, 21. Sephora, 22. Faster Payments, 23. Money Dashboard, 24. Visa, 25. Capital G

See you in a few week’s back to the regular Substack and LinkedIn slots of Friday and Monday respectively.

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Favourite Bits of News 📰

HSBC’s Zing-er payments product - They've launched an international payments app called Zing to rival Wise, Revolut and Monzo and hired from those respective firms to help build it. If the objective is to take back a share of the FX market from Wise and Revolut, then building a separate app (with no 'powered by' logo) is a 'wise' move. 

HSBC will likely use its weight to fund large-scale marketing campaigns for speedy customer acquisition and slowly get to the feature richness of Wise, which, based on its current UI, is its direct competitor as the brand, positions of many of the widgets and overall style is very Wise-esque.  

But as Wise CEO Kristo Käärmann pointed out, "Today HSBC charges their own customers 3.7% in hidden FX markups for 'free' Euro transfers. " And I'm struggling to find an example of a traditional bank that's created a fintech to truly rival the original innovators. Time will tell if this is a success, and I'm not including this as part of the predictions section.

For more on this, check out Techcrunch's comparison of Zing and its main rivals, which is the best write-up I've seen so far.