I am the CEO of Me&My Family Inc. We are in the business of growing our children and caring for our elders, producing fine vacation memories and advancing the cause of fine dining. Financial management is not one of our core competencies.
My wife, who is also, of course, the Chairman of the Board, has been serving as CFO. She writes checks and balances checkbooks; she runs spreadsheets to simulate future cash flows and models alternatives for card and home equity financing, saving for college and that condo in Florida.
Her other job as an accounting clerk at a big multinational is a blessing and a curse, as it gives her the know-how, but also the bad habit, of sophisticating our finances to death. Me, I have bigger fish to fry. However, the Chairman is now fed up with all that clerical work and would like to get into loftier pursuits, like her soccer run, gardening and quality time with the CEO after the kids’ bedtime.
The thing is big shot CEOs have it easy, because scale lets them afford armies of financial optimizers who distill the tons of noise coming from their economic activities into the fine spirit of financial charts, interest maximization and perfect forecasting.
On the contrary, I, and most other consumers, face the bleak choice of trying, with scarce time and poor tools, to emulate the work of a CFO’s department or accept abysmally sub-optimal end results by letting things slide. Not that my great grandparents did any better: they only had the cookie jar as a financial tool. At least their lack of choice saved them from insanity.
Over time, very large multinational and governments first developed, and/or purchased from banks, services to optimize their finances. Then, as technology improved, medium and small businesses got them too. High net worth individuals have long had a version of the same under the form of private bankers or family offices.
Isn’t it time that everyone could have a similar service, albeit without all the PowerPoint presentations or the wood paneled bank offices? That automated Nirvana would not be easy to achieve, all the more since the needs vary so much across demographics.
Let’s review what a financial service for today’s ordinary (NOT average) person would be:
- Help me choose the most convenient (i.e. less expensive or more profitable) option.
- Automate activities that can be algorithmically programmed, i.e. pay according to my wishes, accept or reject debit requests. But not just that: BE my personal banker, for real.
- Have a budget based on past experience plus my stated goals for the year and my lifetime. Have a forecast of how I am doing and will likely do versus budget if I stay the course. And revise my budgets accordingly,
- Keep me informed of relevant issues. Help me be paranoid where I need to be (fraud alerts) and easygoing where I can (decide what I allow others to access of my stuff),
- Show me these things in a language that I can easily grasp and use for decision making. Understand in almost natural language what I want. Learn from me, at my pace and under my conditions, to customize on my terms, like my personal banker or corporate account officer would,
- Scour the world (wide web) in search of best offers I decide I need, but do not try to sell me any crap,
- Let me reach you (bank) whenever and wherever I want with the best quality of interaction. Read here “make the service mobile first”,
- Respect my privacy above all else.
Now I know some of this stuff is present in some banking offers. I won’t make a necessary incomplete laundry list. Look for some out the hotbed of financial innovation that is the UK. It is still not all there and it is not commonplace.
Regular users should not even have to know it’s there, like my wife is not even aware her car takes care of the engine’s temperature and keeps tires inflated at the right pressure. That some of the above is cutting edge is highlighted by the modest expectations in this recent article (Three Online Banking Traditions That Are Extinct.)
It doesn’t help that banks sometimes profit from their customers inability to optimize their balances or choose the cheapest loan available.
Someday, however, this will sound as quaint as the service of love letter writing that could be purchased in Gabriel Garcia Marquez’s Colombia. I hope I get to see this soon.
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