Nobody wants to bank. But they do want embedded banking.

SUMMARY

Nobody wants to bank - they want what banking can facilitate. People want somewhere safe and secure to store their money. They want convenient access to their money when they want to spend it. They want access to more money to make large purchases. Etc. When banks realize this, they design products and services aligned to customer needs and they win.

Banking is an enabler

Nobody ever woke up on a Saturday morning and said 'I can't wait to go to the bank'. But plenty of people have woken and said 'I'm finally going to get that new car', or 'I can't wait to book that vacation to Hawaii'. These are things people want to do and they are facilitated by banking products. The auto-loan or lease makes the car possible. The credit card makes the vacation possible.

Now don't get me wrong - banking provides critical products and services. But banking is an enabler. It is a means-to-an-end. People don't want to bank, they want what banking can facilitate. Bank of America seems to disagree. In 2022 they released this TV commercial saying people on their cell phones at a wedding were banking. Seriously?

Consider electricity. Do you want electricity in your home? Most people would say 'of course!' But do you really want electricity or do you want light, heat, fresh food, entertainment? Do you want electricity or do you want what electricity can facilitate? I can imagine a world where we don't buy a refrigerator and then pay a separate electricity bill. Instead, we pay for a refrigerator subscription that covers the cost of the device plus the electricity it consumes. This would encourage people to choose energy-efficient devices - they'd cost less at the time of selection.

I view banking in the same way - I don't technically 'want' banking. I want what banking can enable.

What does banking enable?

Nobody wants a checking account, a personal loan, a credit card, or a mortgage. They want what these banking products can facilitate.

Banking Product	What consumers REALLY want
Checking Account	Somewhere safe and secure to store my money and convenient access to my money when I need to make a purchase.
Personal Loan	Access to additional money to facilitate a large purchase such as a car or vacation.
Credit Card	An ability to buy things now, but delay paying for them (and over time we've conditioned people to expect 'rewards' for their purchases).
Mortgage	A home - but I don't have enough money to pay for it in full right now.
Savings Account	Somewhere to safely store money (and grow it) for an expected (e.g. education) or unexpected (e.g. medical expense) purchase.

Jobs to be done

Dr. Clayton Christensen (Harvard professor, author, and entrepreneur) wrote and presented on the concept of 'jobs to be done'. There's a nice 10-minute video excerpt from a presentation at Google on the topic here. The idea is simple - people employ products and services to get particular jobs done. And when you understand the 'job to be done', you design better products and services AND market and position them appropriately.

The 'jobs to be done' concept allows us to rethink banking products and services. If we start with the job to be done and understand it, we can design appropriate products and services to meet the consumer's needs.

Clayton uses the famous example of the McDonald's Milkshake in his work. McDonald's created a customer focus group to identify ways to improve the milkshake - better flavor, sweeter, thicker (although at some point it becomes a 'solid') etc. They took these recommendations and 'improved' the milkshake. The result was no noticeable increase in sales or customer satisfaction with the product.

So a researcher took a different approach - he stood in a McDonald's restaurant and observed customer behavior and noticed that the majority of milkshakes were sold in the morning and only the milkshake was purchased. So the researcher asked customers 'what job did you employ that milkshake to do?' A bizarre question! But once people understood the question they consistently explained that they needed a satisfying food that could be easily consumed on their commute (with one hand) and that would satisfy them until lunch.

When asked what other products had been 'employed' to do the job and why they failed, customers gave the following example:

Food	Failure
Bagel	Too dry. Cream cheese was messy. Left crumbs on clothes.
Banana	Not satisfying - hungry again by 10:00am.
Candy	Guilty pleasure.
Doughnut	Guilty pleasure. Needed more than 1. Sticky.

But people had realized that the milkshake got the job done perfectly. It could be cleanly consumed with one hand and was so thick/viscous that it took most of the commute to suck it up through the straw, killing time on the boring drive. And it satisfied them until lunch.

McDonald's had never dreamed that the milkshake would be purchased for this job. But once they did, they made changes. Including offering a pre-paid card that allowed for faster purchasing of the milkshake. And they put a self-dispense machine at the front of the restaurant so customers could bypass the drive-thru or counter queues.

Banking products and 'jobs to be done'

What if we applied the 'jobs to be done' concept to banking products and asked 'what job are you employing this banking product to do'?

Interestingly, as an industry, we did this years ago. With the auto-loan. According to this article from Lendedu, the auto loan was first conceived by GM President Alfred P. Sloan in 1919 to allow customers to purchase a vehicle immediately and then pay it off over time (as opposed to having to save the equivalent of $20,000 in 2022). Ford did the same in 1928. And soon after banks and credit unions realized there was an opportunity to lend money to customers for the express purpose of purchasing a vehicle. Then the banks and credit unions realized they should embed the auto-loan product in the dealership. After all, it was facilitating a vehicle purchase - so why not put the enabling product at the point of sale.

The 'job to be done' was 'get a car'. And customers were employing the auto-loan to do that job. So why add the inconvenience of going to a bank to get finance and risk the car being sold to another customer in the market.

There are lots more places we can embed banking products to create greater customer convenience - especially if we take a 'jobs to be done' approach and recognize that 'people don't want to bank'. They have a job to be done and banking products and services can get it done. But what's the job to be done?