Banking the Karma Army

A Random Act of Kindness

Many years ago, my soon-to-be wife and I set up a wedding gift list. On the list, the sort of traditional mindless items that every married couple thinks they need in preparation for that next important lifestage––a set of “good” china, some new linen, new suitcases for the honeymoon, and a butter curler (current status: tucked away in a drawer. Never used. Still asking ourselves whatever were we thinking).

Weekly email updates arrived to the excited couple, eager to see what guests had bought––and how much they had spent.

On the Friday before the wedding, I distinctly remember something extraordinary on the list. Someone had bought one of the most memorable gifts that still sticks firmly in our memory many years later. 

A ￡10 voucher.

It wasn’t the fact that it was a voucher––we’d asked for vouchers (just in case no one bought the butter curler, obviously). It wasn’t the amount either. 

What was most memorable about this solitary voucher was that none of our invited guests had purchased it. In fact, we didn’t know and would never know the person who bought this.

What we did have was a gift message...

“A random act of kindness. Congrats on your special day. From a stranger.”

That’s right. A complete stranger had taken time out of their busy day to go online or wander consciously into the London department store. They had searched lists for upcoming weddings that weekend and they had promptly spent a tenner of their own hard-earned cash buying a gift to give to a complete stranger.

A random act of kindness to a complete stranger from a complete stranger.

I didn’t know who, but I did know how we became the lucky recipients of this random act of kindness.

A Man Who Accidentally Started a Cult

Around that same time, a writer named Danny Wallace put an ad in one of London’s free papers simply saying “Join Me” and asking people to send a passport photograph. Whilst that might sound a little creepy, Wallace was inspired after learning of a deceased relative who unsuccessfully attempted to build a pacifistic community on his farm in Switzerland. Wallace didn’t actually think his own venture would turn into anything either. 

However, after one person, then several people, sent him a photo, he apprehensively began to meet them. As then hundreds of people began sending in their photos, they demanded a cause. A purpose for the group to exist. Something they could all rally around.

Wallace set up a website, created flyers––in an age before social media––and decided that ‘joinees’ should do some good in the world. The group became known as the “Karma Army” and tales of doing good deeds around the country, then around the globe, became commonplace. 

Why the Karma Army? Karma is the act of doing a good (or bad) deed in the anticipation that it will generate good (or also bad) results for you further down the road. It’s a theosophical belief. An action and a principle bound in both religion and philosophy. They wanted to spread good will by doing good deeds. 

I had known about Wallace and the Karma Army through following his previous adventures with comedian Dave Gorman. A few years before, flatmates Wallace and Gorman journeyed around the world to try and find all the other Dave Gormans. They co-wrote a hilarious comedy show (which I’d been to see) and book (which I’d also read) about their adventures. I thoroughly recommend watching it, especially if you love a good PowerPoint presentation. 

The Karma Army started as a bit of a joke, and ended up as a bit like a cult that actually still continues to be active today. There are many well documented and heart-warming examples of good Karma Army deeds, and I became a fortunate unsuspecting recipient of one of those good deeds, in the form of a ￡10 department store gift voucher.

What I also took away from that time was that you can bring large audiences of people with you and motivate them to do good deeds if they share a common purpose. 

Paying it Forward

Wallace’s Karma Army were simply paying it forward––the gift of someone repaying kindness to others instead of gaining some personal benefit for themselves. The only personal benefit was the adrenaline buzz of doing such a good deed.

This word-of-mouth phenomenon was made even more remarkable back then, as word spread to potential new ‘joinees’ through printed leaflets and a basic website. Today, marketers have social media and the benefit of potential virality to mobilise people.

But, the Karma Army was more guerilla benevolence than guerilla marketing, as they were not promoting themselves or their business. They were promoting good will. They were paying that good will forward. In the form of kindness. In the form of gifts. To real people.

What about if we did this in banking?

Can the Pay-It-Forward concept work in financial services?

The Karma Army of Coffee

This month, during the pandemic, a cafe in Queensland, Australia, created a “Pay with a Post-it” system. People with a little spare cash can pay for someone else who may be struggling financially ––or ‘doing it tough’ as they say down under––to have a free coffee.

Image Source: The Kindness Pandemic Facebook Group

Lizz Gale posted this photo on Facebook, summing it up as “a gentle reminder that kindness can be so easy to spread.” 

And she’s right. It is easy.

The practice of paying it forward in the form of coffee is actually an old Italian tradition called caffè sospeso (or suspended coffee), which began in the working class cafés of Naples, and has been revived several times over the years around the world.

It’s a form of societal good. 

It’s a reminder that all around us, there are still examples of people doing good in society. Has it felt to you like there is a growing shift towards doing more good in the world right now? In the middle of a pandemic? We cling on to as much positivity as we can at the moment. After all, we’re in this together as a global community, right?

Fintech for Societal Good

In my previous article, I wrote:

“There is no quick fix to build back better, but we must do it anyways because society is shifting and financial services need to shift with society.”

Can these same societal acts of kindness transcend into the world of financial services? Can financial services offer something that embraces people feeling empathy and care for others around them?

The concept of Pay It Forward is actually something that already exists in fintech.

In developing countries, companies like Thriive Capital and Spirit in Action provide micro-finance loans where instead of asking recipients to pay back a loan in cash, they are asked to pay forward into their community, to support vulnerable people in need, through economic development––providing jobs, training, services and products for the community.  

Thriive found that very few of the loans are not paid back because the majority of entrepreneurs are so inspired by the impact their gifts have on others in the community and 59% continue to give to their communities years after receiving financial support.

I wonder if there is more room for benevolent banking in other markets and if it can be part of a sustainable business model.

The Karma Army of Fintech

Last week I also saw that a new fintech called BELLA opened up its waitlist in preparation for a November 30th 2020 launch. Whilst new fintechs appear on my radar on an almost daily basis, BELLA really caught my eye, and I’ve not seen much written about it yet, so what follows is my own personal take on why I think the founding team (with an already impressive track record), may be on to something special with BELLA.

Billed as “the first conversational banking experience 100% powered by human love”, their vibrantly colourful website, has been beautifully designed by UXDA––arguably one of the best UX Design teams for financial services.

We don’t need customers. We need people who care about each other.

You don't need to go far past the colourful impact to start to already get a feel for what BELLA is about. The banner headline is, “We don’t need customers. We need people who care about each other”. It's a bold statement and yet intriguing, drawing visitors in to know more. How can a financial services company not need customers?

On the face of it, BELLA is another US fintech offering no minimum account balances, no service fees, no overdraft fees, 24/7 support and using the increasingly popular Banking as a Service model (Note: it’s banking partner is nbkc bank which already powers banking services for large fintech players like Betterment and Gusto)

Digging deeper though, there are a number of elements in BELLA's proposition that are really intriguing and make it stand out from the usual Fintech/Challenger Bank. 

Chatbots - A (conversational) chatbot experience is nothing new in fintech. But you often have to type a question, phrase or word, or select an option, and wait for a response.

BELLA’s chatbot is a new type of interface from LivePerson––they’re calling Socratex––with an intuitive search field that interprets your intent and provides suggestions. The BELLA website appears to have this search field too and it’s certainly quick to navigate the website without having to rely on dropdown lists or the standard hamburger menu of options.

My take: This should speed up delivery of information and interaction with BELLA. I also imagine that it can get to know you better over time, delivering a more personalised experience based on what it anticipates your intent will be before you even type anything––this could be based on location, time, or anything else it knows about you and your activity or habits. 

BELLA's CEO, Angelo D'Alessandro, previously launched buddybank in Europe, which had a conversational interface from LivePerson, and I see the CEO, CTO and CFO of LivePerson all on BELLA's advisory board.

The same LivePerson team were posting on social media this week about the BELLA launch, speaking in the first person about it, and Chelsea Kim, LivePerson's Head of Operations for Banking and Customer Service has now become BELLA's Head of Operations.

This must be a very close partnership between the two teams.

Checking Accounts - BELLA's checking account comes with a limited edition debit card design made from recycled ocean plastic. Standard with any fintech launch these days—a colourful card and an eco-friendly angle!

BELLA also offers up to $5 million dollars per member instead of the usual $250,000 FDIC insurance. They do this through what they say are “relationships that we have established with nbkc bank and a network of other FDIC insured banks”.

My take: I’m unclear how this additional coverage really works under the covers. Do they spread deposits across 20 banks? Regardless of how...will their target segment be depositing such large sums to be protected by the extra coverage?

Savings Accounts - Open as many as you need and get 6x the national average in interest. 

What’s interesting here are what BELLA calls “unconventional savings rules”. These appear to be a similar concept to other FIs like Monzo and Qapital that have integrated IFTTT (‘If This, Then That’) rules to trigger savings based on specific actions or events through connections to your other Apps––like a savings ‘tax’ when it rains; when you take an Uber; or saving money to reward good habits like exercise recorded on Strava; or moving money when you complete your 10,000 daily steps.

My take: This type of programmable saving actually is proven to drive better customer engagement. On a webinar I attended earlier in 2020, Qapital reported a 73% increase in monthly savings and a 147% increase in log-ins to their App within the first few months of launching IFTTT, by customers who set up their own savings rules using IFTTT against just setting up basic rules directly on Qapital.

However, the recent move by IFTTT to introduce a PRO subscription charge for creating more than 3 rules, actually forced me to archive my Monzo rule and switch it off in favor of other rules I have in place that provide me more value. This is a good lesson for businesses who rely on partner technology, where changes outside their control can alter their own business model and have an impact on both business and customers.

It appears from the language on BELLA’s website that they may be building these rules internally, which might not initially give customers the freedom to be creative with their rule creation, but will give BELLA more control and perhaps more flexibility will come later.  

BELLA Surprise - the company will pay random cashback between 5% and 200% on some debit card purchases. 

My take: If relying on US card interchange fees to generate revenue (as most US Bank-as-a-Service (BaaS) fintechs seem to do), then by encouraging customers to use their debit cards and also randomly rewarding them for doing so, generates an important part of what can be a flywheel for BELLA.

What this means is that an action generates momentum towards a subsequent action or outcome, which consequently drives the next outcome until it is a perpetuating flywheel…

I use my Debit Card → I receive cashback → I am delighted, so I stop using other debit cards → I use the BELLA debit card more often → I get more cashback → I use my BELLA debit card ––> I tell my friends I’m getting cashback → my friends open a BELLA account → my friends use their debit card...and so on and so forth. The flywheel is running. 

BELLA can also use it’s marketing dollars here to speed up that momentum, supplementing the surprise cashback with separate cash giveaways and partner promotions, adding another element to the same flywheel. 

If they can gain some network effects through social media, generating awareness and excitement, this could take off. It’s a similar tactic that we’ve seen work phenomenally well with Square’s Cash App digital wallet users using $cashtag Fridays and also VibePay in the UK are doing something similar for their Open Banking payments solution. So far, it looks like BELLA are targeting the Instagram channel only, which might indicate the priority user demographic they are initially going after. 

The Karma Account - You’ll hopefully be familiar with the Pay It Forward concept from my earlier explanation. BELLA uses the same caffè sospeso example on their website to explain it too.

The Karma Account is a separate account into which you can deposit funds, which BELLA will then use to randomly pay it forward, by reimbursing another BELLA customer’s debit card purchase - be it coffee, donuts, train tickets, or something else entirely. 

My take: Although it is completely anonymous, both customers can see the customer’s first name in their feed. This creates an emotional connection to both the anonymous donor but also to BELLA, and hopefully encourages the recipient to pay it forward themselves, and the donor to continue the practice. And the flywheel keeps on spinning...

Emergency Fund - BELLA recognises that things can go wrong. It is 2020, after all. So, this feature enables you to access money if you have an emergency.

My take: We all should know how important it is to have an emergency fund to cater for those unforeseen moments in life. The name of the feature and using the phrase "no questions asked" in the marketing is interesting language here. Access to funds embedded into the App and provided at the point of need is so important, and knowing that your bank has your back when you’re in a pickle, and not requiring you to jump through hoops, can be very reassuring.

I originally thought this must be a loan or advance of some kind, but I double checked...and surprisingly, there's no repayment requirement! This is a calculated risk by the company, but perhaps one worth taking. It's certainly consistent with the BELLA brand.

If karma is about doing good deeds in anticipation of receiving good results for you further down the road, then emergency fund recipients will hopefully repay those funds, or at worst, talk about this wow moment of truth with their friends, colleagues, the world on social media, thereby increasing network effects again. And the flywheel keeps on spinning...

Karma Score - a gamified score based on your actions helping others through your Karma Account. BELLA will also have a feed of all the random acts of kindness its customers make, adding them into a ‘Bellalovesme 100 Index’, a graphical representation of the love and kindness that its customers have shown to others over time. As they state, this is an index that can only ever go up. 

My take: I’m fascinated by how game design and game theory can be used to motivate the right behaviours. Whilst it is still fairly nascent within our financial services industry, when game theory is executed well, it can make banking not feel like banking at all and ensure the right financial behaviours are embedded within a fun experience layer.

Last week, I spoke with Colin Weir, CEO of Moroku about this. Moroku are building game theory right into the heart of their solutions for banks and energy companies and are seeing real success in customer engagement.

If you need gamification and game theory demystified, check out Colin’s guest appearance on this recent podcast or watch this excellent Ted Talk by Jane McGonigal from a decade ago about how gaming can make the world a better place.

All of the above are just a few of the concepts from BELLA that caught my eye but it’s their overall philosophy to “build a community that genuinely wants to create a better world for everyone” that is admirable and may be a real magnet for socially conscious customers. 

But will BELLA succeed as a business?

Like all fintechs and challengers out there, the question is how will BELLA make money and become profitable?

This appears to be another BaaS model built on interchange fees, at least initially. That’s an approach that has worked out well for Chime who recently reported being profitable (although it took Chime many years and significant funding to grow that strongly, plus the pandemic has certainly accelerated their growth).

Interchange is also not a model that easily transfers internationally, as places like Europe don’t have the same interchange fee model, so they’ll also need to be imaginative further down the road if they want to go global.

With that in mind, a dive into the world of providing credit to their customers is the most obvious route to accelerating the path to profitability. Offering higher margin products within the same caring philosophy could work well if the messaging and customer need is matched up well.

But there’s been a recent narrative around how many of the Challenger Banks have become prettier versions of their incumbent predecessors. A nicer UX, but underneath, still essentially the same product set, and an absence of differentiation, which narrows further once the incumbents start to copy features and parts of their challenger propositions.

As a fintech observer, BELLA actually feels like it really is starting out from a different place. A different philosophy. A different way of thinking about money. A different way to deliver.

When I made some initial comments about the proposition on LinkedIn last week, BELLA’s Chief Product Officer, Will Beeson, responded,

“We think a totally different approach is required to create real change for people.”

Being different is also a risk, but if BELLA can find product-market fit, get that flywheel going, generate brand awareness, and scale amongst the socially conscious ”people who care about each other”, they have a better than good chance of succeeding. 

Time will tell if they are really onto something special here and how many others may follow them. I’d personally love to see more banks and fintechs like Bella show the world that paying it forward, putting money in your pocket and creating good karma in financial services is possible too. 

New Themes and Positive Creativity

Whether you believe in karma, fate, luck, serendipity, providence, kismet, something is written in the stars or just put outcomes down to ‘it is what it is’, there’s no denying that we have the power to do more good in the world.

We have the opportunity to create a shift in society, to focus on being better citizens. Focus more on mental health (particularly in the current environment as we spend less time in the physical presence of others). Focus our businesses on more conscious capitalism. 

Can there equally be a societal shift in how we create, view and use financial services? 

We are more than capable as an industry to put in that extra effort and pour positive creativity into new solutions. To build new propositions around new themes. To find compelling ways to tackle societal good. To do this whilst still balancing the right levels of value exchange.

This could be how we build back better.

This could be how we make banking better.

It doesn’t need to be an anonymous ￡10 voucher, but perhaps more random acts of kindness in the world can be the societal nudge for financial services to create its own Karma Army of followers…

Ciao Bella!