CHAPTER 6: SUBSCRIPTION SERVICES

We are shortly to release the 6th edition of the mobile banking app review. In this article, we share an extract of Chapter 6. To find out more and get exclusive material visit our website.

Life-as-a-service

Research from Barclaycard, published in August, revealed that the subscription economy increased by 39.4% year-on-year in July 2020 and showed the UK’s growing subscription economy is now worth ￡323m annually[1]. It found 65% of UK homes are signed up to regular subscription services, with an average of seven contracts per household – and they range from entertainment platforms such as Netflix and Spotify to food delivery services like Hello Fresh and Graze.

Furthermore, one in ten retailers launched their first sign-up service during lockdown, with a fifth still intending to push forward with developing their subscription services despite the easing of restrictions; ‘the pandemic is both highlighting and expediting the process of moving to a customer-centric, digital, subscription style of commerce – and living’[2]. Morrisons was just one of these retailers, who joined the movement with a new weekly, fortnightly, and monthly food box service originally aimed at getting people the essentials in the pandemic.

Many businesses are cashing in: Volvo announced ‘Care by Volvo – the flexible car subscription’[3], Apple launched Apple One[4] making enjoying everything Apple ‘even easier’ and Pret lets you enjoy all the hot drinks you can ask for, for a ￡20 a month fee with YourPret Barista[5]. This is also filtering through into banking too, as Santander Spain introduces ‘Santander One, a new simple account with service plans via subscription’[6] and we have seen the monthly fee subscription models promoted by Revolut, N26 and Monzo too.

Managing my new life

As the number of services subscribed to increases, it can be hard for customers to maintain control over these recurring expenses and it will become expected to be able to manage their subscriptions via their bank and money management apps. In a study by Minna, 74% of customers said that cancellation is the most frustrating part about subscriptions, and described the experience of cancelling a subscription over the phone as "extremely painful", which is where banks can help.

Revolut: managing regular payments

Currently, only Monzo, Starling and Revolut offer their users a bill and subscription tracker, where a user can see all their regular payments together, as well as over time. With Monzo and Starling you can currently only track these payments, whereas Revolut has gone one step further; in addition to being able to track all recurring payments, they also enable users to block and unblock unwanted subscriptions with ‘a tap anytime of the month’[7]. Revolut also sends users notifications if there is not enough money in the account to cover a scheduled payment, giving them even more control.

Monzo: managing regular payments

It was announced in July, Lloyds plans to add subscription management to their mobile app. It is said the new mobile feature provides customers with a snapshot of debit card subscriptions alongside real time push notifications alerting them to subscription changes. Users can cancel within the app when they no longer want to use a service or product[8]. Four months on and the functionality is yet to come to market, once again demonstrating the incumbent lag between development and full release.

Subscription pilots

In a similar vein, TSB launched their bill management and utility switching service pilot back in July[9], again this has not yet made it to the masses!

Will subscription management become a table stakes feature and how quickly will this happen? Long enough for the pilots to make it to full roll-out? History suggests that the UX of the challengers’ offerings for such a feature might show up the incumbents’ versions and we wait with bated breath to be proved wrong on this.

A clear example of this disparate implementation is when we look at the integration of Flux digital receipts in Starling and Monzo compared to Barclays.

To test this use-case, we made a Just Eat transaction on all three bank cards and the results were stark. The Flux digital receipt appeared in the Starling and Monzo apps instantly post-transaction. In contrast, the transaction in Barclays is still showing as pending, over 24 hours later, and no digital receipt is available to view. Furthermore, the H&M transaction that has now settled also shows an error message that a digital receipt could not be created.

This is clear demonstration of how far the incumbents have to go, when it comes to offering feature parity with the leading fintechs.

Perhaps we shouldn’t be too harsh on Barclays for getting the product live – as long as they are able to refine and develop the feature to be as good as the challenger offering in the coming months!

Starling integration example

Barclays examples

We’ll be a little patient then with some of these new features. But if my banking app can’t help me manage my new spending habits in the coming months and years then I might be persuaded to use the powerhouse google offering when it arrives on these shores. They have, after all, unparalleled expertise in data and search in real-time which may put a bank’s service to shame? Whether I trust google or not is a different chapter altogether!

We'd love to here what you think of the study - reach out on social media to any of the team with your thoughts or feedback.

[1] https://www.home.barclaycard/insights/payments/Generation-Subscription-The-UK-is-now-a-nation-of-super-subscribers.html#01

[2] https://www.customercontactweekdigital.com/customer-experience/articles/the-rise-of-the-subscription-economy-how-it-will-change-your-business-and-life

[3] https://www.volvocars.com/uk/care-by-volvo/

[4] https://www.apple.com/apple-one/

[5] https://www.pret.co.uk/

[6] https://www.santander.com/en/press-room/press-releases/2020/10/santander-introduces-santander-one-a-new-simple-account-with-service-plans-via-subscription

[7] https://blog.revolut.com/take-control-of-your-subscriptions/

[8] https://www.finextra.com/newsarticle/36195/lloyds-to-add-subscription-management-to-mobile-app?utm_medium=newsflash&utm_source=2020-7-13&member=67425

[9] https://www.finextra.com/newsarticle/36174/tsb-launches-bill-management-pilot?utm_medium=newsflash&utm_source=2020-7-8&member=67425