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From toasters to mobile banking – moving to better outcomes

October 5, 2016

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From the Boss to the Biebs

Toasters, blenders and electric can openers. There was a time when these appliances were the state-of-the-art customer acquisition tools in the banking industry. Admittedly, this was also the height of passbooks displaying transactions, long lines at branches, and friendly tellers.

I actually remember it well.  Peering over the counter at my father’s favorite branch of the Brooklyn Saving Bank, I would watch as he greeted the tellers and bank guard by first name, tracked his account activities in a passbook, and listened to the teller’s suggestion to open a CD account to earn higher interest on the excess funds in his checking account.

Things change. Lest I forget, seemingly every car ride with my three teenage kids reminds me. The Rolling Stones, Bruce Springsteen, Steely Dan and all my favorites are somehow now pure torture. Justin Bieber, Taylor Swift and One Direction are apparently the icons! While I don’t quite understand, I regularly relent. Long live the Biebs.

Embracing new demands

As a veteran of the financial services industry for 30 plus years, much like my love for “The Boss,” I cling to certain ideas. Borrowers must have the ability to repay a loan, display a track record of managing credit, and have the right incentives for repayment.

However, I recognize that I should expect and even embrace a new and different set of demands on financial products and services from the current generation. A social visit and shiny toaster seem just as obsolete and irrelevant for today’s savvy young adults as Mick and Keith seem to my kids.

Impacted by technology, the younger generation’s attitudes towards banking and lending are reshaping what financial services must provide. As an industry, we must accommodate their unique preferences, particularly for speed, ease, and transparency.  In this respect, despite the recent headlines, I think we can look to how Marketplace Lenders have been reading the tea leaves as a measure of progress.

Make it fast. Make it easy. Make it honest. Make it better.

In my view, Marketplace Lenders have been successful at simplifying the credit application process by reducing the amount of information collected.  They have offered more competitive pricing as a result of new technologies, reduced operating expenses, and more efficient processes and the use of new data sources.  They also understand the need to make credit decisions quickly.

So what can lenders do to attract and meet the needs of the new generation of credit seekers?

Make it easy and fast:

    • Simplify the application process by pre-filling out the applicant data


    • Automate proof of identity, income and employment


    • Introduce many ways to make a payment with plenty of reminders and the ability for lenders to make it for them

Make it transparent and enlightening:

    • Display salient terms and conditions, with no hidden or surprise costs


    • Make pricing very competitive and not complicated to compare  


    • Send account owners messages on all transactions


    • Educate the younger generation on the importance of having good credit histories to help them build their future

New demands, better outcomes

What’s most important is that I believe the the result of taking the above actions will be to give a whole new generation better financial outcomes. By providing simple, streamlined ways to consolidate debt into reduced interest rate loans, our customers will be able to put money towards their savings instead of paying fees. By developing responsible use of credit, our customers will be able to improve their cash flow management, particularly when expenses suddenly rise and fall. Improvements in financial literacy will provide an understanding of how the combination of investments, savings and credit can work together to develop increased financial control and build wealth.

At Varo, we are building an entirely mobile portfolio of banking services and developing strategies on how to satisfy today’s generation by listening carefully to their financial needs and desires. While I don’t expect my kids will ever enjoy my music, I think I have a pretty good idea what they may want from bank services in the future. That’s what I am working to make a reality with the team at Varo. Until then, I’ll have to be satisfied with solving my music dilemma--the kids now each get exactly what they want in the car, courtesy of three sets of headphones.

Help shape the future of what mobile banking can be by signing up for Early Access to our Beta today!


Image credit: Samuel Dixon


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