Note: If you’re a Forrester client, you can jump straight to the full report here.
Two weeks ago, I was lucky enough to spend 10 days in Italy on a vacation with my wife and some friends. As we walked the Path of the Gods, made our own Neapolitan pizze, and enjoyed the gorgeous views of the Amalfi coast, different people in our group would pay for a limoncello here or a glass of aglianico there. As such, our financial activity was a mix of different individuals spending various amounts for a range of stuff. But our group was often too busy having fun to carefully track who paid how much for what and when.
Enter Splitwise* a non-bank mobile app that lets groups of people easily track their spending and settle their short-term debts to each other (see screenshots below). We used it throughout our trip, and it was a breeze.
But why didn’t a bank build this kind of convenient digital offering first? Or why don't more financial providers integrate with Splitwise and other disruptors to build ecosystems of values for their customers? Many bank executives and digital banking teams say their goal is to help customers better manage their finances (and increase retention and engagement by doing so). But too few financial institutions have focused on what Forrester calls the shared finances opportunity. Forrester defines shared finances as:
Any situation in which a person acts as an observer of, partner in, or proxy for another person's finances.
Our new report Why Digital Teams At Financial Providers Should Invest In Shared Finances outlines our research in this space, and we argue that digital executives at financial providers should embrace this opportunity and build digital services that meet people’s shared financial needs.
Forrester believes that shared finances will only expand as a market opportunity, but the chance for retail financial providers to pioneer in this space will not last long as customers’ expectations rise and competitors — including disruptors like Splitwise — roll out new products and offerings.
*I had the chance to speak with Jonathan Bittner, CEO & Co-founder of Splitwise. I will post a follow-up blog about that conversation in the near future.