Picture of Frederrick Hamann
Frederrick Hamann

What are the benefits of subscription management for a bank?

Let’s look into the benefits of subscription management for you as a bank. Let’s start off with a short question: how many of your customers are contacting customer service when it comes to claims and the blocking of cards?

Hold on to that question for a moment, while I give you just an overview of the different benefits when it comes to subscription management for you as a bank. Because there are three:

  •  The first one is the cost saving part
  • The second one is generating revenue, and
  • The third one is really creating those happy customers and creating retention from those happy customers as well.

But let’s come back to the question from before. How many of your customers are contacting customer service when it comes to claims and the blocking of cards? So the answer is 7%, at least if you ask the different banks that we’re working with at the moment. Not all of that is of course linked to recurring payments. It’s actually half of that that’s linked to recurring payments so it means that 3.5% of all the different contacts to customer service are linked to claims and the blocking of cards.

Account opening

Financial data aggregation can transform opening a new account into a matter of seconds for users. At the same time, it provides banks with crucial data points about their prospective customer. Here is how it works.

When a customer opens a new account, the bank can instantly receive information about the person thanks to data aggregation. The type of data can include personal data like name, date of birth, address, occupation, and more. This ties into banks’ Know Your Customer (KYC) processes. Because it delivers banks as much information as possible about their future customer before authorising the account opening.

Besides personal information, aggregation can also provide financial data from a customer’s previous bank, including credit history, income details, and more. This helps the bank with security while limiting the risk of fraud. It also plays a vital role in profiling the new customer. This means that banks with this service will have a leg up on the competition, possibly driving extra revenue.

In conclusion

Financial data aggregation has been on the rise recently. Even though many have only heard of its most well-known use cases, such as bank account aggregation and personal finance management. Fintech data aggregators can also provide significant value to banks and other financial institutions via lesser-known use-cases. There are substantial new revenue streams to be discovered in consumer loan switching. At the same time, financial data aggregation can also help banks comply with the new regulation on assessing creditworthiness. Or make opening an account faster and easier. Banks must make sure to familiarise themselves with little-known use-cases of financial data aggregation. Otherwise, game-changing solutions could fly under their radar.

When it comes to the recurring payment part, the internal price of this is of course different from bank to bank, but what we can see is that the internal price structure is between 20 and 50 euros per contact to your customer service.

So this is of course a huge number once you look at it in a bigger volume size. And let’s just take a look at the calculations here. If you have a bank with a million contacts a year to your customer service, that actually means that you’re spending between 700.000 euros to 1.75 million euros on claims and the blocking of cards on the recurring payment basis. So this number is of course huge and we can help you drive it down with our subscription management feature.

And how can we do that? Well, we do three things. The first one that we do is that instead of the user seeing these types of letters and numbers in their bank statement we show them exactly what it is that they’re paying for. So we put in logos, we put in the merchant name. So this type of letters actually converts into to this one – the local gym.

So that means that the end user is not in doubt in what it is that they’re paying for and thus less inclined to also do a claim because they can’t recognise the payment.

The second thing that we do is that we make it easy to get out of these different subscriptions. So instead of the user taking the scissors and cutting that credit card they can just press a button within your banking interface and then we take care of the rest.

So that was the cost saving part the first benefit. The second benefit is around the retention. What we really do is that we give the customers a sense of financial wellbeing. We give them control of their different subscriptions, we give them an overview of all the recurring payments and also making it available for them to just cancel the ones they don’t need anymore. And that means that we are both protecting their money and we’re also making them relaxed in this setting as well.

And we can see that it’s working. 60% of the customers are active, so 60% on a yearly basis are using our service, and when we send out notifications more than 85% of those notifications are converting successfully into that the user is interacting with us.

The third benefit that’s the revenue and let’s start with a short and simple example. So we have Peter as an example. He goes down into the local shop and he wants to buy a washing machine, but Peter doesn’t have the money himself, so he has to take a consumer loan to buy that washing machine with a high interest rate. 

Peter takes the washing machine home, is happy, starts paying off on the loan. The loan then comes into the the subscription management system, where we’re actually able to show the recurring payment on that particular consumer loan, and once Peter can see it, you as a bank can also see it, and that means that you are actually able to go in and help Peter. Give him a better loan with a better interest rate instead of the expensive one that he had before. We can do the same thing when it comes to mortgages, insurances, car loans, all the different financial products that are out there.

And the way that we do it is actually that we’re tagging all of these different financial products so we’re able to see exactly what financial products Peter and all the rest of the consumers are buying. The good thing here is that we’re actually able to see not only what he’s buying from your bank account. We’re also able to see what he’s buying from all the other bank accounts out there.

So by using PSD2 data we’re able to detect all the different recurring payments that he has on other financial products, and suddenly you as a bank are in the driver’s seat when it comes to giving Peter better loans, better mortgages and better insurances as well.

The second part of this cross-selling mechanism is really once Peter presses that button and gets out of the subscription, then he’s able to put that savings, that money that he saves, he’s able to put that into a piggy bank – and he can put it into an investment account as well. So if he doesn’t have a savings account or an investment account, you can help him get such a product from you, but if he already has it, of course you can direct the money into those parts as well. 

Thus even creating more financial wellbeing for Peter and his peers and what we see is really that there’s a huge potential in this. So, 936 euro is the average number that Peter and the other consumers are able to save and put into other types of products from their subscriptions because they’re not using them or because they’ve simply forgotten them. So it means that this is the potential. This is really what you as a bank can also go in and play a good role in in the financial lives of these people. 

So just for recap purposes here: we are with subscription management able to give you cost savings that’s the one benefit. The second one is around the retention, creating those happy customers and loyal customers, and the third one is generating revenue.

Get a personal demo of how the Subaio solution will work for your bank​