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Coaching the young to save via an app

Case studies showcasing how members are innovating within their organisations was set to be a key part of the BSA’s Digital Mutual at the postponed Annual Conference in May.

Instead of the event and given the huge amount of innovation going on in our sector, despite the market lockdown, this is the first of a series of articles where societies talk through the work they have done. 

Kicking us off is Principality Building Society, which recently launched its First Home Steps app to better engage with young savers. The app uses the principles of gamification to help them build up enough money for their first home.

Consumers, as demonstrated by a number of studies over the last couple of years, have a high degree of trust when it comes to building societies.

A recent consumer study from UK fintech Bud was the latest to identify this attitude towards the sector. Among societies’ own customers, Bud found greater trust than even for the NHS.

This is a huge badge of honour for the sector and is testament to how it has looked after (literally) generations of savers and borrowers.Principality's marketing for the First Home Steps App

But it also points to a massive opportunity when it comes to developing digital solutions and engaging the younger generation.

As Bud’s research also highlights, greater levels of trust leads to a greater openness to the essential sharing of data required for digital use cases.

Many building societies have already launched or are actively developing their digital solutions. In March this year, a week before lockdown, Principality Building Society launched its own app.

Rather than providing mobile access to existing customers’ savings accounts, the app uses the principles of gamification with savings goals and digital coaching to engage with new customers to help them save for their first home.  

Harri Jones, head of customer development at Principality Building Society, says that when he joined the mutual from Lloyds Banking Group in May last year, the society knew that developing a proposition that engaged with the younger generation on their level was key.

“It was clear that for the younger generation, getting their heads around what it takes to save for a property, never mind the ins and outs of arranging a mortgage, is complicated for them,” he says. “We needed to be active in the places that they’re interacting, online and through social media.”

The solution Principality came up with to address this problem is the First Home Steps app, which was developed in partnership with UK fintech Life Moments.

Connecting with Rising Metropolitans

Principality used the financial services segmentation system Fresco, which categorises the UK adult population into 12 distinct groups such as “Still at Home”, “Home-Owning Families” and “Low Income Elderly”, the society honed in on the specific group of “Rising Metropolitans”, who tend to be younger professionals in their 20s and 30s.

It also quickly recognised that the branch network would not enable it to connect with Rising Metropolitans in the same way as its existing customer base and that it needed to develop its own app.

Principality already had a technology programme under way so it looked to develop a hybrid approach to work with a company to accelerate its development, which led to it approaching Life Moments.

The fintech had already created its own app called First Home Coach and was interested in scaling the solution to help more first-time buyers. 

Principality used Life Moment's digital coaching platform and the insights the fintech had gained from the launch of its own app to launch First Home Steps. 

Ben Leonard, CEO at Life Moments, had set up Life Moments following an 18-year career at HSBC, primarily in investment banking.

Having worked on first Open Banking and then the Financial Service Advice Review with HSBC’s retail division, he saw an opportunity to develop digital tools that could improve the finances of consumers and help firms speed up the time to bring new solutions to market.

The Life Moments’ app aims to bring three things together – provide goals, make things easy to understand and coach customers digitally.

“In financial services speak, digital coaching is personalised, data-driven guidance,” says Leonard.

Sharing the journey via gamification

Principality has also tied its First Home Steps app to a Principality First Home Steps savings product which mirrors the goals in the app with financial rewards.

The tiered product rewards customers as they achieve savings steps (hence the name!) on their way to the total amount they need to save for your deposit and other costs.

There is also a celebratory bonus to achieve that at the last step if you go on to take a mortgage with the Principality.

This combination is a clear push towards the principles of gamification, whereby savers are rewarded for the financial gains they are making.

“In the same way that we have an app that gives them a sense we’re on their side and share their journey, the product is intended to do something similar,” says Jones.

“We know it’s a long way between zero and the average £18,000 it takes to buy a house. So the product is structured so it actually acknowledges when savers are making steps on that journey.”

Leonard says the key part of gamification is to focus on life goals but to break down long, difficult journeys into short motivational steps.

“The app sends people on missions and celebrate when they achieve those missions and make it fun,” he says.

Advocacy from consumers and colleagues

Fittingly for a digital proposition, the app has been marketed via social media platforms using case studies and micro-influencers to extend the campaigns reach (see here for its YouTube video).

Principality says this performed well in terms of driving app downloads, as did targeting specific regions and demographics via Sky AdSmart TV advertising, digital display on Rightmove, in addition to traditional marketing in press and branches.

“The number of downloads has far exceeded our expectations,” says Jones. “We are very happy with the reviews that users are leaving which give you qualitative insight about how useful the app has been and the key pages and features that users are looking at.”

In addition to the positive response from users towards the app, Jones says that the app has also had a positive impact within Principality as a traditional organisation starting to utilise new technologies.

“I wouldn’t underestimate the benefit of being able to land something like this on the internal mood of colleagues within an organisation,” he says.

“That’s important as well - when you move quickly and deliver something for an organisation that has not had this type of app before. All of a sudden your colleagues see that we, Principality, are in the game now and moving ahead.

“From our perspective, that type of internal advocacy has also been an important result as well.”

 

Posted by Robert Thickett on 25 June 2020