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People want Subscription Management from their Bank

Few people could imagine going back to a life without binge-watching Netflix, creating Spotify playlists, or backing up files on Dropbox, Drive, or iCloud. However, there is a flipside to subscriptions and recurring payments. The explosive growth of subscription services, people are losing track of what they have.  

A 2019 study by Minna Technologies includes more than 400 000 European consumers between the ages of 18 and 75. The study shows that the average person spends €334 on at least 11 different subscription services each month. The study also found that the average household pays for a total of 21 subscription services. Given these findings, it is understandable that people are finding it a challenge to maintain control over their recurring expenses.

Minna's findings underscore the magnitude of consumers' frustration. For instance, 1 in 3 said they had found themselves paying for subscriptions they no longer use. Without knowing it, customers found that subscription companies had been charging their cards for months, and in some cases, years. The most common reason for this was free trials that had ended and subsequently started charging money, without notice.

74% of customers pointed out that cancellation is the most frustrating part about subscriptions, and described the experience of cancelling a subscription over the phone as "extremely painful". The bare realisation that there might be a salesperson on the other end of the phone, trying to convince them not to cancel, caused many not to go through with the cancellation in the first place. 33% of consumers are aware that better subscription alternatives exist (such as cheaper telco- or utility deals), but did not change them as they did neither have time or energy to compare and switch provider.

For many years, the general notion of a subscription was to a newspaper, digital streaming service and perhaps subscription boxes. However, given its ­original ­definition, subscriptions include far more products and services than most people think. According to Merriam-Webster, the definition of a subscription is­ "an arrangement ­to ­receive ­something, typically a publication, regularly by paying in advance". A­ more ­distinct ­and ­contemporary ­way ­of ­defining ­it ­is "any recurring expense for a service or product that can be cancelled or improved". 

For ­the ­vast ­majority of people, ­satisfaction ­with ­financial ­health­ is lower than physical health, social life, and emotional health. Reports have found that 63% of consumers are ­unhappy ­with ­their ­current ­financial ­situation and ­that­ a staggering 38% of consumers (50% of millennials) would have problems paying back a loan of €450. Customers need help managing their subscription services. This conclusion stems from the 2019 report from­ the ­British consultancy ­firm­ 11:FS,­ s­tating ­that ­"helping ­customers ­to­ get ­a ­better ­grip ­on­ recurring costs and monthly bills are one of the most underserved jobs to be done in retail banking." Subscription management is a great strategy to strengthen long term customer engagement, satisfaction and loyalty.

Challenger banks such as N26, Monzo, Revolut, Sterling, and Klarna have understood this and are working on subscription management features that aim to win over customers from incumbent banks. However, as incumbent banks are still the primary choice for most people when it comes to money management, they are well-positioned to take the lead on subscription management and strengthen their natural position as number one in money management.

In conclusion, deploying subscription management is one of the best ways for incumbent banks to mitigate the risks of customer disintermediation and unbundling of services.

 

 

 

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Comments: (2)

Melvin Haskins
Melvin Haskins - Haston International Limited - 22 April, 2020, 09:14Be the first to give this comment the thumbs up 0 likes

I accept that 400,000 is a large number, but it is still less  than 0.1% of the population of Europe and there is no mention of the breakdown of the countries surveyed. Your findings do not gel with my contact base so I question the validity of percentages extrapolated from your findings. Subscription management is a great idea and every financial institution should offer it, particularly as most suppliers make cancellation an unpleasant experience - as you say, most insist on a telephone call to cancel and have a salesperson at the other end to talk you out of cancelling.

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 22 April, 2020, 12:17Be the first to give this comment the thumbs up 0 likes

With #RoachMotel and other dark patterns used by service providers snaring consumers into #SubscriptionTrap, there's no argument that there's a compelling need for Subscription Management. But I'm not sure if banks have a play here or even want to have a play here. 

To take my personal example, whenever I buy a subscription, I try to buy it from AppStore or PlayStore as far as possible because they support cancellation of a subscription anytime (even if the original service provider does not).

In the case of my WSJ subscription, I ordered the subscription directly from WSJ website without checking whether they were available on AppStore / PlayStore. Big mistake. I encountered the classic RoachMotel dark pattern and had a tough time cancelling it. 

Now, the thing is, I paid for this WSJ subscription via my credit card. If my bank really wanted to have a play in Subscription Management, it should let me cancel my WSJ card-on-file mandate by contacting it. I didn't try but it has been widely reported that banks do not accept cancelation requests or chargeback demands from consumers wanting to cancel or get refund for unauthorized subscriptions respectively. 

Banks make money only when the subscription continues to run. Ergo they have a vested interest in NOT letting the consumer cancel the subscription or in getting into subscription management in any other manner that would benefit Consumers. Of course, this does not apply to banks, if any, that value CX over Revenue and banks who have delusionary thoughts of being able to charge fees for providing Subscription Management. 

Hannah Preston

Hannah Preston

Growth Strategists

Minna Technologies

Member since

18 Apr

Location

London

Blog posts

3

This post is from a series of posts in the group:

Banking Strategy, Digital and Transformation

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