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How banks can add value for their customers with recurring transactions

5 min read|Published May 24, 2022
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With the subscription economy taking off, many consumers are now tied down with several automated recurring costs, and are losing visibility over their monthly spending. Find out how banks can leverage data to increase transparency and give their customers more control over recurring transactions – and what they have to gain by doing so.

TL;DR – Quick summary
  • Consumers are spending much more on transactions than they assume – 89% of Americans underestimate the amount they spend on subscriptions.

  • Open banking can give customers a great overview of their recurrent spending, in turn giving them more control over their finances.

  • Banks implementing this service will benefit from increased and more meaningful engagement from their consumers.

TL;DR – Quick summary
  • Consumers are spending much more on transactions than they assume – 89% of Americans underestimate the amount they spend on subscriptions.

  • Open banking can give customers a great overview of their recurrent spending, in turn giving them more control over their finances.

  • Banks implementing this service will benefit from increased and more meaningful engagement from their consumers.

There is a major disconnect between what consumers believe they spend each month on subscription services and the reality. According to a study made by Westmonroe (2021), 89% of Americans underestimate the amount they spend on these services, which is an increase of 4% from 2018.

The use of digital banking has increased since the pandemic and similarly, so has the number of signups to subscription services – increasing the amount of fixed costs for the average consumer. The rise in subscriptions and other recurring payments can lead to uncontrolled costs, as they’re set up to be charged automatically from credit and debit cards, direct debits or through e-invoices. These recurring costs can catch consumers off guard if they don’t have a good overview. 

Here’s an increasingly common scenario: with tons of new streaming services popping up, many people now have multiple subscriptions for competing platforms. Since these payments happen automatically, customers might not be aware of how much is being withdrawn from their account (or when) each month. Increasing transparency over all their recurring payments could help them to determine if they’re spending too much on unnecessary subscriptions.

So how can banks help consumers spend the right amount on subscriptions and not a penny more? It’s all about leveraging transaction data to better understand their spending patterns. 

Leveraging data to increase transparency and control

By accessing and analysing transaction data you can help customers have a better overview of their fixed costs, which can create a better understanding of their finances as a whole, and help them reduce unnecessary spending.

Having this data allows you to provide a better digital banking experience by providing users tangible and personalised insights.

To help their customers tackle their recurring costs, banks can provide an overview of spending patterns and recurring expenses within their banking app. This can be done with Tink’s data enrichment capabilities using recurring and predicted transactions.

Tink’s capabilities allow you to easily build these features and let consumers gain a better understanding of their fixed cash flow (like contracts or subscriptions) by delivering an overview of their recurring transactions.

The difference between a fixed and variable cost can be identified to help users see their monthly expenses – and understand what they can do about it. They can gain insight into subscriptions they might have forgotten or aren’t actively using anymore. 

These capabilities alone give them a chance to reassess. Beyond that, users might also be able to cancel subscriptions and free up funds. Another great benefit is that they’re given a clear view of overlapping subscriptions (subscription stacking).

Prevent overspending and overdrafts

When users understand upcoming commitments and cash flow they become empowered to make better decisions and are less likely to overspend. 

In most cases when banks display upcoming transactions, they often show direct debits or standing orders that are 1-14 days ahead. But with Tink’s predicted recurring transactions capabilities, you can provide an accurate overview of upcoming transactions for the coming 30 days, including charges that might typically go unannounced (such as recurring card payments). 

It gives a full view of all recurring transactions a user has such as subscriptions, gym memberships, loans, utility bills, rent, monthly savings, credit card invoices – and importantly, when these payments will be withdrawn. Since these payments can happen at different times throughout the month, people might be caught unaware and not have sufficient funds – ending up overdrawn.

This makes in-app interactions more valuable by also showing upcoming commitments and their impact on the balance available to spend. 

Offering better banking experiences

Want to know more about how you can harness the power of open banking to give your customers more value, and help them stay on top of their finances? We’re always happy to answer your questions, big or small – just get in touch

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