In a sea of sameness among digital-only banks, Varo is taking a bold move in pulling the plug on a feature that millennials supposedly hold dear: goals-based savings envelopes. In one fell swoop, the San Francisco-based startup rebelled against a trend that’s become a table-stakes offering among digital-only banks, including N26’s “Spaces” and Monzo’s “Pots.”
Varo‘s decision surfaced over the weekend, when a customer posted to Twitter a message he received from the company announcing the move. According to the memo, the financial “dashboard” and “goals” screens on the app were to be scrapped as of September 9, with Varo citing low uptake as a rationale for the move. Customers still will be able to auto-save for a rainy day, but they’ll now see a new screen called “Offers,” presumably recommendations that Varo makes based on what it knows about its customers.
Varo Money replacing Dashboard and Goals with Offers… seems like a pretty big product shift! pic.twitter.com/U6JMR01xnz
— Ben Brown (@bebrown2) September 7, 2019
August de los Reyes, chief design officer at Varo, said the company is moving in a direction where users will design their personal finance journeys, including some element of exploration and discovery, but he didn’t offer specifics on how Varo would implement this from a user perspective.
De los Reyes wants the Varo app to encourage people to save without having to use goals or other structured systems. “There are ways to elicit that behavior without being prescriptive and shoving it down people’s throats,” he said. “What we’re doing at Varo isn’t just creating the table stakes that banks offer. We’re also designing to create a very specific state of mind.”
With Varo’s auto-save capabilities, for example, de los Reyes wants people to see how much they could save over time if they put away a certain amount each week. According to him, people are more likely to commit to healthy financial habits if they set these parameters themselves and play with different outcomes.
In developing its products, de los Reyes said one of the biggest challenges is navigating between operational and product teams, in particular tech and finance employees. “There’s a very positive aesthetic tension between trying to push the boundaries of what can be while still staying within the law,” he added. Other companies, such as SoFi, have balanced the work of marketing and product teams by bringing expertise together on product development initiatives.
Customer feedback also is at the core of Varo’s product vision. According to the company, all Varo employees must listen to or read at least one customer feedback comment each week, including through emails, phone calls, surveys, interviews, external feedback sites and social media. Indeed, as a result of customer feedback, the startup instituted higher ATM withdrawal limits and early direct deposit capabilities.
It has yet to be seen whether Varo’s direction will resonate with customers. Ben Brown, who initially posted Varo’s message to Twitter last week, surmised that a longer-term strategy could have influenced the company’s decision. “It seems like a pivot from financial wellness to commerce facilitation,” he wrote. “Both strategies have merit! The latter certainly has a clearer link to monetization.”
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