Minna technologies CEO and founder Joakim Sjöblom (Image: Minna tech)
It’s a deal you can’t beat. Instant access to all the music you could ever listen to. All the movies and series you ever wanted to watch. Fresh produce delivered to your doorstep every day. A car out front that’s yours to use for the next couple of years. A tenner here, a couple of bucks there. And before you know it, you’re talking serious money every single month. Research shows, consumers have a little overview of what they’re paying for their subscriptions.
Challenges of subscriptions
Subscription services have opened up new opportunities for everyone and are shaking up the financial system. For all its advantages, it also offers its challenges for the consumers. It’s getting harder and harder to track the cost of all the different services one is subscribed to. And before we know it, the monthly cost of living grows out of hand.
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Take the Netherlands for example. Often touted as progressive in adopting digital solutions, it’s popular with startups exploring new financial models. Subscriptions are all the rage. But recent research by the National Institute for Family Finance Information (Nibud) shows that half of the people in the Netherlands do not know how much they spend every month on subscription services. It also shows almost everyone underestimates the number of subscriptions they have,
Set it and forget it
The number of subscriptions averaged 6 in the year 2006. That more than doubled to an average of 14 right now and will likely increase to 17 in the year 2025. There are several reasons for this increase. First, there are more subscription services. Whether it is electronics, bicycles, T-shirts or fresh flowers: you can get them automatically, every month.
But due to their nature, subscriptions are also difficult to get rid of. Sometimes you simply set it and forget it. More than a quarter of the Dutch say they don’t check their subscriptions yearly to see if they are still necessary.
Unsubscribe with ease
Making it hard to unsubscribe is often part of the business model. “Companies want to keep their income,” explains Joakim Sjöblom. He is CEO and co-founder of Minna Technologies, a fintech solution that helps consumers to monitor, switch or cancel their subscriptions.
Cancelling a service could include lengthy phone calls, but most of the time they simply hope you won’t notice them. Sjöblom knows that ‘cancel anytime you want’ usually means people won’t cancel at all. “It may seem logical for vendors to let their customers commit to a 12 or 24 month period. But data shows that fixed contracts are more likely to get cancelled after their set period than the month-to-month subscriptions.”
Minna Technologies’ solution integrates with banking apps to do that work for them. “We read data and monitor transactions, courtesy of open banking. So we can prompt the users when we spot a subscription. ‘You had your energy contract for a year. Do you want to renew it?’ We give them small nudges. We have a database of information on more than 10,000 companies.” This not only allows Minna Technologies to let users cancel a subscription without any hassle. Switching to another provider is made just as easy- even the ability to make greener or conscious choices.
Minna’s end goal is to support financial wellness for consumers. Embedding the technology within the banking’s native environment helps to reach clients where they are- their trusted banking environment. Through actionable insights, consumers are able to save upward of hundreds of euros a month by discovering, cancelling and optimising their subscription spend. Forward-thinking banks are supporting transparency for their consumers, while improving the digital banking journey by embedding the capability into the banking apps – taking the pain of cancelling or switching away from the consumer.
Forgetting to cancel
When subscriptions drag on, that’s when trouble may start according to the recent Nibud-report. More than a quarter of the Dutch consumers say they have forgotten to cancel a subscription at least once, essentially paying for nothing. Over 10 per cent procrastinates when it comes to cancelling, losing money in the process.
Nibud outlines several cases in which problems can occur for consumers. Payments through credit cards involve extra costs due to high interest. And the products to subscribe to have gotten larger and more expensive. The private lease arrangement for a car is popular now in the Netherlands. Nibud says a third of consumers didn’t receive a financial check before signing up, exposing them to financial risk. Their research also shows one in five consumers unwittingly ran out of money due to automatic payments.
The difference a generation makes
The pandemic and ensuing lockdowns made us more receptive to the ease and comfort of the subscription model, says Sjöblom. With stores closed, automatic delivery services surged and not just with the younger generation. “It’s a fair assumption that Millenials have more subscriptions, but that is not what we see. People 40 years and older have the same amount of subscriptions.” There is a difference in the kind of subscriptions, Nibud found. With more lotteries and newspapers for the older generation, while the younger generation opts for digital and streaming.
Minna Technologies’ solution mirrors the trend in embedded fintech. Through partnerships, banks are able to bolster their tech stacks in support of the end client. Embedding the solution increases the CX experience, it supports financial wellness of consumers, and it also sets the bank up for success as this payment method becomes ever more present. This is why all over Europe they choose to integrate Sjöbloms solution in their online services.
“The rise in subscriptions has consequences for banks and consumers alike,” says Sjöblom. “The cost burden of managing the subscription economy is increasingly falling to banks. From disputes on charges through increase in call centres and fraud prevention, banks end up incurring great costs when helping clients manage this changing payment behaviour. Easy cancellation saves banks a lot of trouble and capital.”
This means, getting rid of a persistent service requires only a couple of taps in your banking app of choice. Sjöblom: “Whatever you want to cancel, rest assured: we are really good at it.”
