Cancel Culture: Technology Makes Managing Subscriptions Easy For Consumers and Banks

In the pandemic, streaming has become firmly ingrained in everyday life — spanning Netflix, Disney, Spotify and all manner of content. For the companies themselves, the top line growth underpinned by recurring revenues has been significant. But for consumers, as noted by PYMNTS research, more than half of subscribers rank saving money among the top three reasons for considering buying subscription bundles. But keeping track of it all can be a challenge — especially knowing what card is being charged, by whom, and when.

Case in point: as Minna Technologies has noted, the average European consumes has 11 subscriptions in place — and the average household has 21 subscriptions. Knowing which card pays which subscription, let alone canceling them, can be a pain point. As many as 74 percent of consumers have said that cancellations are the most frustrating aspect of having a subscription. Minna co-founders and CEO Joakim Sjöblom and Chief Operating Officer Jonas Karles told PYMNTS that getting a better handle on subscription spend can be done through retail banking channels, boosting financial institutions’ own revenue streams.

Founded in 2016 in Gothenburg, Sweden, Minna enables customers to manage subscription services via their bank’s app. As the company states in its collateral, “instead of spending hours on the phone or going through web pages trying to cancel a subscription, Minna can terminate it at the push of a button.” While subscription management is an issue for consumers, it’s also an issue for banks because there’s a risk that extra money can be taken from the bank account as the data ties are cut between the merchant and customer. Minna can also notify customers when a free trial is about to end to prevent them from being charged.

It’s an important capacity for banks as they compete with FinTechs. As Sjöblom noted, in Europe, the rise of digital-only financial services challengers — which has produced Starling Bank and others — have produced lower operating-cost models than their traditional FI brethren.

“On top of that, they are providing functionality that are outside of core banking products. So the incumbent banks, the Wells Fargos and the Citibanks of the world, they are very good at what they do in terms of credit products — cards and accounts,” said Sjöblom. “But the challengers have functionality on top of this, which can be about budgeting, account aggregation or subscription management.”

As a result, he told PYMNTS, the incumbents need to step up their digital game and add new value to stay relevant and competitive. Subscription management is part of that.

Embracing The Subscription

In the meantime, consumer behavior itself is changing and subscription models are impacting almost every line of consumption. People can use subscriptions to buy everything from cars to groceries to razor blades. Karles noted that “we have this recurring behavior … but the business model is not there,” as there remains a “lack of innovation in this pricing model.”  The end result is that there is a deluge of calls into banks’ call centers as consumers cancel or block subscription payments, or switch telco or utility relationships.

“On the product side, we address what we call the subscription life cycle, meaning that we help users to keep control of what recurring payments customers have today. We do this by data analytics enabled by open banking,” said Sjöblom.

Those advanced technologies offered by Minna look at consumers’ payments patterns and can see Netflix, Spotify and recurring insurance payments, for example. The company’s offerings help counsel and inform users on their subscription management. Minna estimates that it has facilitated more than 400,000 successful cancellations.

Sjöblom noted that without improved facility with subscription management, retail banks run the risk of becoming something akin to infrastructure providers, doing the regulatory heavy lifting while digital-first platforms such as Google Plex reap the benefits of the actual retail relationship with the customer. But he noted, too, that retail banks have a significant amount of trust placed in them by end users.

“They have significant reach in terms of their existing customer base — and they need to act now” to cement those relationships.  Subscription management, said Karles, lets a customer sign up for the New York Times, and get notified that the free trial is ending.

“And if you don’t want to continue,” he said, “we can cancel it for you. So you’re getting the comfort that ‘I can try this service without getting stuck into a recurring payment.’ ” The bank, in essence, acts as the mediator for the consumer. There’s an upside for the bank, too, in that the FI need not block, cancel and reissue cards in the event that a consumer is charged for subscriptions he or she does not want.

Minna recently raised more than $18 million in funding, with participation from Visa. Sjöblom said the capital will be used to expand its geographic reach in Europe — and North America remains a strategic market, marked by high subscription activity and high card usage.