Sponsored by Subaio

Søren Nielsen, Chief Commercial Officer at Subaio Photo: Kristian Holm

Bank Customers Take Control of Their Subscriptions With Technology

Subscriptions are more popular than ever, and most users have more subscriptions than they know. But with transactional data and algorithms, Subaio organises the subscriptions – and this is good for the consumers as well as the banks.

From Netflix and Spotify to fitness apps and software packages. The subscription method has become an extremely trending business model, and according to McKinsey, the subscription economy has doubled in size every year within the last five years.

Subscriptions have spread throughout all parts of our society: today, you can subscribe to burgers at Sunset Boulevard, shoes at Nike, and cars at Volvo. But the convenient subscriptions, whose price is similar to a few cups of coffee a month, bring around financial challenges for the consumers.

What our data shows is that our users, on average, have eight different subscriptions – and young people have the most. It has to be easy and convenient. But more than half of our users have a subscription that they have forgotten about, and 42 % have experienced difficulties in cancelling a subscription,” Søren Nielsen, Chief Commercial Officer at Subaio, explains.

The bills are automatically paid every month, and the consumers risk losing the overview. It is this challenge that Subaio is here to combat.

“We’re not against subscriptions. But we see a new power structure, where it is difficult to get an overview and cancel subscriptions,” Nielsen states.

Prevents subscription traps

By collecting the users’ transactional data and letting algorithms process this data to identify subscriptions, Subaio provides the users with an overview of their subscriptions. By doing so, the users can easily cancel unwanted subscriptions – and this can be done by one click.

“If a user wants to cancel a gym membership, the user goes through a brief flow, which is signed in the end, using a finger. This provides us authorization to go to the gym and cancel the subscription on the user’s behalf,” Nielsen explains.

The platform monitors subscriptions continually, so the user receives a notification if there are changes in price or frequency – or a completely new subscription.

“This feature is solely becoming more interesting as we, to a greater extent, are exposed to subscription traps. You find a cheap perfume and purchase it, but you don’t spot that you are also signing up for a subscription,” Nielsen states.

Through technology, it is possible to obtain information about a subscription before the money is withdrawn for the first time. This means that Subaio can warn consumers in advance. This is also great news for the banks because, according to the ombudsman, the banks are responsible for the lost money insofar a customer is exposed to a subscription trap.

PSD2 in reality

Subaio is an excellent example of what the access to transactional data – made accessible by the PSD2 EU Directive – can, in fact, be used for.
The service provides customers with an overview of their subscriptions, even from different banks via PSD2, which lowers the number of claims. And both consumers and banks save time and avoid frustrations.

“The banks utilise an incredible amount of money in processing claims and on people, who have cut their credit cards to get out of their subscriptions. Claims and cut credit cards happen when people cannot recognise a payment on their bank statement, or because they are experiencing subscription traps,” Nielsen explains.

Subaio’s solution is offered as a white-label solution through its 8 banking partners.

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Facts about subscription traps
  • When consumers order a product in a webshop and agree to receive a free trial or participate in a competition, they are simultaneously lured into subscribing to the webshop or the competition’s provider.
  • The membership, for instance, allows the users to purchase products at membership prices. But the terms of the membership are intentionally hidden so well that the consumers do not discover the subscription.
  • In such subscription traps, there is a risk that consumers will not discover the monthly payment until it has been paid multiple times. During a three-year period, 3.5 million people in Sweden, Norway, Finland, the Netherlands, Belgium, and Austria were exposed to this type of fraud. On average, consumers, who are exposed to subscription traps, lose 115 euros.