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Claire Richardson, VP, Verint

In the past I have discussed innovation in banking, referencing the Swedish bank Handelsbanken and its different approach to training and personalised customer service. Now, it seems this customer-centric approach is catching on.

Recently we’ve seen two new private banks emerge – Scoban and Paragon Bank. Scoban has launched itself as a ‘new traditional Private Bank for the 21st century’ and is independently owned and managed, offering a bespoke banking culture which puts the customer first.

Paragon is a specialist lender and retail-funded bank, working alongside professional firms and non- profit organisations. Its strapline is ‘improving customer choice’ backed by a UK-based customer services team. Both of these are the latest in a run of new financial organisations attempting to shake up the industry. But, should our high street banks be worried?

Are Challenger Banks A Force To Be Reckoned With?
Are Challenger Banks A Force To Be Reckoned With?

It’s certainly refreshing to see new entrants putting customers at the heart of their operations, which in our opinion, is the key to success. This is particularly significant in light of recent news around increased bank account switching amongst consumers following new industry regulations that ease this process. With churn rates on the rise, financial organisations need to do all they can to keep customers onside. Paragon Bank’s aim is to understand each individual’s personal style to provide a unique and ‘extraordinary’ client experience. Existing banks should also be thinking in a similar way to remain competitive.

But how do banks actually do this? First and foremost, it is all about understanding the voice of your customers better and directly engaging with them more often. This can be done by collecting and analysing feedback from customers in-branch and wider channels including email and social media, helping to pinpoint any problem areas and general likes and dislikes. Banks can then act on this information to increase the quantity of their communications and offer a more tailored service. While some banks are starting to do this, many are failing to actually speak to customers directly about the changes they are making in response to feedback. Given that such communications will help customers feel valued and that their opinions make a difference, it’s in the financial organisation’s best interest to do this. If they don’t, customers will simply go elsewhere. Analysing feedback can also quickly identify any relevant staff training needs and support internal performance management.

Putting the customer first and encouraging greater interaction and engagement will significantly reduce churn – something critical at this time of mass consumer switching. Much can be learned from the likes of Scoban and Paragon that are building their businesses around these values and challenging existing banks that are working hard to regain customer trust. While customer centricity is certainly catching on, only time will tell if the latest rivals will really give the big high street banks a run for their money.