Exploring alternative services and innovation

Customer Power: Banking is a Harris Interactive programme of research exploring the relationships that UK customers have with their bank. The first article in this series explored the relationship customers want to have with their retail bank. The second explored switching behaviour, and the third looked at the impact of digital and Omni channel banking. This article, the final in the series, explores the demand for new product and service innovations and why this is a defining moment for banks to tailor their propositions to meet different consumer needs.

Putting consumer needs in today’s economic context

It will come as no surprise to know that many UK consumers are finding life tough.

Research in November 2014 by Prudential suggests that one in six consumers are struggling to pay their energy bills, and 28% said they were very concerned. Of the 21 million that would struggle to afford their energy payments, just £18 extra per month is enough to push many people over the edge.[1]

And that’s just energy; the average person has around 9 or 10 bills to pay each month.

When we look at how customers with financial difficulties feel, it is quite negative, and many cite frustration, less confidence and a lack of being in control. Even more worryingly, 3 in 5 say they don’t find banks easy to contact and a quarter say they try to avoid speaking to them.

So what can banks do to help?

Banks need to emotionally engage with customers by showing understanding and empathy, but there is also a rational need to create specific tools and services that better connect with customers, whilst bringing a commercial return.

Around 60% of consumers with financial difficulties have some interest in getting help with their money management, with 20% of these being very keen for that support.

It would seem banks could be doing things differently.

So what alternative products and services could banks offer?

We all know the importance of innovating and differentiating in a crowded marketplace to drive customer retention, but also to attract new customers and create brand energy.

We tested ten different ideas with banking consumers, asking them to rate their level of interest in each. The order of each option was randomised in the survey to avoid any bias in selection.


Instantly we can see the broader appeal of services that enable the best deals to be had and which support money management. We also see that new customers, mobile banking users and those with packaged accounts appear to be interested in more of the ideas, and could be targeted most effectively.

Our winner, with interest from over half of customers, is getting tailored advice on direct debits to ensure the best deals are being found. From the Harris Customer Power series, there is a general feeling amongst existing customers in banking, energy, pay TV and mobile sectors, that they don’t get as good a deal as newer customers, and they feel unrewarded for their loyalty. This could be a way to address that balance. It also reflects the strong value for money culture in the UK.

In second place is another area of related innovation –money management and categorisation tools. Banks like Lloyds, Barclays and Nationwide – who are already promoting these – are well positioned here.

Booking appointments in branch via a mobile app follows closely. This is a highly convenient and flexible method for many customers, as it minimises their effort. As far as we’re aware there isn’t anything like this in banking right now, but it’s been prevalent in retailing and supermarkets for years, and even some doctors’ surgeries are enabling patients to do this now. It looks as though banks need to catch up with other sectors.

In Customer Power article three, about digital and omni channel banking, we referenced the important role of the branch in offering support and advice, and building an emotional connection with customers. But it is time for a rethink about the proposition of the branch. In an age of retailing where anyone can walk into a technology store and be trusted to play with a multitude of ‘cool’ products valued at hundreds of pounds, bank branches need to feel more accessible, perhaps just as Virgin Money is doing with its UK lounges. Mobile banking users are very interested in a more relaxed coffee shop style branch, as are those who are more likely to consider switching bank in the near future.

Certain customers – those with a newer relationship, a packaged account and those using mobile banking – are interested in obtaining non-traditional products and services through their bank. The discounted household goods option also strikes a chord with those struggling financially and those with overdrafts. So maybe this could be the start of a buyers’ club or equivalent as the worlds of banking and retailing merge more and more; it will be interesting to see which partnerships develop.

Maybe unsurprisingly, the services of least interest to customers were video chat and payment via a mobile phone number. These are likely to take some time to be accepted and there may be security concerns.  But they can’t be ignored as they do appeal to mobile banking customers, who are likely to grow in number.


It’s time to put the retail into banking and recognise that what the consumers of today and tomorrow want from banks will be partly created from the speed of technological change and innovation from outside the sector.

Banks need to stop adopting a one-size-fits-all approach and focus on tailoring and personalising banking relationships to meet different customer needs; not just because it’s good for customers but because it makes financial sense. According to McKinsey modelling in August 2014, European banks pursuing a full digital transformation could gain improvements in earnings before interest of more than 40% over the next 5 years.

That’s plenty to think about – and it’s only the start of things to come.  Who knows where the Internet of Everything and wearable tech will take us next? One thing’s for sure – banks will need to keep up with changes in consumer behaviour and demands, or risk losing out.

About Harris Interactive UK

Harris Interactive UK is a full service, consultative custom market research agency working internationally out of offices in the UK and Europe. With in-house expertise covering all areas of research design, implementation, analysis and reporting, it has particular strengths in loyalty and brand.

For more information, please visit the Harris Interactive UK website.

Customer Power: Banking is a Harris Interactive programme of research exploring the relationships that UK customers have with their bank. The team comprises Debbie Senior – Senior Consultant, Phil Brooks – Financial Services Research Director, and Georgiana Brown – Financial Services Research Manager.

[1] Prudential UK & Europe 5/11/14

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