By Peter Veash, CEO of The BIO Agency
In a week where the High Court has ruled that Uber’s business model is perfectly legal, despite the best efforts of black cabbies and Transport for London, it seems pertinent to start this article by talking about the way digital-first companies are shaking up almost every single industry around the world.
From travel to retail via hospitality and leisure, companies unencumbered by ageing infrastructure or corporate politics are providing new services to a generation of customers that expect a seamless digital experience from every brand they meet.
We recently hosted an interesting discussion on such disruption within retail banking, at which we launched our latest whitepaper: The future retail bank: Evolving at speed in a new digital world. Alongside heavy-hitters from the likes of Barclays, Lloyds Banking Group and Transferwise, we explored the big challenges facing the industry today and how those traditional players might be able to tackle them.
Overwhelmingly, the message that came across was the need for banks to put their consumers first. It sounds cliché, but too often a big corporation’s first thought is still what’s going to make shareholders happy – that’s a sure fire way to lose customers in the long run. And that’s what digital-first players like Transferwise are doing so well: solving people’s problems and making their lives easier.
While our panel did accept that there is still a role for the physical branch to play in society – whether that’s for an older generation less comfortable with technology, or offering a personal touch for those that want a face-to-face discussion about a life-changing event like their first mortgage – the branch’s role is becoming a niche one.
In partnership with YouGov, we also surveyed a panel of just over 2,000 UK consumers and asked their opinion on how retail banking is evolving. A third told us they would consider a digital-only bank in the same vein as soon-to-be-launched Atom bank, which shows the growing appetite from the public for such services. These people are using their mobile devices to manage their finances, and have heightened expectations of the digital service their bank should be providing – this is putting pressure on the more traditional banks, but shying away from it is not the answer.
According to data from the Payments Council, just 2.3% of account holders switched bank in the UK last year, and that inertia is a huge challenge for the industry. I would bet that most people in their twenties today – the group most likely to switch to a different bank before the mortgage and bills rack up – took out their current account thanks to a student-friendly offer while they were at university. Now they’re settled into their first job, a free railcard is not going to be enough to convince them it’s worth going to the trouble of switching provider.
There are things high street banks can do to stand out, however. Two thirds of the respondents to the YouGov survey told us that one of the most important things a bank can provide is a website that is clear and easy to use, while more than half want their bank to be ‘always on’, available 24 hours a day, seven days a week. People want from banks the same level of control, real-time interaction and transparency they are finding in other sectors. They want the ability to move their money around in real time, to be able to quickly compare bank rates and partner with financial institutions they can trust.
Retail banks that invest in the right technology and talent will have the resources to meet customer expectations and stay competitive. By using digital capabilities to put the focus not just on efficiencies (though digital can also deliver in this department) but on personalised customer experiences they can differentiate their brand. This will build loyalty, advocacy and ultimately profit.
Rather than shackle the companies pushing the boundaries of customer service, as TfL seemingly attempted to do with Uber, the banking industry should see this new wave of digital disruptors as a challenge to grab with both hands. By taking inspiration from their digital-first rivals, traditional banks can improve their own offering and create a better, seamless experience that puts the customer first.