From Northern Rock to Libor and HBOS to payday loans: the list of financial failures goes on and, even if the downturn has bottomed out, the City is still beset by a collective image crisis. The recent customer lockouts at RBS Group caused by faulty systems are just one example of the ongoing issues that all affect consumer trust levels.
Consumer confidence in the sector has steadily declined since clouds gathered over the Square Mile in September 2007 when Northern Rock collapsed. According to Edelman’s 2013 Trust Barometer, trust has dropped to an average of only 50 per cent among the global public; the levels are far lower in the UK at 29%. Meanwhile in its Global Consumer Banking Survey (2012) Ernst & Young stated: “Unfortunately, as banks are only too aware, customers who are losing faith in the industry heavily outnumber those who are feeling more confident… Overall customer confidence in banking continues to fall, with 40% of customers losing trust in the industry over the past year and only 22% gaining confidence.”
In broad terms, UK banks do not encounter the same customer churn rates as energy companies or mobile phone providers. Whilst the overall level of customers planning to change banks has risen from 7% to 12% globally since 2011 (Ernst & Young), that’s not exactly an exponential increase. Perhaps this is because of the hassle involved in switching banks, the lack of an easy mechanism for doing so and general dissatisfaction with providers’ customer service centres that dissuades many people from taking on the task of moving accounts in the first place.
Furthermore, the fact remains that people need banks as much as banks need their customers; we’re not going to become a nation that squirrels its savings away under the mattress overnight regardless of our sentiments towards bankers. Yet neither can banks continue to rely on customer inertia. This September the Payments Council will launch a new and simpler way for people to switch accounts. Its chief executive Adrian Kamellard said: “The… new account switching service will make switching a current account faster, easier, and for the first time it will be backed by a guarantee. It will ensure customers receive a clear and consistent standard level of service so that anyone who wants to switch their provider can be confident about what will happen, and when.”The announcement is bound to result in a spike of switchers and shouldn’t be ignored.
Now I could go into detail about the contents of the Financial Services (Banking Reform) Bill or rehash the findings of the Vickers Report. The fact is, though, that whilst all policy changes are likely to have a major effect on the City, what customers truly care about is how their money is looked after, how easy it is to access and whether they are being treated fairly by their financial services provider or lender.
It will be interesting to see what part the newly formed Financial Conduct Authority(FCA) plays in helping banks restore people’s faith against this backdrop of evolving policy. The FCA’s publicly stated remit is “to make financial markets work well so consumers get a fair deal”; consumer groups and the public will be watching to see how the sector responds to this new framework.
In the meantime, there are myriad issues financial services providers can tackle in order to present a more transparent and trustworthy image. The starting point for banks looking to build trust is for their own employees to believe it and buy into it. That belief must come from the top and permeate the entire organisation. It has been reported that Barclays chief executive Antony Jenkins set out a purpose and values blueprint on arriving in the job that clearly linked customer attitudes and operations to reward.
Barclays is of course not alone in facing negative perceptions and other institutions seem to be following suit. RBS recently unveiled its Sustainability Report including, amongst other things, a frank assessment of previous mistakes and a widening of the role of its Sustainability Committee to include a focus on reputation, conduct, culture and how the bank deals with customers. This is all progress; if others weren’t already looking to follow suit, they ought to be now.
Changing internal culture is the first step, communicating those new values in all you do is the next. In such a complicated industry there is nothing consumers value more than straight talking. From a bank’s brand through to the content and tone of all of its communications, the use of plain English is essential. The clearer information is, the less likely a customer will be to feel suspicious about terms and conditions, and the more likely they are to see their bank as trustworthy.
Another key element in building trust is for banks to take the lead alongside government in educating consumers about financial issues generally. Not all of us are expert in personal economics and the more the industry can offer transparent (and hopefully free-of-charge) advice, the more trusted providers will become. Meanwhile, ministers might also consider acting to reinstate caps on interest rates, in order to curb the worst excesses of payday lenders.
But perhaps the most important thing is for banks to properly examine their customers’ behaviour. What do people actually want? What are the little things they can do that will actually mean a lot? For example, if you asked people whether they would like a return to the days of personal bank managers, the percentage voting ‘yes’ is likely to be high.
It’s perhaps surprising that whilst trust levels in fiscal firms are falling off their own cliff, the vast majority of customers haven’t put their money where their mouths are and switched banks. In an age of social media and financial comparison sites, it’s important to note that consumers are increasingly looking to family, friends and word of mouth to make decisions about who to bank with. Ernst & Young found 71% of customers around the world seek peer recommendation, preferring to trust their social circle rather than banks’ brand messages. Their report states: “Personal recommendations are the most important source of information in mature markets such as the US, Canada, Japan and Australia (63%, 67%, 59% and 63%, respectively) but they are also the leading consideration in many emerging markets and, to an even greater degree, in Brazil (77%), India (82%) and China (84%).”
There appear to be few reasons at the moment for firms to rest on their laurels. As the regulatory system bends and buckles under the weight of policy changes, now is the perfect time for financial services organisations to build and articulate sustainable business strategies that encompass core customer-focused values. Those that grasp the opportunity to share how they are working to restore trust, by returning to core purpose, showing fresh thinking and demonstrating a culture that values customers, will surely reap the benefits.
Samantha Wilding is Director of Sustainable Business at Corporate Culture – the sustainable behaviour change agency.
Staying connected: keeping the numbers moving in the finance industry
By Robert Gibson-Bolton, Enterprise Manager, NetMotion
2020 will certainly be hard to forget. Amongst the many changes we have come to live with, for many of us it has been adapting to a new style of working. Whatever your take on it is, remote working, working from home or even agile working, one thing remains clear – for many of us, this could be the new-normal for the foreseeable future. The professional services sector is no different. For example, many finance practices around the world are now allowing staff to work from home part of the time. In addition, a recent KPMG report found that half of the UK’s financial services workforce want to work from home after COVID-19.
Will this therefore become the de facto working practice for the finance industry too? We can’t say for sure, but this agile approach to working has certainly caused a major rethink for many firms. And as they evolve and adapt to meet the demands of a different way of working, firms need to ensure that their workforce can seamlessly interact with each other and their clients – this is key if they want to continue to deliver exceptional client service. Whilst financial services organisations everywhere are busy adopting innovative new technologies to better reflect the ‘work from anywhere environment’, they need to ensure secure access to resources and strive towards enhancing the end user experience. Success will be replicating the office working experience at home or wherever else they may be.
It’s all well and good for a firm to boast about the ability of their staff to work successfully from home, but how do they also establish that their people are just as productive as they were before? Whilst the IT department will have to grapple with security and compliance issues that arise from agile and remote working, they must also ensure that their people can connect securely, without eschewing user experience. And it needs to be completely seamless, without compromising the service level provided to clients.
Why all the fuss?
Which brings us nicely to persistent connectivity. Persistent connectivity effectively allows you to do more. How frustrating for the user when connectivity drops, or when the device that they are working on can’t find a network to connect to (or if the device switches between different networks). When connectivity drops, and re-connection is required then there is that small period where the user is not connected at all. And the user might have to re-authenticate or log into their VPN again (most VPNs are rubbish when they lose connectivity). All of these different scenarios ultimately disrupt the user experience – persistent connectivity provides the flexibility to overcome these challenges. When you enjoy consistent connectivity, you are making sure that the technology works as it was designed to work, allowing staff to rely on optimum user experience, anytime, anywhere – in effect, supplying them with that office-like experience, wherever they are. Just think about how many hours might be spent on a train, in a hotel or even on a client site. Consistent connectivity is key here – consistent in any of these locations.
Connectivity will be a fundamental component for successful remote working as firms try to meet the demands of an increasingly mobile workforce. Ultimately, they need encrypted and reliable connections that enable them to quickly and easily reach business applications and services. Working in a disconnected environment can lead to frustrated workers, hardly fitting given all the new remote working policies in place.
Getting the user experience spot-on
When you fine-tune connection performance so that essential business applications run reliably across networks, you are essentially talking about traffic optimization. Mobile traffic optimization ensures that applications, resources and connections are tuned for weak and intermittent network coverage and can roam between wireless networks as conditions and availability change. When connections aren’t performing well, applications that are crucial for job performance can experience packet loss, jitter or latency that can make working on the hoof extremely tricky. Compared to wired networks, wireless networks operate under highly variable conditions, including such factors as terrain or congested mobile towers. When you optimise the flow of traffic, you are helping to manage packet loss. Effectively, packet losses are data loss, which happens very regularly when you’re on the move or transitioning between different networks. Applications that require a lot of data tend to become fairly unusable when you hit even minor packet loss, which can be a common occurrence for many on residential broadband or on local Wi-Fi. conversely, NetMotion can enable critical applications to work and prevent disruptions at over 50% packet loss – in this way, employees can rely on technology performing well in situations and locations where it simply could not before. That is incredibly powerful for firms.
The finance industry is facing many of the same challenges presented to other industries. It is a question of balancing the requirement for more sophisticated ways to ensure secure access to resources with the need to enhance the end user experience (key team members in particular). For finance firms everywhere, adopting the right technologies will ensure that their people can enjoy a ‘work-from-anywhere’ environment.
Hong Kong’s Cathay Pacific warns of capacity cuts, higher cash burn
(Reuters) – Cathay Pacific Airways Ltd on Monday warned passenger capacity could be cut by about 60% and monthly cash burn may rise if Hong Kong installs new measures that require flight crew to quarantine for two weeks.
Hong Kong’s flagship carrier said the expected move will increase cash burn by about HK$300 million ($38.70 million) to HK$400 million per month, on top of current HK$1 billion to HK$1.5 billion levels.
Hong Kong is set to require flight crew entering the Asian financial hub for more than two hours to quarantine in a hotel for two weeks, the South China Morning Post reported last week, citing sources.
“The new measure will have a significant impact on our ability to service our passenger and cargo markets,” Cathay said in a statement, adding that expected curbs will also reduce its cargo capacity by 25%.
The airline, in an internal memo seen by Reuters, requested for volunteers among its crew who could fly for three weeks, followed by two weeks of quarantine and 14 days free of duty, adding it will be a temporary measure and not all its flight will require such an operation.
“We continue to engage with key stakeholders in the Hong Kong Government,” the memo said.
The government did not immediately respond to a request for comment.
Separately, a company spokeswoman said the airline could not detail the impact on vaccine transport specifically in terms of cargo shipments.
The aviation industry has been hit hard by the COVID-19 pandemic as many countries imposed travel restrictions to contain its spread.
In December, Cathay’s passenger numbers fell by 98.7% compared to a year earlier, though cargo carriage was down by a smaller 32.3%.
($1 = 7.7512 Hong Kong dollars)
(Reporting by Shriya Ramakrishnan in Bengaluru; Additional reporting by Jamie Freed in Sydney and Twinnie Siu in Hong Kong; Editing by Bernard Orr and Arun Koyyur)
Travel stocks pull FTSE 100 lower as virus risks weigh
By Shashank Nayar
(Reuters) – London’s FTSE 100 fell on Monday, with travel stocks leading the declines, as rising coronavirus infections and extended lockdowns raised worries about the pace of economic growth, while fashion retailers Boohoo and ASOS gained on merger deals.
The British government quietly extended lockdown laws to give councils the power to close pubs, restaurants, shops and public spaces until July 17, the Telegraph reported on Saturday.
The blue-chip FTSE 100 index dipped 0.1%, with travel and energy stocks falling the most, while the mid-cap index rose 0.1%.
“Stock markets are crawling between optimism around the rollout of vaccines and worries that a jump in virus infections and fresh local lockdowns could further affect recovery prospects,” said David Madden, an analyst at CMC Markets.
Britain has detected 77 cases of the South African variant of COVID-19, the health minister said on Sunday while urging people to strictly follow lockdown rules as the best precaution against the country’s own potentially more deadly variant.
Prime Minister Boris Johnson had earlier warned that the government could not consider easing lockdown restrictions with infection rates at their current high levels and until it is confident that the vaccination programme is working.
The FTSE 100 shed 14.3% in value last year, its worst performance since a 31% plunge in 2008 and underperforming its European peers by a wide margin, as pandemic-driven lockdowns battered the economy.
Online fashion retailers Boohoo and ASOS surged 4.8% and 5.9%, each. Boohoo bought the Debenhams brand, while ASOS was in talks to buy the key brands of Philip Green’s collapsed Arcadia group.
Recruiter SThree Plc gained 0.9% after its profit, which nearly halved, still managed to beat market expectations and the company said it had resumed dividends.
(Reporting by Shashank Nayar in Bengaluru; editing by Uttaresh.V)
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