the app

Have I got news for you…

Might just be me, but it feels like we’ve seen the tipping point in recent weeks of mainstream media picking up on what many of us in the FinTech space have been getting so excited about for the last two years – that there is about to be a step change in new entrants and increased competition in UK retail banking.

Key in driving news coverage this week was the 2nd year of the British Banking Association’s (BBA) The Way We Bank Now report. What the underlying data highlights, is not just the rate of transformation taking place, but the acceleration in that pace of change.

In the introduction to the report, Anthony Browne, chief executive of the BBA draws attention to the rate of transformation in the way people manage their money, driven by the saturation of smartphone ownership and the transformation of the underlying banking technology.

The report goes on to highlight the key changes in consumer behaviour, demonstrated by a number of recent case studies, and concludes that customers are having a “closer” relationship with their bank.
Are customers really feeling closer to their bank though? What the report highlights, to me, is the increase in basic, transactional behaviour, and in particular the incremental contacts being driven by increased mobile usage.

I would argue that this is people keeping a closer eye on their money and disposable income – much needed in the increasingly cashless society, but nothing to do with the strength of customers’ relationships with their bank. But let’s come back to that in a sec.

Staying on increased transactional behaviour for a moment… this is a space that increasingly the banks don’t have to themselves of course. One of our future opinion pieces will focus on the new segmentation needed for the market of services that were traditionally only offered by the retail banks.

Yesterday, we were given a unique insight into just how real a threat the big banks are starting to see the next generation of new entrants, as well as the multitude of disaggregated players entering payments and other spaces, in terms of marginalising their relationships with customers.

Picked up by the Drum, ‘Banks are in danger of “just becoming the plumbing” if they don’t work out their new role in the financial eco-system as the storm of payment innovations continues to rain down on the industry, according to Lloyds Bank head of digital transformation Terry Cordeiro.’ 

Or, as the Telegraph so eloquently put it, ‘NatWest’s latest glitch is a perfect metaphor for problems facing UK banks.’

But let’s come back to the point around closer relationships. I would argue that customers have never been further away in terms of emotional proximity to their banks – and not just because of the continued customer disappointment in delivery of the basics.

As engagement moves from face to face channels to functional channels, delivering efficient but rational engagement, the risk is that already low brand perceptions and emotional engagement will get worse.

For starters, exclusion could become a problem, as highlighted in the channel data released this week, and flagged by the Financial Times, ‘Thousands in UK could miss out on digital banking revolution.’

For those players focused on delivering a digital or mobile experience though, surely there’s a bigger opportunity than improving transactional functionality? Whether an oversight in the BBA report down to having to prioritise insights or, I suspect, a gap due to lack of good case studies, there are key customer relationship moments of truth where there is huge headroom for improvement in the experience.

Take account opening and on boarding alone, one of the biggest barriers to converting a digitally generated switching lead. Or change of information i.e. address, marital status, or worse bereavement. There is so much to be done to improve the customer experience– and little headway being made by any of the current brands in market.

That’s before you even touch the areas where banks can really add most value and why they were created in the first place – to help customers manage their money more effectively, and ultimately make more of it. We believe we, in focusing on delivering a mobile-first solution for the current account only, are best placed to get this right.

So much opportunity! And exactly why I made the move from big bank to start up, and hopefully customers will soon too.