As the nature of the banking landscape changes, so too does the way in which we bank. With more options available to them than ever before, consumers have become more demanding of traditional financial institutions and now expect banks to keep pace with the rate of change.
The Covid-19 pandemic has only accelerated that shift; confined to our homes, many of us have taken up new digital experiences – whether it’s food delivery or telecommuting – intensifying the challenge that incumbent banks face in a post-Covid world.
“I think consumers are online and they are digital now more than ever before,” says Alexandra Dixon, Customer Insight & CX Leader for Metro Bank. “Their experiences are being shaped by other online experiences. For instance, they’re on Amazon, on Netflix… consumers are used to a high level of personalisation. As a result, they also expect efficiency and a seamless service alongside that.”
As consumers use more big tech services, they become used to the convenience and intuitiveness of those platforms. Facebook has more than 2.8 billion active users while 3 of the largest streaming platforms – Netflix, Prime Video and Disney+ – count almost 550 million global subscribers between them. Banks and fintechs need to mirror the design and experiences that consumers get from these apps in their own product offerings.
“Expectations have definitely shifted in the service delivery that we’re giving,” says Natalie Fuller, Head of Customer Experience and Communication for Cashplus Bank. “What our customers used to think was a benefit or a ‘nice-to-have’ has now become a basic that they expect. They want immediacy, they want speed, they want the experience to be intuitive and smart, no barriers to entry whatsoever, but they also want it to be personalised to their needs and also to feel human.
“As a service, there is a lot to be able to deliver on just as a basic and without that you’re then creating a misalignment in expectations, so I think we’ve all got a lot of ground to catch up on in order to do that.”
The imperative to get digital banking right is starker than ever. With more options out there, consumers who are dissatisfied with their bank’s digital offering will switch to another bank or a fintech challenger. In many cases, they will even spread their business out over multiple suppliers. It leads to a situation where brand loyalty in banking is virtually dead, according to Zendesk’s Senior VP for EMEA, Andrew Lawson.
Lawson says: “Expectations have changed. There has been a massive power shift where once it was the banks that were in control… to nowadays it’s actually the individual that’s in control. We are demanding, and certain demographics are really demanding in terms of how they want to be served. The days of having a bank for life are gone; loyalty is not where it once was. If the service or the products that are being provided are not there, people will move – and it’s made easy to move now.
“I worry younger people will move after turning 18, within 2 years they’ll have swapped bank accounts. We’ve got a lot of work to do to build up that loyalty. We want a personalised, proactive service. Normally with a bank account, I’m initiating, I’m opening the app and going into it – I actually want some pushback and saying ‘by the way here’s this product, have a look at this, this is the exchange rate’. I think we’re more demanding about that way, but I think education is really key. We are pumping out more and more applications, more and more functionality, but are we bringing our customers with us on that journey?”
Consumers want more digital services from their bank – a trend that has only been accelerated by the Covid-19 pandemic. In research published last November, EY found that the use of fintech apps in Europe had increased by more than 70% since the onset of the pandemic.
At the CX FS Summit, Niall Corrigan of EY argued that banks have started to take customer experience much more seriously as a result of this accelerated uptake.
Corrigan explains: “I think externally it’s all very obvious how digital has really started to drive customer experience. Covid has accelerated digital transformation; we’re seeing new entrants come into the market that are starting to push the boundaries of customer experience and customers also have started to make more of their experiences from other verticals and industries into financial services and reset the bar from an expectations perspective.
“What I think is interesting from the last 12-18 months internally is actually at the exco and board level, customer experience is truly understood and is actually really pushed and sought for. We’re starting to hear questions now at the board level – how will this technology transformation programme improve customer experience? At the exco level, why are we doing this digital initiative; is it going to make a difference to the customer? So it’s started to really permeate into all levels of the organisation. When you start to hear technical architects worry about what their integrations are going to mean from a customer perspective, you know the organisation is behind CX!”
And Alexandra Dixon of Metro Bank continues: “I think what we’ve seen in the pandemic is an acceleration of digital transformation – it’s almost turned 6 years’ worth of digital transformation into 6 months. I think in financial services we’ve seen banks have had to pivot very quickly to become digital-first, to focus their services on digital to upscale their capabilities, their ability to give remote advice.
“I think longer term what’s really interesting is whether some of the behaviour sticks, and how much of that will roll back as we return to something more like our normal previous life. I think there are a lot of digital behaviours that will stay in my opinion – benchmarking data that we see has 80% of customers in financial services now using digital as their first channel preference, so that’s huge.”
But will the break-neck speed of digital transformation risk leaving some consumers behind? In the US, figures from the FDIC show that 7 million households are considered ‘unbanked’ while in the UK, the FCA puts that number at more than 1 million unbanked adults. Other consumers would be left isolated and vulnerable if we suddenly switched to a digital-only world.
Do digital products designed for the 90% risk leaving the 10% behind?
Alexandra Dixon says: “There is a lot of focus on digital and it’s right to think about those that are just not comfortable or able to interact in that way. From a Metro Bank perspective, that’s why we still place a lot of value on our stores and other channels as well as digital. It’s an easier [problem] to solve for more traditional organisations because we have those other channels available to us and we’re used to operating in that way. I think it’s more of a challenge for some of the fintechs to think about that in the future – are they only serving a particular demographic and is that okay or not?”
One person who can answer that question is Natalie Fuller from Cashplus Bank, which after all is a challenger bank, founded in the UK in 2005.
“There’s a huge role to play for banks and financial services as they start to roll out more and more tools to educate their customers and to take them on that journey,” says Fuller. “For us, as a digital challenger bank, we don’t necessarily have the luxury of somewhere where a customer can come in and have someone face-to-face but one of the things we really do strive to do is to identify customers who may potentially be vulnerable and to help customers identify themselves as vulnerable.”
She explains that Cashplus Bank invests a lot of time and resources in training its teams to be able to support customers adequately. It has a dedicated, ringfenced team that can give the time to potentially vulnerable or confused customers who are struggling with a particular aspect of their banking, ensuring they stay on the line until they’re able to take the customer through the entire process of what they’re trying to achieve.
Fuller also dispels the notion that older consumers are always the least tech-savvy, and that only younger generations have an appetite for digital banking. “One of the things that we’ve found most interesting is that it’s not just the ‘London bubble’ that I think a lot of people think of when they think of the customer bases of your Monzos, Starlings and Tides. They imagine they’re very fintech-first Londoners that are using these services. For us, our customers are across all the UK, we’re actually 35+ in terms of our audience and they come from all backgrounds and all levels of technical ability. We have customers that are 75-year-olds that have chosen a digital challenger as their bank.”
