Banks risk paying the price for customer service cutbacks
Amid news of several UK high street bank closures announced by the likes of Lloyds and RBS recently, consumers appear to be losing faith in the industry once again.
Increasingly impersonal customer service and communication is causing UK consumers to consider switching banks, according to research from GMC Software.
In a survey of 2,084 UK 16 to 64 year-olds, 43 percent of respondents were either thinking of switching banks in the next year, or had already committed to doing so. Customer service concerns are a major influence on this: 68 percent felt that they were “just a number” to their bank, while 79 percent were concerned that customer service would fall as remote banking, such as over mobile apps or online, continues to grow.
This is an ongoing trend; bank branches were responsible for only 20 percent of all transactions in 2015 according to the British Banking Association, while 38 percent of survey respondents hadn’t visited their local bank for six months or longer.
“These are interesting times for the industry: although as people know, interesting is not the same as easy,” said David Webster, Financial Services specialist at GMC Software. “With the Competition and Markets Authority’s “Open Banking Revolution” still to get underway, we are on the cusp of a huge upheaval in both how consumers communicate with their banks, and the expectations they have of them. When it’s easier than ever to compare banks’ offerings and switch or spread your accounts across multiple providers, banks will need to offer something very special to hang on to their customers.”
As in-person visits to banks slow down, and competition becomes easier, there might be opportunities for newer challenger banks, with a focus on remote customer service and communications, mobile apps, and often specialisation in specific financial services.
Indeed, 32 percent of respondents said they would trust a challenger bank with their money; but only one percent would do so without knowing more about them and whether they could be trusted. Yet despite the growing use of mobile apps, which the British Banking Association expects to process over 2.3 billion transactions a year by 2020, customers are still not ready to embrace the technology. 62 percent of respondents were only comfortable using banking apps for the most basic banking tasks, or not at all. In comparison, 24 percent would use an app for rare occasions such as large transfers and loan applications, while eight percent would use their app for once-in-a-lifetime tasks, such as arranging a first mortgage.
Regardless of a bank’s size and technology, effective communication isn’t guaranteed: almost half (44 percent) of consumers’ banks don’t communicate with them consistently. However, effective communications needn’t mean following expected methods of doing business: 56 percent of respondents don’t want technology to mimic the traditional bank manager experience. Instead, using technology in the most effective way could help finance repair its reputation against other industries: currently, 64 percent of respondents said that retailers are streets ahead of banks when it comes to a more personalised customer service.
“From mortgages, to pensions, to life insurance and financial advice, the finance industry holds a critical place in its customers’ lives. At the very least, it should ensure that its communication and level of service isn’t seen as being eclipsed by retail and others: after all, how can a retail product be more personal than a will or pension?” continued Webster. “Ultimately, effective customer communication is key; if a bank cannot tell its customers what they need to hear, when they need to hear it, over a channel that they are listening to, then customers’ opinion of their service will continue to fall. This holds just as true for newer, challenger banks as for their more established rivals. Communications need to be personalised, over the right channel, and share relevant, pertinent information. Any bank that cannot win over its customers trust by doing this will soon find itself deserted by customers, whether it has been operating for two or two hundred years.”
UK office space slashed as hybrid working looks set to stay
With hybrid predicted to be the working model of the future, and businesses both large and small announcing that WFH will continue for employees into the future, the traditional office space is being re-thought.
Businesses are both questioning how much space they need for a hybrid working future, especially if it means they can potentially save money, and what form that space should take.
UK firms slashing office space
Back as early as February, HSBC – whose real estate footprint currently stretches to around 112 football pitches worldwide – said it would be cutting its post-COVID office space by half globally and by 40% in London over the next few years, as it looks to implementation of a hybrid working model in light of the pandemic.
Lloyds Bank followed suit. Following an internal survey where 77% of employees said they wanted to continue to work for 3+ days a week post-pandemic, the bank announced it was also moving to a hybrid model, and so looking to cut its office space by 20% over the next two years.
In fact, the latest research from consulting firm PwC reveals that a third of organisations surveyed (258 of the UK’s largest companies) believe they will reduce their office footprint by more than 30%.
The findings of PwC’s Occupier Survey indicate there is likely to be a sizeable fall in occupied office space with half of executives surveyed saying that despite taking into account mass vaccinations, employees will continue to work virtually 2-3 days a week.
And companies continue to announce the hybrid working model for their employees. Accountancy firm EY has just announced that its 17,000 employees are moving to a hybrid way of working, WFH for at least two days a week. This follows PwC which in March said workers could stay at home for half the time and KPMG which this month said it would expect employees to only work two days in the office every week.
More collaborative work spaces
However, what’s also clear from PwC’s research is that the role of the office is not going to disappear completely, but instead adapt to a new way of working, with half of all organisations with more than 100 employees saying they have a real estate and workplace strategy that considers the long-term impact of COVID-19.
“We may see an increased demand for flexible space as many businesses operating models may well need that option if holding dead space is to be avoided,” says Angus Johnson, UK Real Estate Leader at PwC UK.
According to the survey, more than three quarters of respondents said they are likely to reconfigure existing office with 43% of financial services firms stating that they are extremely likely to do so as a result of the pandemic.
“It’s also clear that the nature and purpose of office space is going to change. As occupiers seek new, different space to meet their accommodation needs, environmental aspects will be increasingly important. If the real estate sector is to truly succeed as a more dynamic, greener industry it’s imperative that creative thinking comes to the fore.”
And companies are already thinking creatively how they can utilise office space in a hybrid future. So while HSBC is cutting a significant amount of office space, it is not downsizing its prestigious Canary Wharf headquarters, and instead reimagining the space. In April, CEO Noel Quinn announced the firm was embracing an open plan floor, with no designated desks or private offices, and instead using hot-desks in line with the future hybrid working style. “My leadership team and I have moved to a fully open-plan floor of the building in east London with no designated desks,” he said on LinkedIn.
Lloyds also reported it was adapting its office space, so that rather than individual offices, it will have a more collaborative workspace. And just last month, KPMG announced it too was ditching desks and individual offices, and replacing them with meeting rooms and conference halls for a more collaborative workspace.