Banks risk paying the price for customer service cutbacks

By Real GDPR

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.”

Read the April 2017 issue of Business Review Europe magazine. 

Follow @BizReviewEurope


Featured Articles

Meet the COO: Brook Sims of MAC Diversity Recruiters

Passionate about helping others find their voice, diversity leader and COO Brook Sims talks powerful leadership, diverse teams and being a change agent

Best business books to improve leadership strategy

From strategic guides to inspiring CEO memoirs, these new books dish up plenty of principles, strategies, and anecdotes to help you become a better leader

Shoplazza founder and CEO Jeff Li, ex Baidu, on leadership

Named in Fortune China’s 40 under 40 for 2022, former Baidu head Jeff Li is the entrepreneurial founder and CEO of ecommerce platform Shoplazza

The office shifts to new way of working – workplace special

Leadership & Strategy

Trailblazer: Clorox's DEI leader Shanique Bonelli-Moore


The inspirational CEO story – Dean Forbes of Forterro

Leadership & Strategy