By most accounts it’s a good time to be a retail bank customer in Europe, particularly so in the UK.
The established players, knowing they need to regain the trust of consumers after the scandals of recent years, are trying hard to make amends. That probably explains why the new management at Barclays is so keen on promoting socially usefully banking and Santander would like to be seen as ‘simple, personal and fair’.
Newer entrants, spotting an opportunity in the aftermath of the great financial crisis, are benefiting from the door being swung wide open for them to offer a different flavour. Hello to Metro Bank and Aldermore, making headway since 2010. Hello again to TSB and its commitment to ‘local banking’. And not forgetting of course what M&S, Tesco and Virgin are all up to with their forays into retail banking.
New regulations, such as seven-day switching of current accounts, mean customers now have more choice and less hassle. Previously you were statistically more likely to divorce than leave your bank, such was the apathy to switch.
Then there are all the new ways of paying, raising finance, transferring capital and so on. It makes for an interesting, even intriguing, landscape for retail banks.
As the European Union pushes for more effective supervision of euro-area lenders, it’s clear we’re witnessing a seismic shift in power from the lender to the customer. But what are the key ingredients the players need to retain or attract those customers?
In branding terms, in order for both new and more established lenders to outfox the competition they essentially need to hone in on the following four elements:
Service: Extending the ecosystem by offering a greater range of services for customers - built around the customer.
Sense: Becoming truly omni-channel by seamlessly integrating the customer experience across branch, centre and digital interactions makes sense.
Simplicity: Offering digital personalised financial advice to customers to help better manage their financial needs - less complexity.
Style: Remembering that consumers are drawn to brands that are consistent in how they speak, behave and operate – more appeal, greater esteem.
And the retail banks that will win will also recognise that the rush to digital offerings is not the be all and end all.
They will not merely adopt technology but place themselves at the centre of a new financial ecosystem that might include tech companies, energy companies, retailers, estate agents and many other service providers – thereby offering integrated services that create real customer value.
For a glimpse of what is coming Europe’s way, just look at Apple Pay re-inventing the contactless payments segment - ‘easy, secure and private’, according to CEO Tim Cook. The Australian Commonwealth Bank’s augmented reality app and Capital One’s acquisition of Adaptive Park, a design and user experience consultancy, are further examples of how some retail banks are putting the customer at the centre of their strategy.
It’ll be interesting to see how European banks deploy new tricks, particularly with technology, to adapt to changing customer behaviour. All banks should focus on elevating customer experience. The wise among them will know that customers need banking, they don’t necessarily need banks.
The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views of The Economist Intelligence Unit Limited (EIU) or any other member of The Economist Group. The Economist Group (including the EIU) cannot accept any responsibility or liability for reliance by any person on this article or any of the information, opinions or conclusions set out in the article.