Last month, the Competition and Markets Authority (CMA) revealed the findings of its annual banking customer satisfaction survey. The research asked consumers how likely they were to recommend their personal banking provider to friends and family. Metro Bank took the top spot, with 83% of consumers saying they’d be happy recommending them to friends and family. First Direct followed closely at 82%. Dead last came the Royal Bank of Scotland winning just 47% of their customers’ vote.
The results are another pin in the cushion of challenges established retail banking player face in the market today. On one hand, new regulation is forcing banks to readdress and overhaul existing processes, while challenger banks such as Monzo and Starling have stepped into the ring and taken 14% of the UK’s banking revenue in the last few years. With leading challenger banks surpassing the 1 million customer threshold, and with 15 FinTech companies granted full banking licenses, this number is only set to increase.
At a recent event I visited, James McManus from Nutmeg explained how the success of challenger banks came largely down to the way they communicate with people. This really struck a chord with me as a consumer and made me think about the difference between the service provided to me by Monzo and Halifax.
When managing my finances in my Monzo app, I feel empowered to make decisions knowing the customer service team will be on hand to help out if anything was to go wrong. With my Halifax account, however, everything tends to be clunky and difficult to use. If I want to speak to someone about my account I have to make an appointment or wait on hold for 10 minutes. If I wanted to set up a new savings account, I am provided with a long document of terms conditions, most of which I have a little or no understanding of.
If the traditional banking model is to survive the storm of flourishing FinTechs and learn to dance in the rain it must bring itself to the level of the consumer and speak to them in a way they understand. Taking this approach is taking one big step towards being able to compete with the disruptors and keep customers both loyal and happy.
New entrants have captured 14 per cent of total banking revenues, with the clear majority (12 per cent) going to non-bank payments institutions.