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FS: The Performance Paradox

by internationalbanker

rickBy Rick Keen, FS Consultancy Director, C Space EMEA




“They are crooks, swindlers and charlatans, plain and simple.”

People don’t trust banks. And they don’t trust insurers either. In fact, they don’t trust financial institutions, full stop. So when you’re a financial services provider, generally speaking, you’re not starting from a position of power in any high-street best-loved list. But many financial services brands have found a way to regroup, fight back, and align themselves with their customers’ needs and desires. But many more still have a long way to go.

One of the key problems facing these brands is not the hangover from the financial crash of 2008. It’s that customers don’t think in sectors. Customers’ expectations are formed, set and then reset again by their experiences with all of the brands they engage with. They learn what a responsive, customer-focused service looks and feels like through using brands like Uber and Amazon; brands that operate unhindered by the regulatory issues facing financial services.

This challenge is made all the more immediate and difficult by the rise of the new kid on the block: FinTech. Small, agile and built to fill service gaps, FinTech companies are a direct threat to the big brands’ market share. And more than this, they are raising the expectations bar higher and higher with every passing day.

This traditional distrust combined with cross-sector and internal-sector disruption is having a huge impact on how customers relate to their financial service providers, and what they demand of them in the 21st Century. According to our research, customers don’t like the way financial services brands treat them. They think that their products and marketing are irrelevant; that dealing with them is confusing and unpleasant from end to end; that providers are being deliberately opaque. They read review sites, talk on social media and find that most people think the same way.

To be fair on the financial services sector, it is constrained by regulation designed to protect customers. So, many of the elements that naturally lead to a high Customer Quotient are all-but unattainable for these brands.  Addressing systemic failings by stopping mis-selling, opening up competition, protecting data and so on, requires regulation. But it is this regulation, combined with the sheer size of institutions and internal bureaucratic systems, that has created fertile ground for the top financial services brands in the CQ Report: 

  • First Direct
  • Nationwide
  • Virgin Money
  • Aviva
  • Halifax
  • NatWest
  • Santander
  • Churchill
  • Co-operative Bank
  • Citi

First Direct is the top performing financial service brand in this year’s Report and with these obvious customer frustrations it’s easy to see why. First Direct’s 24/7 contact option gives customers a channel for contact on their terms, which are, these days, whenever and wherever they want. What’s more, customers aren’t sent to an automated service, they are dealt with solely by real people, and effort is made not to transfer calls endlessly around the centre.

Customers want a joined up experience but FS can’t share customer data. “Admin is appalling- send four copies of the same letter then ring repeatedly a few weeks later saying they don’t your address.”

And this always-on service goes to the heart of the way today’s customers live their lives. People are hugely time poor. They need things to be simple, quick and easy. And financial services need to wake up to this or die. Sadly, we’re still seeing brands expecting, even forcing, their customers to read 20 pages of T&Cs. But why? As technology options open up the sector, regulations can be made clearer and more convenient by using paperless options delivered across basic platforms that consumers will begin to accept. Take Virgin Money’s blog as an example, each post is ended with a postscript that briefly explains the legislation. This is non-intrusive, and also ticks the legislative boxes.

Virgin Money has been rewarded for its leadership in this area, having made concentrated efforts to make their service easier to understand. And they don’t stop there. They have created a number of Lounges in major cities, free community hubs with free wifi and refreshments, and they have created a charity-giving website that allows you to set up a campaign and fundraise online. They are in tune with their customers. Virgin Money has found very clever ways to increase brand awareness outside of its core financial services.

These two examples tell us how brands succeed in the financial services sector. The brands that excel in the CQ Report are those offering services that go beyond their typical remit.

We call this the performance paradox. 

FinTech is driving this revolution, and Millennial customers are at the heart of its creation. However, what FinTech cannot do is leverage the huge resources at the disposal of existing banks and other financial service providers. Not yet.  If the high-street brands are smart, rather than taking the status quo for granted, they’ll learn how to be swifter and more decisive, and embrace the fail-fast, learn-fast mentality that start-ups are built upon, before it’s too late.

If it’s real-life-focused ads which can connect with the customers on a personal level, such as those created by Nationwide, or simply by maintaining their current customer base through the introduction of new, popular features like mobile banking, brands need to reconnect with the everyday lives, aspirations and expectations of their customers.

Either way, the next 12 months will see big changes in the financial services sector and if the legacy players can embrace a more nimble approach to services, we can expect to see a reversal of the current situation and maybe, this time next year, it’ll be the FinTechs that are feeling pressure from the banks.


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