Author: Jesse Swash, Co-Founder Design by Structure

Challenges and challengers. There have always been pressures and change forced upon banking as an industry and retail banking specifically. In just the last few years think of the heavier financial regulation, government-backed customer switching and ever-diminishing customer-trust. Add to this the threats of new entrants from outside the sector, with giants such as Apple and Amazon dancing around banking services and the emergence of digital-first disruptors such as Monzo and Starling – the secure world of banking, is looking ever more vulnerable.

The disruptors are the change agents. With brand new business models that place customer experience and engagement at the core of their thinking, they are eroding the loyalty (the cornerstone of any bank’s ability to retain and charge its customers) customers felt to established banks.

Fortunately, or unfortunately, depending on where you stand, every SaaS success story has to have a loser too. And that SaaS success also tends to accelerate towards a point of no return, a tipping point where change moves out of the reach of an incumbent.

In banking it’s the ease-of-use where the transformation really lies. It’s no longer enough to have different kinds of accounts or interest rates and account charges. Now, sky-high consumer expectations built on experiences from other sectors are the driving change. Managing your money at your fingertips, facial recognition and payment without contact are just some of the new battlegrounds where damage is being inflicted.

It doesn’t stop there, traditional banks are being attacked from other angles too. Their very structure and set-up make it hard for them to compete with the agile service providers that are built around making life easier for consumers. There is concrete evidence of this change already happening. The ‘big five’s’ share of personal current accounts was 80% in 2016 and has dropped to 63% in 2019 (Centre for Economics and Business Research). Following decades of slow change, customers have voted with their accounts by switching to new banks that seem to better understand and serve their needs.

Taking all this into account, it is clear to everyone (who wants to see it) that the winners of the next round of banking will be those with services specifically around customer expectation and need. Now more than ever it is 'experience' that counts the most. It’s a harsh lesson that the retail and transport sectors have been forced to learn and the music industry before them. And as a sector which has a retail face, it’s something the established banks should embrace, quickly, genuinely and wholeheartedly if they are to continue and to prosper again.

But all is not lost and there is still much to play for. There are ways the banks can design and build their way to a more stable future. Here are the three pillars of experience as we see it.

Experience counts - listen and learn from the legendary.
Transforming an industry means collaborating with experienced people who understand and have a deep-rooted passion for the opportunity in the sector.

Disruptors will always come to market with newness and energy as their currency. They can see an industry differently and do things in a newer and sometimes better and more agile way. But even they can’t do it alone. The legendary innovators, from Gates to Jobs all surrounded themselves with people who had talents they could absorb and learn from, that would help them not to just continue to ‘think different’ but also to continue delivering and growing and building. This works both ways. The established players can just as easily listen and learn. The shortcut is advice.

Experience counts - borrow great ideas from other sectors.
The second lesson is to take and adapt the best customer experiences from other sectors and replicate their successes in your sector.

If you’re in ‘retail banking’ bring ideas and innovations from successful retailers, digital and physical to your operation. Why not be the first to have an advisory ‘style council’ like
Mr Porter or the stylist experience at Selfridges but for your banking needs. Or an Apple Genius Bar, which provides concierge-style support for Apple customers if you still have to have branches. Put the customer experience at the core of your business activity and their success can be yours too if you’re open to it.

Experience counts – live in data, it never lies.
Banks sit on a vast vault of customer spending data. What does it tell you, what can you learn, what can you do better?

Banks can leverage that data to make more informed decisions to build better experiences and products for their customers. Look at rewards programmes run by retailers with the vast amounts of product consumption data, which is used to provide seasonal rewards or preferred brand vouchers. So, have an idea, a theory, build the test, try it. Trust in the data. It will tell you what to do, what colour to change the button too, which page needs the most work on your new website. Success comes from hard work, analysis, and lots more hard work. But with data on your side, it will work.

Show them you know them.
So, how do you bring all these elements and ideas together to create a better experience for your customers, which keeps you in the game? It all distils to the same idea. Show your customers that you know them. Show your customers that you understand them. And most importantly, treat them as if they are your most important possession.

Experience counts. Experience and expertise will take you far. Learn from the legends of your industry and the SaaS successes around you. Learn how they are shaping customer expectations and experiences. And learn from what you already know, the data you have within your organisation.

Harness all these elements in the right way and you can win the experience battle. Because for your future to be a success, experience counts in large amounts.

 

This article is part of a series published in Global Banking and Finance Magazine.