The UK’s competition watchdog has just unveiled the results of a major investigation into the current account and business banking sector and I for one am disappointed with the outcome.
The high-level recommendations just don’t go far enough and do little to help new challenger brands. The banking sector needs a huge shake-up and springing straight to my mind are better products, transparency and better personalisation.
There hasn’t been a huge change in the UK’s banking sector for some time. When Metro Bank were issued their full service banking licence in 2010, it was the first to be granted for a new high street bank in over 100 years. There are few sectors where the competition is so small, yet the stakes so high for the potential to provide an amazing customer experience that would impact positively on customers daily.
The UK’s current personal account market is vast with 97% of all adults in the UK having a current account (that’s equates to around 68million active personal current accounts) yet the big four banking groups (Barclays, HSBC, Lloyds & Royal Bank of Scotland) represent about 77% of the personal current account market. The others hardly scratch the surface at the moment and to me that’s a huge disappointment. On the upside it does pose a huge opportunity for challenger brands and the potential for considerable disruption if the right player nails it properly. Brand advocacy with the likes of Google and Apple is far higher than with financial services brands so could they be the ones to watch?
Only 3% of customers switched their bank account last year (2014) and that could be down to lack of choice in the sector but I truly believe its because there isn’t currently anyone out there with an amazing digital offering. If my banking experience could be as intuitive and personal as some of my retail shopping experiences, I would change banks. Instead I’m still with the same bank I’ve had since university who quite frankly have a dreadful online banking experience. For some strange reason like the vast majority of consumers I just accept it.
Atom Bank seems to be the one to watch, having received its full licence from the Bank of England, which is moving the digital-only lender one step closer to opening to customers. In our research with YouGov, nearly 30% of respondents say they would consider a digital only bank and I’m with them. Recent figures from the British Banker’s Association reveal that mobile has overtaken branches and the internet as the most popular way to bank. It’s not a surprise, I have no need for a branch, queues and to speak to someone who can’t be bothered to help me. I’d rather self-serve and choose to speak to someone online at a time to suit me.
You can read more about our views of the banking sector in our latest white paper here and catch our CEO chatting to one of the big four banks here.