Rebuild customer confidence! That’s the clarion call from the Competition and Markets Authority (CMA) to banks in its recently released Report on ‘Making Banks Work Harder for You.’
Graham Cobb
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With over 600 branch closures annually, banks risk being distanced further and further away from their customers. As the banking industry continues to further shrink the branch network footprint, banks should make the most of digital and mobile channels. This will enable them to extend their reach and relationship with customers who hardly ever visit the branch office.
The recent instruction by the Competition and Markets Authority to banks on capping unarranged overdraft fees should come as no surprise. According to the banking regulator this will improve competition in the sector, whilst ensuring that customers get a better deal. Further, the BBC highlights that banks must operate transparently to create customer stickiness and demonstrate how they compare to others.
Transactional banking is no longer the cornerstone that marks a customer’s banking experience. Irrespective of whether the customer touchpoint is in a branch location, internet banking or mobile banking through a phone or tablet, customer experience is crucial to improving loyalty and driving revenue generating opportunity. Transactional experiences are no longer viable on their own to hold an effective, long term customer relationship.
Financial Services organisations continue to struggle to regain the previous levels of profitability, being hamstrung by the slow pace of economic recovery, low interest rates, and regulators attacking their traditional fee income streams by driving increased competition in the market through vehicles such as PSD2, and demands that banks sell their dominant interests in areas such as Vocalink. To control costs many continue to look to retrench their business, divesting parts, shrinking others and tackling their internal cost base aggressively, but such cost focus is short term in nature and merely bring a breathing space which competition will exploit.