When was the last time you switched banks? If you are like the majority of Brits, the answer is probably ‘never’. Even with new seven day switching introduced in 2013 to make the process easier, only two per cent of us change banks every year.
What is this strange hold that banks have over their customers? It certainly isn’t exemplary service or blind loyalty – there are around 13,000 complaints about banks every day.
The fact of the matter is that although consumers moan, most can’t be bothered to do the one thing that would make banks up their game – take their business elsewhere. This is at a time when trust levels for banks and bankers remain pitifully low in the wake of banking scandals such as PPI mis-selling.
In any other sector, these conditions would be fertile ground for a new breed of players to enter the market. Indeed widespread consumer mistrust coupled with the pace of technological change lowering the barriers to entry has opened the doors for entrepreneurial players.
Banks such as Atom, Mondo (below) Tandem, Starling, Fidor and the rest, have burst on to the scene in the past few years, all telling us they’re different. They’re about putting the consumer at the heart of their businesses and promising that this time it’s not just lip service. They’re proving this by offering personalisation and product innovation powered by customer feedback.
In this respect, they may well be different from the image we have of traditional banks, but the problem is that they don’t seem to be very different from each other. Just a quick look at their websites tells you this. Young, smiley, cool people swarm all over their homepages, delighted to have happened on a financial institution that understands them so well.
Putting aside the fact that they all seem to be using the same picture stock library, these new banks all have very similar marketing strategies. Of course it’s okay not to have sizeable differences in your actual product – it hasn’t hindered Coke or Pepsi – but they have to stand for different things in consumers’ minds.
With consumers so intransigent despite the past sins of traditional banks, the new challengers have an uphill task to achieve break through and a lack of differentiation won’t help.
Advances in fintech and the ubiquity of the smartphone are ushering in a revolution in financial services. Consumers are happily adopting technologies when it’s simple and makes their life easier. Contactless payment and its integration into the London transport ecosystem is a small joy for many. These kinds of improvements are the sorts of everyday little miracles that genuinely make people value their banks. But who will reap these rewards?
As much as we castigate the big banks, they haven’t been completely asleep at the wheel when it comes to technology. Online and mobile banking is a massive opportunity for them to cut costs and drive up consumer appreciation of their brands. As they seed technological utility into their offerings, it could make consumers even less likely to switch.
The challenge for new banks lies in the fight to shape the wider conversation around making life easier and better. If they don’t then they’ll face the same fate as alternative utility suppliers, scrabbling for crumbs from the table of the big boys who continue to supply the majority.
It’s tough to make banking sexy. New business models are important, but so are doing mundane things consistently well while demonstrating that you understand consumers at an individual level. New financial players need an audience-first understanding of the marketplace and to adjust their marketing plans accordingly.
Crucially the challengers must accept that talking about their fresh offer with a bold tone of voice isn’t enough. Audiences aren’t sufficiently interested and don’t trust the messenger. Instead new players must create content strategies that inspire audiences to share their vision and values for them. It worked for Chipotle and, after all, those 13,000 daily complainers just need the right peer recommendations to make the change and begin what could be the quiet revolution investors are betting on.
Jack Simcock is a founder and strategy director of Telegraph Hill