By Melanie Pittham, Creative Innovation Director at The BIO Agency
The retail, music and media industries had to adapt years ago to the impact of the internet on their relationship with consumers, but the financial services sector has been much slower to move with the times.
When it comes to managing our money in 2017 we want cheaper and more convenient alternatives to the services being offered by conventional banks and the traditional providers of insurance, pensions and mortgages.
Our wishes have been granted by technology which has been a game changer in this sector as a flood of disruptive fintech brands have challenged the old guard’s cosy market dominance.
Technology has also boosted financial social mobility by opening up products and services to smaller businesses and minority groups previously intimidated by traditional big banks and who faced barriers such as language difficulties.
The digital revolution in how consumers handle their money will not slow down because technology is advancing all the time with new developments such as biometrics and cryptocurrencies.
Whether it has wanted to or not, the financial sector has had to change and become more innovative and customer-centric.
The industry took a major step forward to putting customers first in July with the launch of the super trade body called UK Finance.
This is an umbrella organisation for more than 300 global businesses that provide banking, loans, access to international stock markets and payment services. It brings together the likes of the British Bankers’ Association, the Council of Mortgage Lenders, Financial Fraud Action UK, Payments UK and the UK Cards Association.
There are some heavyweights leading the new body. The industry big cheeses include Steve Jones (ex-Barclays, Schroders and Santander) as chief executive and Bob Wigley as chair. Wigley is the former Europe, Middle East & Africa chair of Merrill Lynch and an ex-member of the Court of the Bank of England.
UK Finance claims that the customer’s voice will be heard on the new board with the inclusion of “a strong, independent consumer champion”. We await the details.
Considering how we live our lives in 2017 it is crucial that the industry does become better at listening to the customer. When it comes to our money, many of us now want and expect to manage our funds using technology.
And whether we are ordering books from Amazon or buying a mortgage from a bank, we expect top-notch customer service from the companies we interact with.
There is no doubt that the boundaries between banking services are beginning to blur so banks and other providers must find more creative ways to use the technology available to them. The launch of UK Finance and its stated aims of re-building customer trust and promoting industry collaboration should help to make that happen.
Its members are starting to appreciate how much their customers love technology having seen massive numbers embrace the transformation of payments. The convenience of contactless and the ability to tap a mobile phone to pay bills or to buy a coffee is something people have come to expect.
Of course cash remains the most commonly-used form of consumer payments. According to Payments UK, British consumers still make around half of their transactions in cash, with the other half divided between debit and credit cards, mobile payments and cheques.
However many companies already refuse to take cash payments.
Think about buying a snack on a flight or how Transport for London insists you buy tickets for London Buses with a card. Many parking meters are also automated.
Companies just don’t want the hassle and administration costs of dealing with coins and notes.
There are still challenges for banks.
Consumer groups complain about banks closing their branches but such a strategy makes sense when you consider how many people now want to self-serve using mobile devices. Yet for those who still prefer to use cash and cheques, and talk to a human being, the demise of the branch network is anything but customer-centric.
Banks must become better at explaining their reasoning for shutting branches and communicate more effectively the benefits of the technology they are investing in. We are seeing the rolling out of more ATM machines to help consumers make the transition, with about 70,000 now scattered around the UK.
What is exciting is that the technology is there to go even further to improve financial services. It just needs providers to embrace the potential opportunities.
In what remains a very traditional sector, financial service providers, regulators and the government must put to bed their mistrust that customers will adopt technology so that innovation can thrive.
Customers should be able to engage with any service aspect, any way they want – why shouldn’t they be able to secure a mortgage via messenger? The biometric verifications required exist. There is no question that banks have more data on us than any other service provider, so why aren’t they using it to help people live better financial lives? If I’m an existing customer and you know me, why can’t I apply for a bank loan in one click and fast track the application process? And why aren’t banks using data more intelligently to combat financial fraud and cybercrime?
I believe we have yet to see the full utilisation of technology in financial services, which is why the coordinated voice of UK Finance is to be welcomed. The members who embrace change will thrive while those that remain stuck in the dark ages will die off.