On the 15th of August, the UK's Financial Conduct Authority (FCA) and Competition & Markets Authority (CMA) released data on quality of service for the first time, marking a historic step for Open Banking and putting a mass of customer data in the hands of fintechs and comparison websites.
The rankings (below), based on the recommendation of 16,012 respondents, give much insight into the current UK banking landscape, but the addition of the challenger banks would provide improved insight still into the reality of the quality of financial services with the aim of opening up the market to greater competition.
“We call ourselves the Good Bank,” says Knox, CEO of Tandem Bank, the aggregator app and new bank. “We’re supportive of anything that gives a better deal to customers and think this latest move by the CMA adds to the pressure that banks are beginning to feel from the challengers, in terms of customer numbers."
With an emphasis on care, the digital challengers have already carved out a loyal following with Monzo reportedly hosting 750,000 retail accounts and Starling, while Knox’s own Tandem has jumped from 11,000 co-founders (as the website puts it) to 100,000 since 2016.
“That change is happening and the CMA is going to accelerate that change and making things a little more visible” says Knox.
While the challengers are embracing the rankings, many of the legacy banks will certainly be feeling the cold shoulder of the customer. The BBC, the FT and The Times all focused their attention on bottom of the rankings, with the latter running the headline “RBS must put up posters revealing it ranks worst for customer service”.
But for all the sensational drama this invokes, Knox is unconvinced the rankings will have much immediate impact.
“Evidently the CMA surveys are awesome and will help customers make better choices but I don’t think there’ll be that much switching in the short term to the digital banks, but next year (2019), customers will begin to carry their accounts permanently across.” says Knox, once the survey results reach mainstream public opinion.
The rankings, to be published every 6 months, aim to provide greater transparency into customer satisfaction, something which the banking industry has historically lacked.
“There’s been this weird assumption on behalf of the banks and customers that no one switches so why bother worrying about it?” says Knox, before adding: “The existing comparison tables are pretty risible because they’re trying to compare, for example, the cost differential on switching current accounts which only amounts to ‘you could save £6 a year!’”
While banks must publish the rankings in branch and online, the greater implication of the survey provides a unified standard of comparison, until now only available through Net Promoter Scores.
“An industry like retail will be at +30 but banks are typically around -5 to -10 with RBS at -30,” says Knox, before adding that their own Credit Card service received +33: “The challenger banks are posting good positive numbers and to be fair to First Direct and Nationwide get into the positive figures too.”
For Knox, the most important aspect of the new recurrent rankings is that they open the market up, deliver the underlying data to emerging fintechs, and incentivise greater customer service from the bigger banks.
“The challenge is that the banks haven’t really cared about customer service, or it hasn’t been on their radar. They may have been thinking about it from a cost reduction point of view – can I move my call centres to the Philippines or wherever – without thinking about the outcomes for their customers.
“I think that balance will start to shift but will properly take off, hopefully by this survey, when the challenger banks start taking millions of legacy customers.”