“The big banks lacked focus on getting a full and seamless customer experience right,” said Andrew Stevens, financial services specialist at Quadient, the customer experience platform on a panel at FinTech Connect.
“The lack of focus on customer experience has enabled the rise of digital challenger banks,” said Stevens, on the side lines of the event. “It’s very easy to think of customer experience as this airy fairy thing - an ethereal experience that doesn’t really mean anything,” he said.
“When a customer has a relationship with a bank,” he continued, “they want to know their money is safe, they want to know they can access it, and they want to know that if something goes wrong there’s a simple solution in place.
“If a bank lets them down on the simple solution point by fragmenting that solution across multiple channels, they’re losing a third of the relationship,” said Stevens.
While the incumbents may be playing fast and loose with customer retention, Stevens believes the challengers are leaning into their single approach, and doing so, effectively.
“The big banks are making an omnishambles out of omnichannel experiences. Customers can see that and are going to the digital-only challengers who only have one single channel that they do so beautifully well it more than makes up for the other channels,” said Stevens.
But Stevens is optimistic that big banks can run challengers out of the market.
“Providing a seamless omnichannel customer experience is itself a differentiator,” he said. "A bank that can offer that type of service can beat the challengers at their own game by rolling it out across their many channels.
“Unless Monzo and Starling begin to open branches, they can’t compete with the big banks,” said Stevens.
However, larger market participants have their own structural problems, according to Stevens.
“Big banks are executing the wrong way, unfortunately. They define their organisational charts and their channels first and then prioritise them by mobile, SMS and digital etc. When it comes to prioritising, they give money to the digital team - everyone gives money to their digital teams - who take the money, spend it on a technology that will work and solve the problem within their channel.
“That’s fine, but it doesn’t get you closer to the omnichannel experience. Put the customer before the technology and the technology before the channel. Before the big banks define the organisational chart they need to define the customer journey and figure out which technology can deliver across all of those channels,” said Stevens.
Even though they may struggle to compete with incumbents, challengers have a strong future, said Stevens.
“The concern for banks is to look at the incredible growth these challengers have had. Where will Monzo be in five years time? Watch that space,” he said.