Digital experience key focus for UK retail banks

By David Beach | 19 February 2019

A strong digital customer experience, relationship management and increased growth in small and medium sized enterprise (SME) banking are among the top priorities of a number of the UK’s retail banks, according to the recent CMA rankings.

“It is telling that the UK bank that customers would be most likely to recommend to a friend – Metro Bank – was also ranked the highest in terms of physical bank branches,” said Andrew Stevens, global banking and financial services specialist at Quadient, in a press release.

“For all the talk of challenger banks and online banking,” wrote Stevens, “local branches still have an important place in the wider mix of channels. In fact, our own research revealed that more than three quarters of consumers are concerned customer service would be damaged by the rise of remote banking, while 62% are only comfortable using banking applications for the most basic tasks, or not at all,” he said.

While Metro Bank performed well in the rankings, Peter Heywood, director of digital transformation and banking at consultancy Genpact, is quick to point out that the challenger brand is struggling in other areas, namely profitability.

“It’s frankly not cheap to run Metro’s in-branch, 7-day, customer centric model,” he says. Metro’s share price plummeted 37% on January 23.

Stevens warns that incumbent banks can’t stand still as new models shape the market.

“More traditional high street banks have to ensure they aren’t left behind as consumer demands around online and mobile banking grow,” he says.

“In 2019 banks must be able to tell each customer what they need to hear, when they need to hear it, over a channel they are listening to – whether that’s in person, using mail, email or online or, most likely, a combination. Ultimately they will see this repaid in happier, more loyal customers,” said Stevens.

But while digital-only banks have supposedly been whisking customers away, crises such as those seen at TSB are not affecting customer bases as much as people may think, says Heywood.

“A number of the big names have had technology challenges, like TSB’s crisis. When you read the general reporting it’s quite catastrophic but then when you look into the detail it’s less so.

“We’re in the era of always-on and the fact that some of these banking platforms have been down even for a few hours it can have large effects, particularly from the SME side.

“But I would question the ramifications it would have on the retail side. We did some reporting around millennials and switching and found that even though they had a digital-only current account, they also have a primary account with a big six bank and strong brand loyalty,” he says.

The CMA rankings update

The UK’s Financial Conduct Authority (FCA) and Competition and Markets Authority (CMA) has published its second set of banking customer satisfaction results, part of an initiative in line with the country’s Open Banking regulations, and as a result of the CMA’s own investigation into the banking sector, started in 2016.

The first set of survey results, released in August last year, featured input from 16,012 UK banking customers. All British banks and building societies with more than 150,000 personal current accounts (PCA) or 20,000 business current accounts (BCA), as well as Northern Irish banks and building societies with more than 20,000 PCAs or 15,000 BCAs, must publish the information every six months.

“We introduced this survey last August so that people can see exactly how well banks are treating their customers,” said Andrea Coscelli, chief executive of the CMA, in a statement accompanying the release. “If people are unhappy with the customer service they are currently getting, I would encourage them to look at the results and think about switching to a better performing bank.”

The results at a glance

Personal banking

Between February 2018 and December 2018, 16,023 customers with personal current accounts were asked how likely they would be to recommend their provider in a variety of categories.

Overall service quality - Metro Bank came in at the top of the with 83%, leapfrogging last year’s winners, First Direct, who come in at second with 82%. Third place goes to Nationwide, followed by Coventry building society and Barclays in fifth.

Santander drop from fifth to seventh while TSB drops from ninth to thirteenth. RBS remains bottom and records a 47% satisfaction rate, 2% lower than last year’s rankings.

Business banking

Between January and December 2018 BVA BDRC surveyed SME customers with business current accounts. They were asked how likely they would be to recommend their provider in a variety of categories.

Overall service quality - Handelsbanken retains top spot with Metro Bank in second and Santander in third. Barclays moves up to fourth as Lloyds slip to sixth. TSB drops from ninth at 51% last year, to last with 42% in the current rankings.

Full results here.

Additional reporting by Alex Hamilton.

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