The digital revolution has created a new world of financial services which far outreaches basic online banking.
The retail banking industry is currently undergoing a major transformation, thanks to new technology and changing consumer attitudes.
Remember when all banking services were carried out in-branch, with customers relying on recognisable high street brands? Fast forward to 2018, and the digital revolution has created a new world of financial services which far outreaches basic online banking. Customers in the UK are demanding high-quality digital services from existing brands, or are being drawn to online-only, mobile-first banking services – relative newcomers to the industry.
Harris Interactive’s latest hi brands® report into the financial services industry has provided some interesting consumer insights into how brands can weather the storm of change and continue to be relevant to customers in the digital age.
The changing state of the banking industry
For many years, marketers in the banking sector have considered brand awareness and familiarity. This is no longer enough, as today’s consumers expect differentiated, strong products and services, and brands must now consider how well they are meeting consumer needs. In our hi brands research, we found that Lloyds Bank, Barclays and TSB saw notable shifts in their ‘future relevance’ scores among consumers, showing that that the ‘big brands’ are addressing the challenge.
Looking more closely, these banks have all made significant strategic alterations in terms of focusing increasingly on digital services and boosting their appeal to younger audiences. Millennials are much more comfortable with digital services and being able to interact with their bank when it suits them, with 69% of the age group in the UK regularly managing their money on their phones or tablets. It’s also important that they can complete a transaction and other functions across multiple touchpoints, rather like Netflix allows them to pick up a TV show on their tablet at the point they paused it on their smart TV.
Consumers have more power than ever when it comes to choosing their bank – the digital world means they are no longer limited by geographical constraints, and they also have access to much more information. A 2017 report from the Competition and Markets Authority (CMA) found 44% of consumers use comparison sites to research brands before making a decision. It’s also now much easier to switch banks in the UK, with the Financial Conduct Authority (FCA) now requiring banks and building societies to publish details that will help people make more meaningful comparisons between current account providers. As a result, it is more challenging for banks to earn customer loyalty.
In the UK financial services market, our research found that Barclays was the retail banking brand that consumers were most seeking information about – and also the fastest to adapt to the needs of the modern-day consumer. Barclays has been at the forefront of digital banking for the past decade, pioneering contactless technology and making a significant impact with social media campaigns such as Start Today and Pay Your Way.
TSB has been performing well in its future relevance and customer satisfaction ratings, making it clear that it has listened to consumers’ wants and needs. TSB’s claim to unique and transparent banking experiences across multiple digital channels and devices is a good example of what financial brands need to be doing to stay relevant.
Is your brand fit for the future?
Banks can ensure they are fit for the future by having a clear strategy in place to engage their target audience. Lloyds Bank’s By Your Side campaign used powerful, unifying imagery and made the bank’s commitment to its customers clear. Its #ForYourNextStep social media campaign saw great results, again focusing on the key concerns and milestones of its target audience while combining both its heritage and its future relevance. Creating this kind of buzz is key for banking brands that want to create a true connection with consumers, particularly in the younger age bracket.
As well as engaging their audience, banks also need to anticipate the future needs of their customers – not just react to their current ones. For example, with 22% of consumers planning to use their smartphone to purchase goods at the point of sale in 2018, providing a seamless and simple digital process should be a major priority for all banking brands this year. Banks also have to take a thoughtful approach to new technologies that could help them establish their reputation as innovators.
A key part of embracing this shift towards digital will see banks faced with tough choices. It is likely that more branches will close and the ATM Industry Association has recently warned that thousands of free cash machines may also disappear because of the growth of online banking. A recent PwC report concluded that 30% of consumers plan to increase their use of non-traditional financial service providers – a huge wake-up call for traditional banks to update their processes to compete in the future. By searching for forward-thinking solutions and leveraging new technologies, traditional banks can transform the user experience and become innovators in their industry. And many are taking this on board, with big brands introducing facial recognition, fingerprint technology and voice recognition to tighten online security, for example.
Banking brands should embrace the new digital era and offer a seamless experience across both physical and online channels. They should view the rapid changes in the industry as the perfect opportunity to improve their relevance and anticipate the future needs of their customers, and hopefully win over a new generation of consumers.