What do I want from my bank?

Originally published on Billing Views.

Normally I write about something new that’s happening in payments but today I’m writing about something that isn’t happening!

The other day I was thinking about what I want from a bank. The banks we have in the UK today are little changed from the model that has existed for decades; fundamentally it is branch based. Everything else feels like an add-on, rather than part of the core. The banks are still branch centric and for those of us that don’t want or use branches we are still engaging with a bank that is driven by the branch based cost model. There are one or two exceptions however they suffer from limited product sets and apps with reviews that reflect the fact they don’t understand digital engagement!

I want a bank that is built from the app up. I want to be able to do everything in the app from setting up new payments to depositing the occasional cheque that I still receive thanks to the banks inability to lay them to rest. I don’t want to subsidise unprofitable branches that are used by other customers. I’m happy to pay with a card but I want to see my expenditure appear in the app in near real time, by merchant, by category, so I know where I am with my money. I want to build my own service package on my handset in real time. Is this all too much to ask? In the current world of banking it seems to be. There are glimmers of hope out there with people like Moven doing some very smart stuff in the US. But here in the UK it’s a depressing outlook. Even the new players are wedded to branches – look at what Metro Bank is doing; some beautiful branches but no apps and limited online banking. TSB? Same outfit, new (old) brand. Williams & Glyn’s? Still on the drawing board.

Yes it’s difficult to break into banking but the white label model of Moven and Simple proves it is possible. If they can find the right partners to launch in the UK I’ll be at the head of the queue to open an account!

Is there a future for bank branches?

Originally published on Billing Views

A few weeks ago my local branch of HSBC received a major refurbishment. What intrigued me about this is that in our increasingly technology centric world HSBC still thinks it’s worthwhile spending money on its branches. As a customer who will do everything I can to avoid stepping inside a bank, the idea that banks are spending money on branches rather than enhancing their mobile and web engagement is horrifying! Every time I visit a bank it’s because the task I need to carry out isn’t, but could be, available online. 

The banks have yet to understand that branches are only one part of a distribution strategy. They have mobile apps and online banking but these still operate as adjuncts to the core branch; some banks have poor online implementations and some have completely ignored the mobile market. Metro Bank is building its business around the branch, with no mobile apps (the iOS Metro Bank app is for a US bank!) and a limited online banking platform. Marks and Spencer (via HSBC) has focussed on branch banking in its stores. Both Santander and Co-op were excited about buying branches from RBS and Lloyds respectively, until they ran into problems. 

In my home town we have five banks in spacious, under-utilised premises. In the same way as mobile operators share infrastructure so the banks should share branches. Rather than continue to close branches, site sharing would enable cost reduction without depriving communities of physical access to banking. 

If banks want to continue to be relevant to consumers they need to move the heart of their engagement from their legacy infrastructure to the consumer and let the consumer engage via the device they always have with them – the mobile phone. Many of tomorrow’s customers will see bank branches as irrelevant as phones tethered to the wall. 

Banking in the real world

Originally published on Total Payments.

Recently I undertook an experiment with a major UK bank. I decided to investigate, with my wife’s assistance, how simple it would be to obtain a small buffer overdraft facility on her current account. As an existing customer with a perfect banking history and set up for online self-serve it should be easy – right? Wrong!

Eventually we found the information page on the website that outlined the process and yes allegedly it’s easy to apply from within the online banking website, so the customer’s identity is authenticated and there’s no need to re-key lots of data. Unfortunately the page was clearly wrong because there was no option to apply for an overdraft online. Finding this hard to believe I phoned the helpline listed on the website. I explained the problem and received the response “you want to apply for an overdraft over the phone”. If I wanted to apply over the phone I wouldn’t be stating I wanted to apply online nor pointing out that the website was clearly flawed. I was then transfered to another help desk who could only offer an apology by way of assistance. So no online application process.

Lesson 1 – Allow your customers to engage with you using the channel of their choice.

As the bank had clearly failed phase one, we moved onto the next attempt to engage; a visit to the local branch. Something as simple as a low value overdraft could presumably be arranged very quickly with a real time credit check? Ringing the bell on the customer service desk failed to elicit any response. Asking a cashier resulted in being told they were too busy to discuss an overdraft. However they could make an appointment to call my wife at a specific time a few days later. 

Lesson 2 – If you are going to have local branches, ensure they have the appropriate resources to engage with your customers. 

So agreeing to discuss an overdraft on the phone was the next attempt at communicating with the bank. Unfortunately the agreed time came and went with no call. So my wife went back into the local branch to point out the failure to contact and was told that the person who was supposed to call her had to take her husband to hospital because he had stuck a screwdriver through his hand! As excuses go, that’s an unusual one, although didn’t explain why someone else couldn’t have called. Unfortunately they were still too busy to discuss an overdraft (they’d clearly had a frenetic few days that prevented the staff helping customers!); my wife was asked to return later that day.

Lesson 3 – Do what you say you will (yes I know it’s obvious but clearly not to some people). 

My wife mentioned her dissatisfaction on Twitter and it did get picked up by a bank representative. Unfortunately their response was a link to the online complaints page. No attempt at taking ownership.

Lesson 4 – If you’re going to attempt to be a social business your representatives must be empowered to take ownership and resolve a customer’s problems. 

The final visit to the branch resulted in the overdraft being arranged in about five minutes. So despite everything that had gone before it was actually a simple process. This experiment has shown the total disconnect between how a major bank operates and how a customer wants to engage. As Brett King said “Banking is no longer somewhere you go, but something you do” and banks that don’t understand this are going to die. The opportunity is there for consumer centric banking and who is going to grasp it?

Movenbank – the future of banking?

Knowing your customer is at the heart of banking. It informs the offers and decisions a bank makes to its customers, from account types to credit decisions. Many years ago, knowing your customer meant building a personal relationship with the customer and empowering bank managers to make personal decisions based on their knowledge of a customer. Now credit decisions often seem like a ‘black art’ to the consumer. Data from credit reference agencies is used to create an automated decision that can often seem arbitrary to consumers because they can’t relate it to their ‘real world’ circumstances. Where’s the relationship and the transparency?

But what if a bank’s decisions were based on more than this? What if they took account of you as a person and who you engage with; not just what your credit score is? As part of creating a more transparent relationship with customers, Movenbank has developed CRED to measure a consumer’s credibility as both a customer and a friend. We live much of our lives online today and this public engagement helps define who we are. As well as allowing Movenbank to better understand its customers, CRED will give consumers more context around the issues that affect them, like credit decisions.

Getting more from your money begins with understanding how you relate to money and Movenbank’s first service is a financial personality test. We’ve all done tests like this over the years but as Movenbank moves towards full launch this data will become the first piece of the jigsaw that defines you as a customer.

What else will define Movenbank? No branches, cards, paper – all legacy bits of banking that few people need or want these days. The mobile phone will sit at the heart of the customer relationship giving the customer access to all their account functionality, including in-store as well as online payments. Imagine paying in a shop and being able to see how much money you have in your account before and after you pay. Imagine paying for a holiday and being offered foreign currency and travel insurance as relevant financial services that you can purchase from your handset. Banking becomes contextual and convenient.

This might sound like an alien future to some people but the way we engage with banks and payments is conditioned by their legacy views and not our convenience. To quote Brett King, the Founder of Movenbank, “Banking is now something you do, not somewhere you go”.

You can request an invitation to check out your financial personality here. I’m a Professor!

Why are the banks looking backwards?

One interesting result of the UK banking crisis has been the availabilty of two pools of bank branches from The Royal Bank of Scotland and Lloyds Banking Group; both banks having been forced by the EU to sell branches as a condition of state aid. Santander was the successful bidder for the RBS branches and The Co-operative Bank appears to have beaten NBNK for the Lloyds branches. Also, National Australia Group is apparently open to offers for their Clydesdale and Yorkshire branches, creating a third opportunity for a bidder.

What is curious about these branch disposals is that organisations are interested in acquiring not just customers with their loan and deposit accounts but the physical branches as well. What is the purpose of bank branches? Once they were the only way to engage with your bank but in 2012 consumers can manage their accounts via the Internet or on the phone. Yes I do sometimes go into a bank branch to deposit a cheque, but that’s only because the banks have yet to come up with a simple, consumer friendly, person-to-person payment service. Bank branches appear to exist primarily to service outdated payment methods and allow banks to sell more products to consumers, who’d much rather not be there, standing in a queue, in the first place. They are a costly overhead for banks which should focus on delivering relevant products and services to consumers where they need them, not in buildings that most of us would prefer to avoid.

If you examine what day to day banking means to most consumers, it’s about knowing how much they have in their accounts and making payments. These activities should be carried out in the most convenient way possible; which means via devices consumers use every day – their phone, their laptop, their iPad and so on. Banking should be contextual and adapt to a consumer’s circumstances. Some banks have made a reasonable attempt at creating consumer centric Internet sites and mobile apps, however these channels are still an extension of and not a replacement for the branch. Plus, access to new services should be a simple process from any convenient device without the need to fill in long application forms.

The move to contextual banking has been best summed up by Brett King of Movenbank – “Banking is now something you do, not somewhere you go”. This tenet underpins Movenbank’s whole approach to banking and will be at the core of their services when they launch this year.

Will traditional banks embrace the opportunity or continue to focus on an expensive and dated infrastructure?