It’s been over a decade since the 2008 financial crisis but ask someone on the street today their opinion of banks and it isn’t likely to be flattering.
After several huge banks had to be bailed out with billions of pounds in taxpayers’ money, these wounds still run deep and a survey in 2018 found 66% of adults don’t think that banks operate with society’s best interests in mind. And 72% felt that the banks should have faced heftier fines at the time from the regulator.
Banks are now held to a much higher regulatory standard but consumers also expect more from them in terms of ethics and trustworthiness. With distrust of traditional banks, there has been a huge number of challenger firms launching to offer a refreshing alternative to the old guard.
Many of these challenger banks are online-only and have embraced technology to reach a mass market in a cost-efficient and personalised way. Examples include Monzo, an app-only bank that started in 2015 and already has over two million customers with over 35,000 signs up a day, and Atom bank which wrote over £2.6 billion of loans in the 12 months to March 2018. They may be new, but customers are already trusting them with their money.
A new generation
These online-only banks are introducing a new generation of savers to banking.
This new generation is expecting an app to be available, live chat should they have any questions and social media accounts they can follow for all the latest information. No one wants to be treated solely as a number and research (from the Financial Brand) has shown that 33% of abandoned business relationships was due to a lack of personalisation.
Challenger banks have already shown they are nimble enough to communicate effectively at a personalised level enough to be entrusted with their customers hard-earned cash. But can incumbents catch up and try and take advantage of these digital trends?
In all likelihood, banks will never be able to entirely make up for their past mistakes in the eyes of consumers. However, by evolving and creating an online and personalised relationship with their customers they can at least remain relevant. A new generation of consumer-facing FinTech challenger brands are making huge leaps in bringing financial services back in from the cold.
The rise of RegTech
Of course, consumer-facing technology is only half the story, leaps have been made in the world of RegTech as financial services firms adopt new digital channels and drive digital transformation. From trade execution and administration, to helping to comply with new regulations, these organisations are investing heavily in becoming more efficient.
This investment reflects a change in attitude from banks as they strive to become more accountable and compliant - for instance, many are archiving their websites and social media for the purposes of eDiscovery and also to conform to new regulation. This allows them to capture immutable evidence and records of their entire online presence and digital communications.
This improves transparency with the regulator and shows a greater consideration for their online message.
It remains to be seen what this will mean for banking, but will consumers even need to use the traditional banks anymore?
To find out more about this fascinating trend why not download our latest infographic: banking’s digital revolution in 13 must-know numbers.