Jeff Bezos, CEO of Amazon, once said: “If you build a great experience, customers tell each other about that. Word of mouth is very powerful”. This is no different in the banking world and a key part of building this “great experience” is creating effective channels for customers to manage their money digitally. Last week I took part in a panel debate organised by The Digital Banking Club on how customer loyalty can increase revenue for banks. The debate explored what banks can do to ensure their digital banking software wins the loyalty of their customers.
This discussion was particularly topical given upcoming regulatory changes. Currently, customers have to wait 30 days to change banks. However, from September, banks will be given a strict seven day deadline to switch a customer’s account to a rival, making it far quicker and easier for customers to change their banking provider.
We recently asked consumers whether the time it takes to switch bank accounts would affect bank loyalty. Our research found that nearly one in three would switch banking provider if it only took a week. Additionally, more than a fifth plan to change providers because the digital banking system offered by their current bank is too difficult to use.
With the majority of the UK now using smartphones, this is hardly surprising. Customers expect their digital banking experience to be as easy and straightforward as their other online experiences, from shopping, to paying bills. In fact, one panel member explained that if the digital platform isn’t as easy to use as Amazon, then it simply isn’t good enough. Clearly, unlike the UK’s biggest banks, retailers such as Amazon were purpose built for online commerce, and therefore did not have a series of complex legacy systems and back office functions to connect. However, with more agile new wave banks such as Sainsbury’s and Metro Bank entering the market and targeting rivals’ customers with tempting offers and slicker digital systems, incumbent banks must ensure the digital banking experiences they offer are up to scratch.
So, as September approaches and new market entrants begin to pick up pace, how many banks will be asking themselves: is our digital banking system as easy to use as Amazon?