Retail brands sell themselves with customer service. Whether it is through social media, in-store or via email, effective customer engagement is vital for retailers to ensure return business. If a customer wants to return a faulty item, they may wish to
speak to a customer service representative on the phone or even tweet the organisation, happy in the knowledge they will receive a timely response through their chosen medium.
Now, retailers like Tesco and Marks and Spencer are launching current accounts in the hope to tap into their existing customer bases. This is news that established banks need to pay attention to. Retailers are hungry for business and customer-savvy, putting
banks on the back foot. It has long been the case that banks lure customers in with enticing offers then provide poor customer service once they have them. So why does this need to change?
The problem for established banks
For retailers, customer service has been a long-standing focus for their business. The expectation is that customers will seize the benefits of the 7-day account switching rules and move from their established bank to the likes of Tesco and M&S in the hopes
of enjoying improved customer service. The rise of challenger banks is giving consumers more choice than ever when it comes to deciding who to bank with, and established banks need to react.
The advantages for retailers are abundant. There will be frequent opportunities for business; customers need to complete a weekly shop, so why not check on their account whilst they are in-store? This is both more convenient and regular for the customer.
Retailers also have a strong background in loyalty. Whether it comes through promotional offers or loyalty cards, retailers know how to keep customers coming back for more. Banks, however, are struggling to gain loyalty. Their history of poor customer service
means customers are more apt to switch to a bank which listens to their demands. The UK’s Payments Council recently released data showing that an estimated 1.1 million current account customers have switched provider in the 11 months since the initiative was
launched, showing that customers are increasingly happy to make a move to perceived greener banking pastures.
Learning from the retail sector
Call centres and mailed communications are a good start, but do not go far enough. When a shopper goes into a store, they expect in-person service from a sales representative to be available. Once they have left a store, customers expect to be able to communicate
with retailers as and when they choose, through their desired medium. Banks need to adopt this method of customer engagement. Statements mailed once a month might work for one customer, but another might prefer instant, real-time interaction with their data
and banking information. Dynamic statements offer a solution to this dilemma. Customers can view their account information from their mobile or tablet device, at their own convenience. Just as a retailer might promote customer loyalty through a mobile application,
dynamic mobile statements offer the customer a means to directly engage with their bank and account information.
The High Street is changing
Even with established banks adopting necessary technology to promote customer engagement, the financial services sector needs to be aware that challenger banks are not only here, but they are here to stay. Metro Bank boasts an impressive 320,000 personal
and business customer accounts, differentiating itself by offering
"seven-day-a-week branch banking, 362 days of the year". Virgin Money has 75 branches (or ‘stores’, as it terms them), whilst Tesco is targeting its existing 6 million customer base and 16 million-plus Clubcard owners. These are not figures to ignore. Established
banks need to be aware that the High Street is seeing more competition than ever before. With the likes of Tesco and M&S already established High Street figures, ensuring that customers are engaged with is vital. The fact that there are more retail brands
than banks on the High Street means that banks are on the back foot in terms of customer touch points. Reducing physical branch numbers could exacerbate this situation; banks need to takes steps to make sure they really engage with both new and existing customers.
The anniversary of the 7-day account switching rules showed that the banking landscape is slowly changing. With consumers enjoying the benefits of widespread competition between banks, customer service and real-time engagement can be the vital component
which decides whether a customer walks in-store to do their banking, or keeps on going down the High Street.