Accenture released some research recently, suggesting that the rise of digital channels may be contributing to ‘an increasingly arm’s length relationship between institutions and their customers’. But to view digital channels in this way is to fail to appreciate that what customers want from their banks is changing, and that ‘short’ and ‘functional’ dealings with banks may actually be desirable in the mind of today’s increasingly mobility led customer.

The Vickers account switching regulation, due in September, will throw customer bank loyalty into sharp focus and lower some of the barriers to competition in the market. However, it is important to make the distinction between encouraging a competitive environment, and actually creating competition. The account switching reform certainly encourages the former, although it is only the existing banks and potential new entrants that can create true competition in the market by seeking to improve and differentiate their offers and services and thereby creating choice. The ability to choose, and switch easily, between different providers is little more than an administrative formality, but if customers don’t feel that the different options available to them are compelling enough for the switch to be worthwhile then they will not do so even if the process is simple and painless.

What the reform will mean is that banks will no longer be able to rely on having customers ‘locked in’, and loyalty will no longer be about the length of time with a bank but the level of engagement. ‘Short’ and ‘functional’ communications will not be a problem for banks when it comes to selling and building loyalty, but ‘impersonal’ and not “customer specific” certainly will. The new world requires visibility and mobility, and banks must wake up to the value of customer service if they are to hold sway in an increasingly competitive market.

The benefits of this focus on engagement will extend far beyond customer satisfaction, to provide a valuable source of revenue enhancement for banks. A customer who regularly interacts with their bank across multiple channels is one that is much easier to alert to relevant products, promotions and services. For the banks that take advantage of the wealth of data and response analytics that these interactions can provide, there is the opportunity not only to enable customers to take up product offers more easily, but also to ensure that these offers are targeted, highly relevant, and personal, dramatically increasing their chance of success. A single customer view of communication across all digital channels strengthens the value of these interactions, allowing the integrated conversation that customers now demand.

Finally, mobile is not a problem to be dealt with when it comes to engaging with consumers, it is a gift. There is undoubtedly, as Accenture says, ‘a link between how customers interact with their banks and how they view them’, but just think about the number of smartphone owners whose device is the first thing that they reach for in the morning! Digital channels provide a means to put a bank portal under customers’ pillows, in their pockets, and on their kitchen tables – and what bank wouldn’t want the ubiquity of being embedded in a consumer’s daily routine? And what better opportunity for engagement, for those providers of financial services that can get it right?