Some banks really capture the interest of customers, quickly becoming the topic of conversation at dinner parties and family gatherings.
Be it preferential rates, a fast and seamless user experience, or even novelty-colored cards, there have been various moves from banks in recent years that have created a buzz.
Getting people talking is one thing. But what can be done to become a bank that customers love?
According to a YouGov poll, almost three-quarters of people in the UK (72%) believe all banks are the same. This is partly down to people viewing banks like a utility company, explains Leigh Pepper, Chief Product Officer at 10x.
Like the electricity that powers your home, banks have provided a service that consumers think very little about, with little difference if you change supplier. For a long time, from a consumer perspective, there was no marked difference between traditional banks. This must change if customers are going to declare their love and tell all their friends about a particular offering.
Historically, people chose their primary bank passively. It's either the bank that your parents used or the bank with a branch nearest to where you lived. However, with the battle for customers now taking place online, traditional banks are competing against digitally optimized challengers built for the digital age. Leda Glyptis, Chief Client Officer at 10x, adds that people keep multiple current accounts today to take advantage of their different USPs.
"People's habits have allowed for compartmentalization—use one bank for this and another for that," says Leda. "It's caused by a combination of external factors and how we've digitized our interface with the world. Open banking and the ubiquity of phones with mobile wallets make it very easy for users to go to the easiest or most profitable solution."
Despite increased competition, the challenge that will help banks become one that people adore is one they've been facing for years: they need to understand their customers better. Traditional banks have a potential advantage over challengers here, however, as they sit on massive datasets built up over many years, often since their customers were kids.
The fact they cannot use this data holds them back, adds Leigh, "It would be a big advantage if banks could use data to recommend and match customers with market leading products accurately."
Disparate banking systems and the need to manually cleanse data before it can become valuable insight are blockers here.
"The market hasn't fundamentally changed in terms of what banks need to do," says Leigh. "They need to use that understanding to provide recommendations and convert those into product sales that meet their customers' needs."
Harnessing data and using it in a meaningful way (and timeframe) is key. However, this opportunity could diminish if challengers build a better picture of their customers while targeting the next generation through kids' accounts and other incentives. "Banks need propositions that win customers through key lifecycle moments. That's still as relevant today as it was when branch banking was the primary channel," says Leigh.
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The low interest rates we've seen over the past decade have reduced the ability for banks to compete on price. But as rates start to rise and net interest margins grow, banks will have more scope to switch up how they build and price products, says Leigh.
But to stand out and become a bank their customers love, banks need to think beyond price.
"I see a huge opportunity for banks to reward loyalty across all of their products," says Leigh. "That's an untapped area where they've got a big opportunity to change things fundamentally."
Today, if a bank launches a market-leading savings rate, customers are likely to move their money unless they have a compelling reason otherwise. But if moving a savings pot meant losing perks like a mortgage discount and a reduced annual credit card fee, customers would be less likely to move.
With a platform like 10x SuperCore, banks get real-time visibility across their entire portfolio, making it easy to reward customers holistically. At the same time, banks can reduce their cost to serve, freeing up budgets to rethink propositions in-line with customer changing needs.
It all starts with understanding customers better, says Leigh. What are their needs and challenges, and how can banks solve them?
For many, a considerable gap in understanding persists. One example is the way banks target customers. Segmentation has traditionally been very static and tends to lump customers together based on broad personas, such as age and income. Again, it's all about data.
"There's a standing joke that Ozzy Osbourne and King Charles would be in the same segment," says Leda, "They are the same age, and they are both high net worth, but the chances of them having similar needs are low."
Given the tooling available today, banks are missing a trick. It's much easier to create segments based on life stages, behaviors, and preferences, adds Leda.
Around 2016, when customers started telling their friends about slick challenger banking experiences, there was more reason for inaction from the big banks. Building new propositions to attract and retain customers was prohibitively expensive, says Leigh.
While the challenges banks face haven't changed, the cost and complexity of transformation has. As a result, it's now cheaper and easier to start becoming the bank that your customers love, that people will remain loyal to, that they see as more than just a utility.
Get in touch with our team today and learn how you can become a bank that your customers love, faster and more cost-effectively than you might think.