Reimagining retail banking: Tech, innovation and collaboration key to survival

In partnership with Capita, senior retail banking leaders reveal how financial services can weather the challenges ahead

by Lauren Brown
Last Updated: 10 Nov 2020
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Down to business

The coronavirus pandemic has had and continues to have a devastating effect on all sectors of the UK economy. But banking has been uniquely burdened by the double jeopardy of having to manage the impact on financial services and take on the pivotal role, as Michelle Prance, Consulting Head of Banking and Culture Officer, Capita, puts it, “of helping the rest of the economy through the transition as well.” 

As a second lockdown commences and cases of Covid-19 rise, COO at Aldermore Bank Zish Khan, predicted during the Management Today and Capita roundtable on the future of retail banking that the full scale of the impact will necessarily remain unclear until at least the end of the furlough scheme. 

But despite this, and the fact that as CEO and co-founder of Funding Xchange, Katrin Herrling pointed out there will in the short term be an exodus of weaker firms from the market, all participants agreed there were actions neobanks and alternative banking providers could take now to future-proof their propositions even in the face of unprecedented uncertainty. 

For Khan, a people-centric approach that focuses on and, crucially, understands individual needs at such a turbulent time is the bedrock of firms’ survival.

“There’s been a lot of money injected into the system by the government, which will soften the blow,” he explained, “but it will come down to market confidence.

“It’s a question of proactively contacting and dealing with our customers throughout their journey with us because ultimately we don’t want that communication to happen right at the end. It’s about asking: How do we engage up front and be with the customer through that journey?”

“It’s about providing useful financing to people,” Jon Hall, CCO and Deputy CEO, Masthaven Bank said: “You’ve got to find a real reason why you can provide a serious service to people when they need it, not something gimmicky.” 

Prance agreed, adding that early on in the crisis, even though a lot of digital players had started to take some of the core banking system payments and lending away from traditional banks, “most of the current account activity stayed with the incumbents because in a crisis people retreat quite naturally to the things they know and trust” – a challenge for emerging retail banks who are losing out to the bigger banks in the short term, but one Hall believes intelligent players will be able to meet head on and benefit from in the long run. 

“As a result of the crisis households are thinking very deeply about how best to get through,” he said, “We need to appreciate that approach people are taking on an individual basis. It’s not easy with lots of people, but there’s a lot of good provisions and scenario planning in place and money that has been put aside. Now we need to deploy that in a very accommodating way to help people and SMEs get through this.”

The panelists were unanimous that well-harnessed data was absolutely fundamental to making this people-centric ethos pay sink-or-swim business dividends. 

“The ability to actually use data is transformative,” Herrling explained. “The way players like Facebook and Google and others have used data is different to how banks are and it’s based on understanding the customer and anticipating their needs, delivering them before the customer has even been able to articulate those needs.”

She said working with numerous different perspectives and skill-sets, with data scientists who understand key business goals collaborating with business experts who then understand how to properly use that data, is key. 

Prance said one of her 2021 priorities was to ‘Unlock the power of the data and get to the root cause of what intelligence will make a difference.”

Providing the slick tech users have come to expect is another unmissable opportunity to build trusted relationships.

“Some of the biggest legacy banks have discovered how reliant they are on frontline staff to make anything happen, so the crisis has brought where there’s really a total lack of digital infrastructure to the surface,” Herrling explained. 

Competent tech should ideally be a part of a suite of options customers can tap into based on individual and circumstantial need, CTO of Metro Bank Martin Boyle added. 

“It will be really interesting to see how the mass experiment of Zoom and digital channels right across the population and ages will be capitalised on, but [in-person meetings at physical locations] for me is still [important to] the trust and the deepness of the relationships and for the complex voice at the end of the problem. That still resonates with lots of members of the population and people are willing to bank on it.” 

Prance agreed a number of complex, interrelating factors were at play, the handling of which will require careful balancing and intuitive, diverse teams who are digitally minded and people focussed.

“It will be very interesting to see how the banking business model itself has to fundamentally change,” she said. “ We’re going to see very low interest rates for a very long period of time, so what is the business model when you’re not able to manage the balance sheets? It has to be a combination of very very low slick operating costs meeting the needs of a hugely diverse set of both retail and business customers, your emphasis on how you manage your data and gain your insights from it, you’ve got to double down on that completely, while you squeeze your operating costs. It’s going to be a transition to something that looks quite different indeed.” 

Image credit: shomos uddin via Getty Images

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