“With 2018 drawing to a close, many high street banks will be reflecting on a tough year. From IT failures, more branch closures and the seemingly exponential growth in popularity of the multitude of challenger banks entering the market.
“However, 2019 should be the year that high street banks respond to the challengers. We’ve already seen challenger banks having to adapt to demands for cash deposits this year, and the gap is certainly closing. Here are my top 3 things that traditional high street banks must do in 2019 to get on the front foot.”
Get the (tech) stack right
“Challenger banks had a distinct advantage in that they have been able to build platforms for the next generation customer from scratch. Heritage banks need to offer the right solutions in the right moment to their customers, but without the right investment in technologies like the cloud, they’re going to struggle to adapt.
“Nowhere is this more apparent than in the branch and ATM channels. It’s time for a new approach given the potential advantages of cloud-based technologies for enhancing ATM services, operations and above all the customer experience. In the face of increasing competition and a fragmenting ATM infrastructure in the UK a cloud-based architecture makes managing the ATM networks that customers demand significantly more cost effective and productive.
“As banks look to embrace Open Banking the right technology will be more important than ever. New financial services providers want to integrate and get to market as quickly as possible, banks who want to compete need to do the same.”
Remember physical footprints are a positive
“While challenger banks have been able to get ahead in the mobile app experience, there is still huge demand from customers for a face to face service, especially for high value services like mortgages. Banks shouldn’t see their branch networks and physical footprints as a disadvantage – instead they can position them as a positive, and make an effort to adapt them. Traditional banks are also now rapidly improving their digital offerings, using their scale and investment capabilities to rapidly match and outpace the challenger banks’ experience.
“As politicians also start to turn their eye to financial access, especially for rural and small communities, traditional banks have a responsibility and unique opportunity to adapt their offerings to meet new demands. This is especially true as the UK’s mobile data coverage and broadband speeds leaves some communities unable to bank online.
Play to your strengths
“Challenger banks need to find a way to become profitable, and fast. They’re under increasing pressure to make customers profitable, grow their user base beyond a younger demographic, and offer more revenue generating services. They’re already starting to come up against resistance from their user base as they try to do this. Traditional banks on the other hand already have the infrastructure in place to offer new services, and the trust of consumers around high value services like loans and mortgages.
“As traditional and challenger banks increasingly try to replicate each other’s strengths and successes. High street brands need to remember that they do have significant strengths, built over years of serving customers and delivering a wide range of services, which can be tricky and costly for challenger banks to match.”