Opportunity awaits as more and more banks flee the high street

Posted: 20th September 2018

First published on Specialist Banking on the 5th September 2018.

With changing consumer habits, online offerings and rising costs, it’s clear the fabric of the UK high street is undergoing a major shift.

In particular, the number of established banks opting to close high street branches makes for stark reading. A UK government report released earlier this year found that 1,270 branches had closed between 2014 and 2017, while consumer watchdog Which? also reported that the rate of bank closures increased in 2017 by 39.5% year-on-year.

This has meant that fewer people are able to visit their local bank in person. Research published by the Nottingham Building Society states that 23% of respondents have stopped using branches since 2013, primarily due to local closures.

What does this mean for banks trying to ensure the delivery of good customer outcomes?

Although online services and banking apps will satisfy the digitally savvy as an alternative to face-to-face banking, banks should ensure that they remain able to service all customers. With the closure of branches, firms should rightly expect demand for telephone banking services to increase. Telephone touchpoints across all aspects of the customer journey will likely see increases and this will include important considerations, such as complaints and query handling that would typically have been dealt with in-branch. As such, banks of all sizes should not neglect the effectiveness of their call-handling expertise and ensure that they have the right resources in place, so that customers continue to have access to the services that they need, when they need them.

By enhancing their existing telephone banking services, firms will have a strong platform from which to develop relationships with customers, while also making a meaningful difference to competition in the sector and ensuring financial inclusion prevails. 

Indeed, the FCA and the CMA have been dedicated to kick-starting industry competition and have been particularly focused on encouraging customers to “shop around” and re-evaluate the service they’re currently receiving from their bank. To help achieve this goal, new measures now require all banks to publish information on quality of service every six months, enabling customers to better compare providers and, in turn, encouraging banks to drive up customer service standards.

The more established banks have historically come under high levels of scrutiny, especially when it comes to customer experience where challenger banks are able to start with a clean slate. On the flip side, there is work to do to build up trust and the new measures brought in will no doubt mean that the scrutiny placed on challenger banks will intensify over time. Expectations to handle complaints effectively and deliver great customer service for all firms will become greater over time, as customers become savvier and reassess what they expect from a provider.

What is clear is that firms of all sizes should avoid the temptation of opting for the rapid deployment of undertrained and inexperienced staff to grow customer service capacity quickly, but instead choose to go with expertise they can rely on. It’s critical that banks focus on ensuring they’re able to handle complaints and deliver customer service effectively, improving the chances of securing positive feedback and better customer retention.

To achieve this goal, improving operational capacity aligned to the key driver of customer service is essential to ensure that trust among customers is protected, allowing banks to remain focused on their core activities and overall business growth.