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The sound of a starting gun is reverberating around the banking industry following the Competition and Markets Authority (CMA)’s recent plans for an Open Banking Revolution. While traditional banks have not generally had to compete fiercely to win business, newer and smaller competitors with innovative ideas have struggled to gain real traction. As such, the CMA is attempting to open things up with legislative changes meaning that, by 2018, consumers and small businesses will find it easier than ever to compare, contrast and, if necessary, switch banks.
It’s now easier than ever to switch banks, which has led to three million people doing so in the UK over the last three years; in line with this trend, the new legislation will make it easier to manage accounts with multiple providers through a single app. From controlling cash flow to avoiding overdraft charges, account holders should be more in control of activity than ever before.
For traditional big-name banks, this represents a real threat in the form of customers leaving for a competitor. Account holders who had not previously thought about depositing their money elsewhere will now be encouraged to do so, and told how easy the process can be. On the other side of the coin, it also threatens to eliminate a major competitive advantage challenger banks currently enjoy over more established rivals: customer service. Being forced to focus on customer service by the Open Banking Revolution will result in the traditional big players sharpening up their acts, closing the window of opportunity challenger banks are currently able to exploit.
There’s a danger that the new rules could inadvertently lead to banking customer service becoming more homogenised than ever before. It is likely that a whole new crop of apps with similar functionality will be released into the market over the course of 2017. If these are all designed specifically to meet the new legislation, many will look and feel exactly the same. Instead, banks need to engage and communicate with customers on their terms; giving them the right message, at the right time, over the right channel.
So what’s the best approach to remaining one step ahead of the pack and giving customers brilliant customer service? Here are three key areas to focus on:
1) Try to avoid reinventing the wheel. Before modernising operations, it’s important to take stock of what you already have; not just in terms of apps, but also approved content and data that complies with legislation – from customer statements to processes for opening and closing accounts. Starting from scratch will require careful, and costly, planning if it isn’t to simply add new layers of complexity on top of those that already exist; resulting in the loss of key services; and ultimately disrupting the customer experience. A major change could also risk losing part of the identity that attracted customers to the bank in the first place. As such, it is vital to take the time to properly inspect what is already in place and modernise the approach without replacing often-critical legacy systems and services.
2) Use this as an opportunity to break down siloes between channels and departments. As layers of functionality are added and different teams within the business expand and grow, siloes will build up as a by-product of progress; meaning that, for example, when a customer visits a bank branch, or telephones customer services, their data isn’t shared and acted on across the whole business. Similarly, content and customer experience can vary considerably depending on what department a customer contacts, and how: for instance, many consumers will go straight to an organisation’s customer complaints department to deal with any possible issue, simply because it has the fastest, most informative experience. Replicating this content and experience across the whole business would not only benefit customers, but would also reduce the burden on the complaints team. Making changes in line with the new legislation represents the perfect opportunity to smash these siloes and connect all the dots, drastically improving the customer experience.
3) Make sure there are no hitches at the implementation stage. This project has a hard and fast deadline which has been set by the UK Government, and of course you want to give customers the best experience possible, so it’s critical to deliver the goods on time. As such, it’s very important to set out achievable deadlines in the planning stage; leaving potential for teams to become overwhelmed means there is potential it won’t be delivered in time, which would have serious implications for customer service.
Above all, remember the advice in point one, and avoid reinventing the wheel. Building new apps on top of existing infrastructure, data and content, can not only improve the customer experience, but reduce the time needed to develop apps; the reliance on specific skills and expertise; and the chances that something will go wrong.
Springboard to success
Banks’ initial reaction to the Open Banking Revolution may well have been negative; especially from those who are going to see increased competition. However, it represents a great opportunity for change by acting as an exercise in providing great customer communication and experiences. By following these three steps the CMA’s new rules, rather than representing a block in the road, should prove a catalyst for greater customer experience than ever before.