Banking customers to benefit from new competition recommendationsby
The Competition and Markets Authority (CMA) has concluded its 18 month inquiry into the UK retail banking industry, announcing that more needs to be done to encourage competition in the sector.
The CMA announced a number of recommendations for high street banks, mostly focused around making switching services more transparent and easier. These included:
· That it should be easier for customers to switch banks.
· That Midata, a service which allows customers to see their transaction history, should be used to prompt customers to switch at certain trigger points, i.e. when their branch changes or their overdraft details are changed.
· That a new price comparison website be set up for small businesses
· That a "sustained" advertising campaign is funded for the Current Account Switching Service (CASS).
The CMA also concluded that competition in the market was not currently “working properly”, stating that 57% of customers have stayed with their provider for more than 10 years and 37% had had their accounts for more than 20 years.
"Despite some encouraging developments, particularly in the shape of challengers that have entered the market in recent years, for too long banks have been able to sit back and take their existing customers for granted," said Alasdair Smith, head of the retail banking investigation for the CMA.
Figures from the Current Account Switching Service state the number of people transferring their current account has fallen by 14% in the last year, however the Institute of Customer Service (ICS) states that this is due to the industry having improved its customer satisfaction levels over the course of 2015, rather than solely being due to a lack of competition.
While banks and building societies are showing signs that customer satisfaction is improving, there is still room for progress: “As mobile and online banking increasingly becomes a convenient option, organisations must ensure that customer service online reaches the same standard as the more traditional methods, such as ‘across the counter’ over the phone,” said Jo Causon, CEO of the Institute of Customer Service.
“Now that customers can switch bank accounts within seven days, they are more aware of the options and more likely to consider changing. There is no longer apathy brought about by uncertainty meaning that strong customer service is now a key competitive advantage in the marketplace. In what is becoming a relationship driven economy, if customers are not happy they will vote with their feet and move to the competition.”
Adaptive Lab’s James Haycock recently stated that retail banking’s biggest threat was not people being able to switch accounts more efficiently, but rather the banks' inability to match growing customer experience expectations.
New players such as Metro Bank have received huge traction in the sector through disruption and a focus on technology and customer experience as a driver.
And there are said to be as many as 25 other challenger banks in the UK awaiting regulatory approval from the Financial Conduct Authority that are set to add to the competition that current incumbents are facing.
Chris is Editor of MyCustomer. He is a practiced editor, having worked as a copywriter for creative agency, Stranger Collective from 2009 to 2011 and subsequently as a journalist covering technology, marketing and customer service from 2011-2014 as editor of Business Cloud News. He joined MyCustomer in 2014.