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What is the impact of technology on the war for customer loyalty and trust in banking? Callum Donnelly, head of digital products, Etch, explores a tricky question.

Digital change is rapidly catching up with financial institutions, both large and small. The recent GDPR drum is still echoing in everyone’s ear. Privacy and data breaches are keeping fintechs up at night and making them think how to gain customer trust. On the other hand, large financial institutions are fighting for customer loyalty and relevance like never before.

Gone are the days when large banks relied on their customers not bothering to change providers due to lengthy application processes, unsurmountable regulation, cash and infrastructure or high barriers to entry for smaller players. Technology has fundamentally changed the game.

But what will be the ultimate differentiator?

The answer is simple. Making the customer’s journey easier and helping them to reach their financial goals. Though this is easier said than done if you’re from a large financial institution with many layers of admin and approvals.

While Brexit is occupying everyone’s minds, until a definite deal has finally been agreed and new legislation has been enacted, the new financial services start-ups retain an advantage. This is because current legislation has enabled fintechs to offer services that were never possible before. Open banking (the use of open APIs that enable third-party developers to build applications and services around the financial institution) is enabling companies to initiate payments and access data in a way that simply was unheard of before.

For example, if you’re a small business owner needing a new bank account up and running, traditionally this would usually take two to three weeks with a conventional bank. However, with the new ‘future banks’ entering the market, such as Tide and Starling, it can now take you one to three hours. All without the fuss or filling out lengthy forms.

Large players from different customer-focused industries, such as Amazon or Google, are also talking about creating a completely new breed of fintech competition. In fact, it is Amazon’s close relationship with customers that is considered more dangerous by traditional banks than its size.

You’d be mistaken to think that large banks will not go down without a fight.

You may have noticed that Barclays is working hard, offering to pull all your different accounts by different providers into one place. Several other traditional banks are also stepping up their customer experience and are completely reshaping their workforce to do so. Lloyds Bank has confirmed it is cutting 6,240 jobs and creating 8,240 new ones, as it overhauls its digital services and forms part of the £3bn commitment the group has made to invest heavily in its technology and people over the course of a three-year strategic business plan.

The positive result of great customer experience transformation can be seen with Etch and Big Radical’s work on Santander’s Smartbank, transforming the student customer journey, and Hargreaves Lansdown investors’ improved trading app experience. Also, Aviva after being completely and vocally against robo-advisory services, changed its tune last year by buying a majority stake in Wealthify to defend its’ long-term future. Santander also outpaced their traditional rivals by recently launching the new ‘Digital Investment Advisor’ app.

Financial service providers need to remember that consumers have bank accounts to make payments, save money and access credit. The banks that choose to focus on how AI and data analytics can help them reach those goals faster by making it as easy as ordering a pizza or an Uber, will help them to stay relevant and fit for the future. Take Polish mbank, which approves loans in 30 seconds and allows you to discuss loan options via Skype. The reason is simple: no-one likes to sacrifice their lunch break for an hour-long appointment to meet a mortgage advisor.

Banks need to remember that customers do not care about the back-end complexity nor are they overly keen on changing providers. But, poor service and slow approval processes are simply not going to make the cut any longer. While promising blockchain protocols and Initial Coin Offerings (ICOs) has been challenging the way we invest and access capital in a global market, AI, mobile payments and open banking are changing our day-to-day behaviour in the way we analyse, save and spend our old money. Despite numerous cautionary statements being issued by world governments and money institutions, it won’t be too long before buying and monitoring Ethereum or Tether through our daily bank accounts will be as common as transferring our pounds and pennies into a savings account.

Simplified banking

Hal Varian, Google’s chief economist, has said: “A simple way to forecast the future is to look at what rich people have today.” This leaves us to wonder which rich person would be satisfied with 0.2% of interest on their savings account balance or horrendous fees on international transfers?

This could explain the rise of robo-advisory investment services, such as Nutmeg and Moneywise, and why traditional investment firms, such as Quilter (previously known as Old Mutual Wealth) are rushing to follow suit with their platform transformation programmes, like its brand new digital home, which we designed to focus on the customer user journeys.

There is much going on in simplifying APIs and connections between different providers, but ultimately, once all the backend complexity has been standardised and taken care of, it will be the front-end user experience, based on user needs and the simplification of processes, that will separate the wheat from the weeds.

This article originally appeared in The Drum Network Finance Supplement. For more information on how to get involved, please contact

Callum Donnelly, head of digital products, Etch

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