Can UK Banks Deliver the Value Consumers Crave?

  • 8 August 2019
  • Blog

Can UK Banks Deliver the Value Consumers Crave?

By Gerard du Toit and Stanford Swinton

Gerard du Toit and Stanford Swinton are partners with Bain & Company’s Financial Services practice. They are based, respectively, in Boston and London.

Banks in the UK are under attack from technology companies and other insurgents, some of which have strong offerings and a more appealing experience for customers. The tech companies obviously have digital expertise, and the big ones have massive customer bases and stores of cash.

But they have also developed another weapon: consumer trust. When Bain & Company recently surveyed more than 13,000 bank customers in the UK as part of a global survey, fully 57% of them said they trust at least one technology company such as PayPal and Amazon more than they trust banks in general. And trust affects a customer’s willingness to buy banking services: 55% of UK consumers are open to trying financial products from a major tech firm.

Trust and value

Beyond trust, consumers also tell us they perceive that tech companies often deliver more value than banks. Of the 30 elements of value we have identified, the five elements that have the greatest impact on loyalty in banking are, first, quality, followed by saves time, reduces anxiety, simplifies and heirloom (a good investment for future generations). UK respondents on average give their primary bank a lower rating on these elements than one or more of the major tech firms: Amazon, Apple, Google, Microsoft and PayPal.

Still, banks can hold their own if they deliver a simple and digital experience both online and in the branch. For instance, Metro Bank, founded in 2010, is now tied for the highest Net Promoter Score—a recognized metric of customer loyalty—among UK traditional banks with physical locations. Metro’s strategy of offering a great experience is paying off. With virtually no adver­tising, it relies on customer advocacy to fuel growth. Metro’s customer base grew 33% in 2018, and deposits and lending increased 34% and 48%, respectively.

Save and simplify

Digital technologies can help banks deliver better on a few functional elements such as saves time and simplifies. But banks also have an opportunity to further increase loyalty by improving on reduces anxiety and selectively adding other emotional elements. Bain research finds that performing well on an emotional element is worth 1.5 times the increase of a company’s Net Promoter Score, compared with excelling on one more functional element.

Each bank will thrive or decline according to its ability to deliver elements of value that engender greater loyalty, incorporating digital tools where possible to improve the customer’s experience. And if banks don’t figure out how to deliver such a proposition, competitors will.