2013: The year in financial services

Assessing the financial services landscape at the end of 2013 you could be forgiven for thinking that absolutely nothing has changed in 12 months. Scandals, step forward the Co-operative Bank and the utterly incongruous actions of its former chairman, and service glitches, Royal Bank of Scotland again front and centre, are still abound. 

There are, however, a number of new trends that have given financial services marketers plenty to think about in 2013 and into 2014.

The new old bank

Lloyds Bank ad

The financial crisis of 2008/09 not only caused a trust deficit banks are still trying to pay down, it also forced those bailed out by the taxpayer to dust down some of their brand assets and relaunch then as the saviours of a sector they helped sour.

Lloyds Banking Group “welcomed people back to local banking” in September, relaunching the 200-year-old TSB brand. The 600-strong branch network was sold as a “return to the community-based deposit and lending banks of the past”. It will be floated next year, in accordance with the European Commission’s rules on state ownership, and instantly become one of the biggest players on the high street. 

As a direct consequence of the TSB launch, Lloyds Bank also reappeared. The grand old man of UK banking returned to its roots as a relationship banker, relaunching a month after TSB as a bank that reflects and values the financial requirements of its customers.

In the pipeline, the return of Williams & Glyn’s, a brand that has been dormant for 30 years. Royal Bank of Scotland, itself reacting to EC rules, announced in September it would launch and float the 300-strong branch network in the new year. 

All have the scale to compete but only time will tell if the back to the future approach will work.

Loyalty comes to the fore

Payments Council ad

It seems incongruous to pinpoint loyalty as a trend. However, the impact of newer entrants – M&S Bank, Virgin Money and Metro Bank – continued to put pressure on the established players not to take customers’ lifelong loyalty for granted. It was in September, however, when the change likely to wrestle banks from the torpor of low switching levels borne from complicated transfer processes came into force.

The Payments Council, in partnership with 17 banking groups that manage the accounts of the vast majority of Britain’s 46 million current account holders, launched the free current account switching service with the aim of making the process quicker. It is claimed account holders will be able to switch in 7 days and the experience will be “simpler, more reliable and hassle free”.

The early signs are it is working. The Payments Council reported early success and last month Nationwide said it had seen a spike in people transferring their accounts to it since September.

The promise the service brought led to several of the sector’s major players introducing retail-like loyalty initiatives to tempt prospective and retain existing customers – RBS and Halifax launching debit cards that offered cashback at participating retailers.  

Retail banking has operated on a relationship between bank and customer built on inertia. The account switching service and emergence of more competition changes that. 

The payday pariahs

Wonga ad

From the Archbishop of Canterbury to Labour leader Ed Miliband, payday brands have come in for intense criticism this year. 

Accused of “grooming” children by running ads during kids’ shows by Martin Lewis, founder of Moneysavingexpert.com, it is difficult to think of a sector that has been so vilified so quickly.

The level of malevolence from politicians, charities and consumer groups is not, however, matched en masse by the public, many of whom are turning to payday lenders in increasing numbers.

A triumph of marketing and PR? Market leader Wonga has certainly spent big on advertising, notably on ripostes to criticism as well as unveiling what has become known as Wonga: The Movie – 12 short films featuring profiles of Wonga customers launched on the same day as it and others in the sector were grilled by MPs over their practices. 

The sector will continue to receive flack in 2014 and it is likely its advertising will have to carry ‘health warnings’ and more information on debt advice but while their services remain legal and convenient, brands in the sector are not going anywhere anytime soon. 

The deal makers

barclaycard-bespoke-offers-304

Payment services brands are always looking to extend beyond being transaction facilitators. In 2013, some of the sector’s biggest players added deal services to their marketing mantra of ease, convenience and flexibility.  

In May, Barclaycard launched Bespoke, a website that promises to offer recession-hit UK consumers thousands of personalised promotions from the likes of Tesco, Starbucks and Shell and followed it in October with a major push for its Freedom Rewards cards, which awards users points after a purchase using the card that can be redeemed at thousands of retailers.

Elsewhere, in October MasterCard launched a service that will see shoppers targeted with offers from retailers as they pay for their parking as a result of a global tie-up with parking services provider Parkeon. 

Paypal, meanwhile, has been trialling a FourSquare-style app for use in local, independent shops that allows users to check-in when entering or approaching a store.

Each is intended to offer customers and retailers, the two constituents of payment services brands, added value. For customers, the feeling their provider is giving as well as taking. For retailers, data insight and a boost to trade. 

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