One article that grabbed my attention recently was the Financial Times claiming that 26 companies are talking to the financial services regulator about entering the banking market. It appears that these potential new entrants fall into three camps: retailers that want a greater ability to leverage customer data; more established financial services players that want to extend their offering or appeal; or new banks wanting to exploit new business models and technology.
This is both incredible and, alas, inevitable. As a marketer who started his career in financial service, I am amazed how the existing players have lost all sense of connection with the people who for decades have been loyal paying customers.
This hit home for me during Christmas when my wife lost a diamond from a ring. I phoned my home insurance provider (a high street bank), which advised that I was not covered, but for an extra £250 a year (an extra 40%), I could add cover to protect her ring should the same thing happen again. I thought better of asking the point of a policy that didn’t cover usage; but while the customer adviser was getting the revised quote, I looked online at the same insurance provider to see what the quote would be for a new customer.
Unbelievably, it was £150 a year – a quarter of the cost that I had been quoted – and the difference between having a policy with or without this ‘accidental damage’ cover was a mere £20 a year.
I asked the adviser about this and she put me through to an underwriter, who quickly dropped the price by £100 (the ease of the act in itself quite shocking, but the price was still over three times more than the online equivalent for the same policy from the same provider).
He explained that this was a fact of life – new customers always got a better deal – and he put me through to the sales team, which meant this was not an online only offer. Ten minutes later I had replaced my policy with an identical one from the same provider, just a different policy number, and I was £500 a year better off – more than the cost of the diamond my wife had lost.
Now, forgive me if I am wrong, but someone has lost the plot here. While a reliance on inertia might make good business sense, it is disastrous for brand building. And this is something that the next set of bank marketers have got to get right.