Posted on: Friday 18th of July 2014
A report published by the Competition and Markets Authority (CMA) today finds that essential parts of the UK retail banking sector “do not meet the needs of personal consumers or SMEs”. As a result the CMA has called for an in-depth investigation into personal current accounts and SME banking. Ctrl-Shift suggests that Personal Information Management Services (PIMS), including services, which help customers make better decisions, may be the solution.
The banking problem
The UK banking sector remains an enigma. A Ctrl-Shift study of loyalty in the banking industry two years ago found that in recent times banks have been hard pressed by regulators and the media for a lack of customer focus and a culture of self-interest. At the same time banks remain a lynchpin of our economy, employing hundreds of thousands of citizens, underpinning the financial affairs of many millions more. Central to government policy surrounding our strategy for economic recovery, one way or another banks touch our lives in essential ways and continue to be the hub of our ability to conduct our financial affairs in a complex world.
Over the last year a number of initiatives have been introduced to redress the balance in the consumer banking relationship. Notably the Current Account Switch Guarantee introduced in September last year has been designed to make it easier for customers to switch current account providers. However the findings in the new report suggest that banks need to do more for their customers. CMA Chief Executive Alex Chisolm says:
“Our studies have found that despite some positive developments, significant competition concerns remain which mean that customers may not be getting consistently good service and value from their banks.”
Two important findings in the research highlight the need for banks work harder to retain and satisfy their customers. Firstly, the report finds that customers see little difference between the largest banks in terms of services; and secondly, limited transparency makes it difficult for customers make comparisons between banks.
Given this background and context there is a huge opportunity waiting for the first bank to put the past behind it and stand out from the crowd in terms of customer service, value and trust. Ctrl-Shift’s research and analyses suggest the best way to do this is to develop their own Personal Information Management Services (PIMS). An emerging market of PIMS is creating opportunities for banks to offer better customer-centric services. Examples include:
- Money management services – Services that integrate data from multiple service providers can create a holistic view of the individual’s financial affairs, to enable more useful, detailed analysis and insight, and to use this insight to set and reach financial goals.
- Data management services – People trust banks to store their money safely, so why not their data? Banks are well placed to use their advantage to enter the new market – if they can also reassure customers that they won’t do the equivalent of mis-selling with their data.
- Digital payments – Mobile wallet and other digital payment mechanisms are potentially transformational for banks and banking, blurring industry boundaries and creating new competitive sets.
- The market for verified – Banks are in a good position to become a lead provider in the fast emerging market for verified attributes for example, by adding an encrypted verification token to banking data released under the midata scheme, individuals can use their digital ‘statements’ not only to access the data itself but to help them to verify identities, relationships, ability to pay for services etc.
The lessons from this new report, and what is likely to be revealed if the investigation continues, is that banks need to act now to meet the needs of consumers and SMEs. The personal information economy is growing, consumers are asserting more control over their information and looking for new ways to use this information to add value. Personal Information Management Services provide opportunities for banks, as well as other industries, to improve customer intelligence, provide new value-adding services, improve customer contact and reduce compliance risk and cost. Find out more about the potential of this emerging market in our free report ‘Personal Information Management Services: An Analysis of an emerging market’.