The financial sector is facing many opportunities, such as digitalisation and increased competition, as well as challenges such as rebuilding reputation and trust. Seven years on from the financial crisis, banks and other financial institutions are changing to make sure they deliver more for their customers and society. Here are five examples:
In a global, fast-paced and digital world, companies are changing to make sure they can deliver financial products and payments ‘on the go’, whether a customers is taking out a new insurance policy or transferring money to a friend. New developments are already benefitting UK customers. Every day a total of 10.5 million transactions are done on mobile banking apps. Customers can now pay for their coffee or tube ticket through contactless payments; £2.32bn was spent in this way in 2014. The industry is also working with the new Payment Systems Regulator whose job it will be to make sure the UK payment system stays world class.
As competition intensifies, financial firms must act to attract and retain customers. Some firms have started to offer additional benefits like cashback or vouchers if you take up their products; Santander’s ‘123’ current account gives cashback on household bills. Others focus on keeping the doors open, such as Metro bank whose branches are open seven days a week, or on rewarding loyal customers like Direct Line who offer existing customers 10% off any additional products they take out. The financial sector is also cooperating with the Financial Conduct Authority in a project called Project Innovate to help new, innovative products and companies that can benefit customers get to market.
Good customer service can be a deal breaker for customers when choosing their finance provider. The good news is customers are more upbeat. Banks and building societies have climbed into the top 4 on customer satisfaction for the first time since 2009. First direct, a telephone and internet-based retail bank, is ranked top.
Markets only work if people can change providers easily if they think they can get a better deal elsewhere. Progress is underway in some sectors – the 7-day Current Account Switching Service (CASS) has seen more than 1.7 million people change their bank since its launch. And to make sure customers know what’s on offer, price comparison sites help people find the best deal. MoneySuperMarket say that half of Britons could save £217 on their car insurance if they compare what’s out there. Credit rating agencies like Experian help people assess the state of their finances when making a move or managing their money. And for those that aren’t happy, the Financial Ombudsman Service is on hand to settle disputes.
Promoting financial inclusion and education is the industry’s responsibility too. Firms therefore participate in financial education in schools helping students get to grips with managing money and entrepreneurial finance skills that can help later in life, such as the Fiver Challenger run by Virgin Money and Young Enterprise, which aims to inspire enterprising attitudes in young people. For those struggling to access conventional finance, help is at hand. For instance, FloodRE, a partnership between insurers and the government, aims to guarantee consumers living in flood-prone houses to get affordable insurance.