By Matt Brown
To retain its position as a leader in terms of hard customer numbers and profit, Metro needs to revisit its challenger values. It needs to refresh them for a new decade, aligning them with customer needs today, rather from 10 years ago when it first launched and redefine how customer data can inform and drive the business forward.
What is the definition of a challenger today? Not in the Rocky Balboa sense, although of course there’s a metaphor there if you’re willing to look for one. Even in business, it seems to personify the plucky outlier, shaking up convention, bringing novelty and, hopefully, changing things for the better.
This is certainly what seemed to happen when the first of the challenger banks, Metro, emerged to put a rocket under the decades – sometimes centuries – old UK retail banks. Like the branchless, mobile-only banks that came after, Metro seemed to offer customer-friendly banking. No delayed transactions pushing the unwitting into unarranged, expensive overdraft, and none of the whiff of scandal that has tainted most of the incumbent banks at one stage or another over the years.
That was until Metro started looking suspiciously like the establishment and suffered its own financial crisis with a £900 million accounting error and criticism of its leadership.
But despite this, Metro remains a strong leader in disrupting the financial services sector, and it has the potential to create positive opportunities for growth and transforming its connection with customers. For a start, it continues to top the customer satisfaction league tables. It ranks top for overall service, just beating First Direct, the only bank belonging to the traditional cohort and even then, only just as it is also a new bank in relative terms and itself online only. However, it’s worth noting that the Competition and Markets Authority (CMA) that ran the poll does not count the app-only challengers such as Monzo or Starling who have shaken the market up further still and who continue to gain users hand over fist.
To retain its position as a leader in terms of hard customer numbers and profit, rather than just sentiment (although also an important metric, just not enough on its own) Metro needs to revisit its challenger values. It needs to refresh them for a new decade, aligning them with customer needs today, rather from 10 years ago when it first launched and redefine how customer data can inform and drive the business forward, putting clear water between in and old-style banking that still fails to satisfy.
The banking customer 2020 onwards
SYZYGY conducted extensive research among financial services consumers to discover their key attitudes to banking today and going into the next decade. It uncovered a landscape where customers are happy to share data with institutions, provided there is something of real value in return. And that value comes in the form of transparency and ease of use, and anything that consigns traditional banking ‘trickery’ to the past.
Driving customer satisfaction
30% of UK consumers say that their experience of handling financial affairs would be improved if the information were easier to understand and free of jargon. This quick win is even more attractive to younger consumers, where 38% of 16-24 year-olds want a plain English approach. Nearly a third (31%) also want just the process of tracking down their financial details simplified, saying their experience would be most improved if they had access to all their services in one place.
The results of applying this kind of data is two-fold. Firstly, understanding what customers want from their service and offering solutions will help to stabilise the customer base, and secondly, it can help to reduce costs. By unleashing this data in the right way, it will lead to positive business transformation. Its insights can highlight where is best to pool money, what will work most efficiently and give banks like Metro a lever to control the flow of cash within its wider infrastructure. Orientating around the customer means more than working with new technology. It involves a fundamental reset of strategy, culture and process across all departments from marketing to sales and HR.
But when it comes to securing that data from customers, it is a myth to suggest that since data scandals like Cambridge Analytica that UK consumers are unwilling to share data. More Brits are happier to share their data with financial companies (55%) than with health and wellbeing (52%), technology (48%), retail (48%), entertainment (45%) and automotive companies (43%). Men were generally more willing than women, with nearly a fifth of the former (19%) content to share data compared to 13% of women.
However, the more personal the data, the more reticent consumers are about sharing it with financial services companies. Their professional lives are open books for 52% of consumers but that falls to 42% when it comes to family, medical (41%) and spending behaviour (41%).
Ultimately, this is great news for the likes of Metro because financial services companies that can optimise the customer journey and make best use of customer data to anticipate needs, reduce friction and maximise conversion are on the way to developing a sustainable competitive advantage. However, they need to gauge what kinds of data their customers are comfortable sharing and their ‘elasticity’ to share, if they don’t want to undermine trust or drown in their own data lake.
Financial services customers are neither naïve, nor underinformed. Few may themselves be experts, but they understand how their data relates to the services they receive and generally, they approve.
Customers aren’t impressed by banks touting the technology itself, but rather what it can do for them. So, software like AI and machine learning didn’t score highly, but related innovations that then delivered a higher return on savings were top of consumers’ wish lists with 49% saying this was most attractive.
Real-time, up-to-date information on personal investments came second with 34%, as well as real-time notifications on transactions and account balances. With the latter already a reality for most, particularly among challenger bank customers, there seems little barrier to transferring this service to the investment product range.
Improving account management was next ranked, with 31% anticipating that lower management fees would be possible due to automation and 25% felt they should be receiving more relevant calls, emails and text messages.
Tailored investment recommendations came last on the list at 19% which is surprising. This is highly valued in other sectors like ecommerce and retail which suggests that something is still getting lost in translation when it comes to explaining more complex financial instruments.
In the end though, it pays not to over-think the value exchange. Our consumer research showed that cashback was the favourite incentive, encouraging 58% of customers to part with their data. Second was discounts or cheaper premiums for insurance at 54% of respondents. Related offers came in at 43% while ‘member privileges’ such as exclusive access to events was popular with 41%. Money management ranked the least exciting at 36%, telling because this is already a significant feature of the app-only bank accounts. It is difficult to tout something as an exclusive benefit when it’s seen as a hygiene factor for many competitors.
[su_pullquote]Transparency is key. The customer may be well-informed but there are still areas of data collection and its use that seem hidden behind the veil and it is the collection of more peculiar data points that can set the customer relationship off-kilter.[/su_pullquote]
Managing growth through transparency
While consumers are increasingly willing to share data, its collection must neither be gratuitous, nor murky. Transparency is key. The customer may be well-informed but there are still areas of data collection and its use that seem hidden behind the veil and it is the collection of more peculiar data points that can set the customer relationship off-kilter.
The most scepticism is retained for social media influence. What are you collecting about me? What does my interaction say about me? The drop in willingness to share family data can be linked here, with consumers unsure of just what sort of picture institutions are building about them through their unwittingly unguarded posts. The solution would seem to be hyper-transparency.
When Metro first arrived in the challenger market, it grew at an exceptional rate. In this first phase of growth, managing it required having messaging that aligned with what the customer was looking for. Now, at the heart of managing its next phase of growth is transparent change. This involves knowing its current capabilities and resources, identifying where it is lacking and formulate a plan that will propel it towards a successful transformation into a customer-focused organisation. To do this, Metro needs to evaluate its internal processes, use customer information to determine where to channel the growth- all while being fully transparent about the data it collects and where that data is used.
Investing in the future
Ten years is a long time in digital banking, and perhaps as the granddaddy of challenger banks, Metro needs to refresh its approach considering new consumer attitudes. Customers have seen what can be done by applying the right data to the right algorithm. Expectations of money management as standard, real-time transactions and even investments and AI-driven financial solutions are rising.
That Metro has branches where other app-only banks – and increasingly some traditional, so-called retail banks – do not is still a bonus. It handily bridges the gap between the standard banking customer and the early adopter. But it must strive to remain current – or even futuristic.
What does that future look like? App-only banks face their own challenges so they’re not about to sweep the board just yet, but Metro can learn from their approach to using customer data ‘out in the open’ so to speak. All those data points that usually work in the background to score interest rates or select products are now scrolling down users’ mobile screens in the form of spending analysis and saving advice. Expenditure data that used to tell an underwriter that someone was a higher mortgage risk using some very shadowy calculations now appears on screen as ‘cut down on the takeaway lattes and you could save £2,000 a year’. Although perhaps best to ignore the stainless-steel challenger take on the iconic Black Amex. A nice headline-grabbing gimmick but of little customer value in the long run.
Metro Bank already enjoys that peculiar position of having a foot in both worlds. It is a retail bank in the traditional sense with branches and tellers and all that gives comfort to customers who value that sort of thing. On the other hand, it is a fully digitised, customer experience-led challenger bank with the access to data and the expertise to deliver highly personalised, innovative financial instruments that can only improve customers’ financial health. It’s not a case of restoring its position alongside the other challengers, it’s about redefining its place as the leader.
Matt Brown have 18 years’ digital marketing experience. He oversees delivery and execution at SYZYGY to help clients drive measurable impact from their investment.