Snatching Defeat from the Jaws of Victory: Have Retail Banks Lost their Golden Goose?RSS icon

Written by Simon Bussy on Monday 18 May 2015

'Conservatives win majority' screamed the headlines around the time I got my very first job in the financial services sector.

More than two decades later, they've done it again. So what else is the same?

Well, back when I started - and for a good few years afterwards - I always thought that the retail banks should become the dominant distribution channel for savings and investments in the UK.

Big brands. Millions of customers. Weekly interactions. Huge amounts on cash on deposit. And crucially, with some clever data analysis, knowledge of the customer, their income, their mortgage, their spending habits, their lifestyle…… their disposable income. A unique insight into an individual's financial world.

They just had to segment the database, create propositions to engage their target customers, personalise the approach, look after the customer, not get too greedy…… and bingo! The golden goose.

And yet…. it never happened. Always flattering to deceive, too slow to respond, never truly grasping the most amazing opportunity. Too many internal approval committees. Too much red tape. Too much internal (read slow, cumbersome, expensive) IT build. Too many scandals. Too much fear of the Regulator.

And the resilient IFA channel (and its derivatives in various guises) - which would've given its metaphorical right arm to have access to that client data - has continued to stubbornly not just maintain its market share, but to grow it.

With direct, intermediated and hybrid channels and customer engagement methods continuing to evolve at an ever-faster pace, typically using increasingly 'clever' and user-friendly technology, I'm now left thinking, have the retail banks actually lost their point of differentiation and the unique opportunity they once had?

As an example, advisers now no longer have to look enviously at the client information held by the banks. They can access it too, incorporating 'wealth aggregation' solutions into their own propositions. These cross-device solutions can access a client's savings, investments and pension plans and display their current valuation on a single, simple to understand screen. Nothing too clever there, of course - wrap platforms have been doing this for years. But when the solution can also access (with the client’s permission) - in real time - their client's bank account details, their detailed credit card and store card spending, and the like - and make some or all of this financial information available to the adviser (alongside some clever cash flow, tax mitigation and forecasting tools) to help them create and manage a well-constructed financial plan - we're starting to see that the big advantage the banks once had - access to data, and therefore knowledge – is being eroded.

This challenge to the banks is real and it's growing. They still hold a strong hand, of course, but……and it's a big but (certainly for some of them)…... can they change their culture, become more dynamic, less fearful, and use the data at their fingertips to truly create compelling wealth propositions for their banking customers, including those with ‘only’ £25,000 or £50,000 to invest?

Or will they continue to lose customer assets to competitors, both direct and advised, and quite simply, snatch defeat from the jaws of victory?

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