Recently I got a lesson in the banking industry, and ultimately how banks make money. In many ways, it comes down to taking your money and then doing something with it; as well as offering you extra products. In a period of long-term, low interest rates, the ability to generate more income by moving up interest rates has been limited. The tight grip of regulation has forced banks to make reparation on PPI and other mis-sold products; it’s also stopped them from launching other products. Plus they have to have more capital in reserve for those rainy days that seem to come far too often these days.
Against this, we see consumers demanding more online services – and looking to banks to operate like retailers do. Quick, easy to use, responsive and innovative. There’s also new entrants to the market, like MetroBank, who put service first. Plus there are companies like PayPal that are taking on more of the payments market, and even Amazon are offering small business loans to customers on their marketplace. In this environment, how can the banks respond?
So what can organisations do to compete? And use their most valuable assets – their people – to give them a real advantage?
Purpose – Mission statements in the sector tend to focus on ‘maximising shareholder value’. Well, as a customer, this simply says to me that you want to get as much as you can out of me. And, as a colleague, how does it make me do my job even better? Create a purpose that re-connects with customers and colleagues. Do that and the shareholders will get their value.
Innovation – Typically organisations employ a person to do a particular job. But now the technology exists to crowdsource innovations from across the business and from customers. But it doesn’t just generate ideas; it engages and inspires everyone in what could be rather than simply what is.
Service – A service culture comes from getting everyone behind it, from the way leaders communicate with and support their own teams, to the way great service is recognised by colleagues as well as customers. The service opportunity should really not be underestimated – for example, in a MoneySavingExpert poll in 2014, Barclays, NatWest, HSBC, RBS and Lloyds Bank were voted the five worst banks for service. Barclays came last with only 38pc of its customers saying its service was “great”. 26% of its customers rated it “poor.”
Of course, there are other big challenges for the banks to sort out – technology in particular. But it’s amazing what can be done with the goodwill, support, ideas and commitment of a talented workforce…