No Accounting For Young Customers

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15 November 2013
Gareth Lodge
So, whilst Robert was doing things in Vegas that have largely stayed in Vegas, I was spending time with my family during the UK school holidays. However, I may not win any awards for best dad! How did I entertain my two daughters? Cinema? Amusement park? Swimming? No. Let’s go open you both bank accounts! OK, it wasn’t quite like that, thankfully, but the net result was interesting. Some observations that struck me: #1 Choosing an account isn’t that straight forward. If you think marketing of current accounts is poor, try looking at it through the eyes of a 15 year old girl. Or, more accurately, their glazed eyes. Considering that most consumers don’t ever change banks, in terms of “bang for your buck”, surely getting this age group right (because they’re likely to be a customer for life) should be high on a banks priority? Not so, based on my observations. #2. Daughter #2, aged 13 – “Have I ever been in a bank before?” Which in turn led to a whole conversation about a bank is, and why she would need one. Again, educating young people about finance is both, in the current climate, probably a good way to head off some future challenges, but equally get time with their customers of the future who are currently spending hours every day with organisations mooted as potential competitors of the future (Google, Facebook, Apple, etc) Now these two points are worthy of entire blogs each (and indeed, may well get them in the future). But the last point is really what I want to focus on in this blog. #3. Clients will know that I’m less than impressed with the UK switching service that has been recently launched. Not that I am anti-switching, but that it isn’t addressing the problem, just the symptom. There has a slightly less sexy version of the switching service for the last 10 years, and switching rates have never fallen below 2% but have never exceeded 3% during that time. Over £750m has been spent on improving the service, and heavy advertising across all mediums, including TV, have been used to promote the use of it. The result? Switching peaked at just over 4%. Based on the unlikely assumption that this level of switching is maintained for a whole year, the service will have cost around £1,300 per additional account switched, plus the cost of switching, plus the cost of acquisition. Hardly a bargain. It would have been cheaper and simpler just to use money as an incentive. So, having said the lack of switching is only the symptom, what is the problem? Well, partly #1 & #2. Consumers, particularly younger ones, don’t perceive a bank as adding value, nor that they are different from each other. In a market where the headline price to most consumers is free, and many products are commoditised (as they are sold via comparison sites based on the price), it’s difficult for consumers to see value. But other reason, and the trigger for writing this blog, is the actual experience. On entering the bank, a newly revamped Lloyds, we were confronted by three different desks, with no clear signage as to how they differed. Four members of staff continued to do what they were doing, and not one looking to help us – fail #1. We then asked at desk #1 for help, and were sent to desk #2. Only 10 feet away but apparently soundproof because we had to start the request again. Fail #2 And the result? Could we come back next Tuesday, at 2pm? Apart from the obvious problem – school children will obviously be back at school – it really surprised me that something so fundamental as getting new customers couldn’t be handled by anyone in the branch – not just the staff under-occupied in the public area, but the other staff in the backroom. Specialist, complicated products do require specialists. But a bank account, in a bank who has just contributed to that switching programme? The moral? The issue around banking is much more fundamental. The banks need to realise that they are in the service industry as much as they are in banking or even products. Those banks that get this surely must be the ones that succeed. Oh – and the result? The Bank of Ice Watch continues, and funnily enough, in paying no interest, is only a few fractions of a % behind the majority of banks. Anyone else like to open an account? Bank of Ice Watch


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