Raisin UK Co-founder: Why customers are still dragging their feet on savings

Banks need to do more work on personalisation to overcome savings inertia, says the co-founder of Raisin UK.

Kevin Mountford has worked in the retail banking world for over 30 years, including a 10-year tenure as Head of Banking at MoneySupermarket.com. He co-founded PBF Solutions in 2013, which was later acquired by Berlin-based Raisin.

Today Raisin UK serves as an onboarding solution for account providers and functions as a marketplace for consumers looking for savings deals.

Kevin notes that during lockdown savings ratios hit record levels as people “squirrelled away” a lot of money. While spending on everyday items was reduced, Kevin cites Raisin research which found that many people realised they didn’t have emergency funding.

“Unfortunately that rainy day came quicker than expected,” he says.

With the Bank of England acting on high inflation by increasing the base rate to 4% at the time of writing, Kevin says that there has been a rejuvenation of the cash savings market as banks compete for deposits.

For savers, this has meant a range of deals including higher paying longer term bonds and a rising yield from easy access accounts. However, Kevin says there remains substantial inertia in the market.

People have “a lot of plates to spin” and are “not normally as active as we like to think.

“You could argue some banks play on that.”

More complicated than price

While the higher rates are driving some of the movement, Kevin says consumer choices are more complex than this.

“I think we still stick to what they know very often with the big banks and yet with the Financial Services Compensation scheme, kind of lesser known, more exotic brands, that money is just as well protected as it is with the Big Four or Big five.”

Kevin argues that consumers are not just looking at price – other factors such as brand and product can play a role here.

“Price clearly does play a part, but it’s not the be-all and end-all.

“What we see on our platform that whilst the top pay rates do well in terms of the percentage that they secure, the spread is quite lengthy. So you can see on a given day half a dozen to a dozen entities taking some level of flow.

“That by default shows that people are shopping around for different reasons.”

Where offers are similar, “the devil you know is always easier.” People will tend to opt for “a brand that has shown that it has credibility and history over several years”.

However, he says younger consumers may be drawn more to “those organisations they think are a bit cool and a bit quirky”. Customer experience also plays a role, with mobile-first experiences tending to be more popular.

Easy access accounts are proving popular as some are now offering in the region of 3% rates. Notice accounts fill a useful niche, Kevin says, combining the ability to access cash with the promise not to be flippant about doing so.

Better communication

Kevin says banks need to do more work on personalising language and tone of voice.

While challenger banks tend to be more focused, bigger banks often try to be all things to all people.

He argues that communications need to flex and adapt based on customer needs, demographics and life stages.

“As opposed to inundating somebody with lots of products, you try and help them through a decision tree of tailoring the right product to the need at that particular time.”

For this more personalisation is needed, with language and voice flexing and adapting based on customer needs and demographic.

He adds: “So I would ask the industry to be more flexible, use personalisation and data to try and tailor propositions.”

Acknowledging that people lead busy lives, the industry needs to work to give people the confidence that they are being offered the best products and services at a given time.