Stop switching. Start connecting!

It’ll soon be faster and easier for bank customers to overcome their habitual reluctance to switch current accounts. But forget the mechanics, argues DAVID GUY. The big challenge for banks is to make change positively enjoyable.
 
Later this year the Payment Council will make switching current accounts faster and easier than ever in an attempt to introduce more competition to the UK banking market. Under the new system, more customers may at last feel encouraged to try out other banks, something many have feared to do until now.
 
“The service will make switching a current account faster, easier and for the first time it will be backed by a guarantee,” says Adrian Kamellard, Payments Council Chief Executive. “It will be backed by a multi-million pound campaign to make sure that customers are aware of the new service.”
 
As part of its research into winning over and retaining current account customers, integrated marketing agency Billington Cartmell (BC) has made some surprising discoveries – notably that banks could benefit from dropping the concept of  ‘switching’ accounts to focus instead on long-term relationships with customers.
 
‘Switching’ might sound innocuous enough. But it turns out to be a loaded term in banking. It can make people feel as if they’re merely swapping like-for-like; going through the uncertainty of moving bank accounts without any perceived upside. Using ‘switching’ within campaigns to attract new customers can perpetuate the dissatisfaction that comes with any short-term relationship. Offering £100 cash-back deals only reinforces the sense of superficiality.
 
What current account customers want is a more equal and understanding relationship, we’ve found, one that’s more emotional than anything currently on offer. People also want banking relationships that last. ‘Switching’ suggests a short-term fling to people holding out for long-term financial monogamy. Nobody likes the idea of being reckless with money.
 
A great deal of wider industry research shows that banks might benefit from a renewed focus on greater customer engagement. Only one-in-three bank customers is currently loyal and satisfied (June 2013 TNS Financial Fidelity Report). On average, just half of customers have any attraction to their bank beyond the functional, and only utility companies suffer less customer satisfaction than banks, TNS finds.
 
Yet bank customers are not switching banks, or at least not in any great numbers. Only 13% of people surveyed by TNS switched bank in the last five years, compared with more than twice that number who moved their gas or electricity supplier.
 
Until now, just two significant ‘push’ factors have tended to persuade people to move accounts – either a customer is unhappy with the service, or the bank has made errors. Only then is the customer potentially open to a new bank. People have avoided changing bank accounts more often due to lack of perceived benefits. Many people don’t mind their bank, although they may not love it. To be honest, they might not even really think about it that much.
 
Apathy and fear combine to trap people with their banks. The so-called ‘hassle’ factor deters many customers from moving. To help with this article, we ran a workshop with staff (marketing practitioners and bank customers) to test behaviours and barriers associated with bank account switching.
 
Focus group members reported that they worried about the financial pain of the switch going wrong. Many felt they barely had control of finances at the best of times and feared that a replacement bank would be no better.
 
They also said they’d like to hear about simple, clear and attractive banking service basics. Research shows it could make sense to communicate this to customers with a new-start proposition, rather than via ‘switching’ and short-term incentives, which carry little weight with the public.
 
Banks could borrow marketing techniques from other service brands that offer long-term and mutually trustworthy relationships.  Examples include car insurers that send out tailored renewal invites every year. People also warm to schemes such as O2 Priority and Orange Wednesday that go deeper than just one-off incentives, instead providing on-going tangible benefits for customers.
 
Convincing customers to take advantage of the Payment Council’s changes will be a significant challenge. Most current account holders believe it’s easier to be unhappy with the bank you’ve got than to switch. They also see little point in switching in a market lacking differentiation.
 
So how in the new regulatory landscape does a bank change its behaviour and make more people connect to them? Research shows it’s not through the default £100 cash incentive. This is a sticking plaster on service, which just encourages churn and switching.
 
Banks need to go deeper and find longer-term emotional brand and service reasons to connect with customers. Reaching consumers on an emotional and rational level is key. Every day, customers are bombarded by marketing. Overcoming the multi-channel noise requires individual relationships with prospects and customers.
 
Products or services need to be humanised and personalised. Buying something isn’t an intellectual process of saying: “This could be useful”. It’s saying: “I really want this.”  Using digital technologies, improvements in segmentation and understanding of the life stages of consumers will help brands to reach consumers on this emotional level. Too much of retail banking is something that people believe they have to endure. Enjoyment often does not even figure in the experience.
 
And there are many tools available to marketers now to help accelerate purchase, including the rapidly evolving discipline of behavioural economics. We subscribe to the power of this discipline and have studied and applied key principles for clients to help their customers make better-informed decisions.  People can’t be put into a standardised model of rational behaviour.   We’re just not rational all the time. And smart marketing practitioners have been intuitively applying a brand of behavioural economics for many years.
 
Our ‘Brand Immediacy’ approach cuts through the clutter of people and brands to accelerate purchase and leapfrogs the expected paths to purchase. This approach seeks people-focussed brand solutions in whichever time, place or channels will simplify customers’ lives and their relationships with brands.
 
Amazon describes ‘customer delight’, a happiness that exceeds mere satisfaction by fulfilling each customer’s unseen yet essential needs. This will be a challenge for all of the companies of the future, including retail banks: to ensure the customer feels cherished and safeguarded. If Amazon created a bank, would customers switch because they can connect better with this ‘delightful’ brand?
 
Techniques exist that can create happiness for banking customers. Research shows us that this type of success can lie in the ‘little’ things that make such a difference to a customer’s experience. For example, making online applications user-friendly to make customers feel wanted.
 
Making websites easy to navigate encourages visitors to hang around. Customers place a high value on the more ‘emotional’ aspects of the banking experience –  service quality, friendliness of branch staff and opening hours. Nobody wants to walk into a bank branch to be greeted by disinterested youths chatting amongst themselves.
 
Customers want respect. They want a long-term relationship where they can be rewarded for their loyalty. Consider how Sky makes an effort to be on first name terms with its customers. Think about the loyalty programmes that have worked so well elsewhere in the retail industry.
 
From September, we believe there will be a real opportunity for bank customers to stop switching accounts and start connecting. The word ‘switching’ itself is a barrier. It puts all banks on a level playing field. For example, a much more positive way to frame change could be around ‘clearing up’ or ‘sorting things out’, often associated with difficult or uncomfortable emotional situations. Harnessing the emotional clarity and positivity gained from clearing the decks and making a fresh start could make change feel much more worthwhile.
 
And the key will be to ensure the experience of starting afresh with a bank is as quick, clear and simple as possible.  Making the experience user-friendly will begin with how the transition is framed, extending to the language and user experience of the move itself. Just as September may encourage customers to make a fresh start in their banking arrangements, it also brings an opportunity for banks to explore deeper, more personalised and longer term customer relationships.