Money Matters: Key takeaways from our London Tech Week event

You’ll find all our latest views and thoughts here on the world

Money Matters: Key takeaways from our London Tech Week event

New trends and disruptive technology are continuously shaping the future of the financial services industry, and big legacy brands are changing up their traditional models to deliver better experiences. But are they hitting the right spot?

Somo recently hosted a panel discussion to explore how shifting consumer behaviour and the growing expectation for best-in-class experiences have affected the financial services sector. Our event, Money Matters: Are digital-only brands the future of financial services?, welcomed a number of high-profile panellists to discuss the changing role of the bank branch, the new focus on financial education and financial inclusion, and what the future holds.

Here’s what we learned.

 

Modern banking for all

Presentation by Guy Opperman, The Secretary of State for Pensions & Financial Inclusion

Guy Opperman_Money Matters_LTW_Somo Global

 

There are still significant amounts of people with limited access to mobile and broadband, and therefore no access to online banking or banking apps. The question is: how do we take the amazing work that we’re doing in fintech, and apply it not just to London or other modern cities, but those based in rural and remote communities? And how can the government assist brands to innovate and be the disruptor they want to be, while ensuring they leave no one behind?

 

"It can’t be enough that you are simply a disruptor creating a change in the modern world. It has to work for the entire United Kingdom.

It is those who are the poorest and the most marginalised in the UK society who have the least access to the banking services that you and I take for granted. And it is our job to try and ensure that there is that access."

– Guy Opperman, The Secretary of State for Pensions & Financial Inclusion

 

As listed by Guy, the financial sector includes the following five areas:

  1. Day-to-day banking,
  2. Savings,
  3. Mortgages,
  4. Investment (stocks and shares), and
  5. Pensions – an area that’s still heavily based on paper and is the furthest behind when it comes to innovation.

 

He suggested that, in a few years time, one of the digital banking providers will overtake all of the above sectors and integrate these into one holistic offering.  

 

Understanding the status quo

Presentation by Ross Sleight, Somo’s CSO

Ross_LTW Money Matters takeaways

 

Over the last few years, the financial industry has witnessed significant disruption. From the changes across the traditional sector, where as much as two-thirds of UK branches have closed in the past 30 years; through to the potential of open banking; slowly moving towards a cashless society; and the big question on whether our future will be dictated by neobanks and Big Tech.   

Ross emphasised that the change in financial services is no longer driven by banks, but by customers. The rise of neobanks and their outstanding adoption rate shows that customers want to see change. Revolut has as many as 4 million users, and Monzo has just recently hit the 2 million milestone. But an important question is: is that what all customers want?

 

Key findings from Somo’s exclusive consumer research

We recently asked 1,000 UK consumers what they think about their banking providers, and the results surprised us. The outlook may not be as gloomy as some brands are painting it – people feel mostly positive about their banks, and while the majority (62% of respondents of all ages) prefer to interact with their bank digitally, it looks like branches still have an important role to play.

 

Consumer views of their primary bank providers are positive:

Somo_LTW_Ross Sleight_views on primary bank providers

 

But to meet modern consumer needs, bank branches must adapt. While our research showed a strong desire to make branches more transactional – with higher levels of self-service capabilities, more staff and shorter queues (i.e. areas where digital can easily take over) – there is still a lot of people who want to get advice by talking to a real person. And it’s not just the older generation.

 

Branches still have a vital role to play:

Somo research_Ross Sleight_LTW_branches are still vital

 

According to Ross, it’s not only branches that need changing. Digital banking will also need to up its game, as it needs to become a safer, easier, more supportive, and more personalised environment.

 

"Traditional banks need to break down the internal silos, both between their physical and digital offerings, as well as their different products. People want to see more fluidity and integration among their offerings.

They also need to take a cue from the very customer-centric work done by the neobanks to provide products that really resonate with their audiences. But on the other side, neobanks need to start thinking about how they appeal to the different life stages customers are going through and how they build awareness and trust amongst the mass majority – an established factor of traditional banks."

– Ross Sleight, Somo’s Chief Strategy Officer

 

 

What’s the future of banking?

Panel discussion

Our panel discussion was moderated by Lea Nonninger, Fintech Research Analyst at Business Insider Intelligence, and featured a number of industry experts:

1. Matt Ford – Chief Product Officer at Tandem

2. Sean Gilchrist – Chief Digital Officer at The Co-operative Bank

3. Steve Hicks – Head of Product, Digital Platform at Lloyds Banking Group

4. Rebecca Crook – Chief Growth Officer at Somo

5. Ross Sleight – Chief Strategy Officer at Somo

panel_LTW_Money matters_somo

 

Tech giants are entering the scene – what do financial services think?

It’s the likes of Google, Facebook, Apple and Amazon that are shaping what customers want – and now that they’re entering the financial services space, it’s those companies that are posing a real threat to established financial institutions. They offer unparalleled experience, flexibility and ease of use that have not yet been matched by big legacy brands. "Fintechs and neobanks are a healthy threat, but I think big tech companies just come from a very different angle," said Sean Gilchrist from the Co-operative Bank; "The thing that worries me the most is the way they use data to engage with customers. And this must become our focus: how can we do it just as easily as Apple does." 

 

Delivering a holistic experience is key; but so is the focus on customer

Our panellists agreed that while there are consistencies in how people spend and save money, individual differences mean everybody has very distinct preferences when it comes to engaging with their bank. Those who deliver a more holistic proposition – one that caters to all the different customer types and their big life moments – will win the race and offer a better quality of service.

"Providing that full financial picture was a starting point for Tandem. You need to start thinking about how do you deliver a holistic experience, so that fragmentation doesn’t create more complexity, but actually allows you to deliver great products while serving all these different needs."   

– Matt Ford, Chief Product Officer at Tandem Bank

 

The role of the bank branch

Current financial services providers are relatively good at delivering the transactional element of day-to-day banking. But we need to do more. Banking providers need to create a more humanised experience, have conversations with their customers and help them make more informed financial decisions – whether through physical or digital touchpoints. As Sean Gilchrist from The Co-operative Bank said: "As we move into the world where transactional banking is commoditised, the role we have to play is going back to what we were good at back in the day – being part of the community, helping people and making their money work better for them. "

Somo’s research showed people still value bank branches, so we need to start thinking about the ways to deliver a better in-branch experience and build end-to-end solutions that solve the key consumer challenges and educational gaps. How do we harness the digital world and the insights on people’s financial behaviour and translate it into the physical environment? "We have to make sure we don’t just deliver a transactional environment that emulates what digital banks already offer, but create something that is useful for all members of the society," advises Ross Sleight.

 

Digital: NOT just for millennials

Somo’s research busted another myth – digital is not just for millennials. People across all ages (including those over 55) showed a preference to interact with their bank digitally. What’s more, Matt Ford from Tandem provided a rather surprising peek into their core customer base:"There is a myth that neobanks equals millennials. But it’s not true. The average age of a Tandem customer is 41. Oldest customer is 97. The distribution is staggering. We don’t over-index in major metropolitan areas; 75% of our customers are based outside the major metropolitan areas."

 

Is the future cashless?

There was a general consensus among our panellists that the UK has a long way to go before becoming a cashless society. There is still a big chunk of the society that wants to use cash. As noted by Steve Hicks from Lloyds Banking Group:

"It’s about offering people a choice. Some people will use cash as a way to control their spending, and we haven’t really invented a digital version of that yet.  We’re also still not offering enough services to small businesses to ensure they can have a cashless ecosystem."

But while the panellists agreed that cash will continue to play an important role in our near future, Steve added:

"When you add in what you can do with your data and how AI can sit on top of it, the power of becoming cashless means that customers could get a better outcome as we start to provide more intelligence around what you’re spending and automate all that information."

 

With new tech solutions coming into play and new trends shaping the future of banking, financial services providers have an interesting ride ahead to ensure they deliver change that helps them retain their positive outlook. And aside from boosting their digital journeys to enhance options to self-serve, building digitally-enabled physical spaces is a necessity to deliver better experiences for those who prefer the high street.

 

 

To access Somo's full research findings and learn more about what customers want from banks, download our white paper here.

If you’re interested in learning more about the topics discussed above or to find out about our upcoming events, sign up to our newsletter or contact us here.

Author: Natalia Bochenska

Life at Somo

Contact Us

London Office

18th Floor Portland house
Bressenden Place
Victoria
SW1E 5RS

+44 (0)20 3397 3550

Bristol Office

1 Temple Way
Bristol
BS2 0BY


+44 (0)117 214 0910

Get in touch