SHOOSMITHS: A DIGITAL DREAM? DOING BUSINESS AT A DISTANCE
Legal News | 23/07/20
Doing business at a distance – customer engagement and retention.
Recently published figures show that the battle for new customers is tilting in favour of financial services businesses prepared to engage with their customers at a distance.
One particular and instantly recognisable lender attracted most account switchers for the first time as ‘customers desert high street rivals’, the headline read in a leading broadsheet at the time (covering the last three months of 2019). It is likely to be even more pronounced in the last six months. Interestingly, part of the blame attributed to the switching away from established high street rivals was attributed to the rules changing in respect of overdrafts, and the way in which charges and rates are to be shown (a simple annual interest rate), this is despite the FCA saying that that seven out of ten overdraft users will be better off or see no change. So, what is really driving customer engagement and retention?
Perception is key
At a recent event hosted for a group of distinguished general counsel for fintech businesses, we debated the notion that the real art in customer engagement is based on the provision of consistently reliable technology. Providing a slicker digital experience, which includes cutting down the complexity of setting up an account or accessing accounts (less clicks they call it) and directly through impressive and intuitive apps. Promising instant access, anywhere, and the feeling of ownership and satisfaction. It’s the financial services equivalent of a good box set, promise of wherever and whenever. Less of the faff.
Our discussions also included a debate on whether the regulations or the regulator (let’s call it the ‘law’) is a real barrier. Again, it was unanimous that while there was a disparity between requirements for different products, the legal challenges were the same for all businesses. We all have the same rule books. So, the law is a challenge, but not a differentiator. Perhaps just the interpretation given to it.
Having attracted the customers, retention is built around the constant evolution of the customer interface. Interestingly, monthly charging is on the up as fintechs have realised that there is a premium in customer experience. It is not just about having the tech in place, but continually improving it, and ensuring its consistent performance. All the signs and research also show that people are not just interested in their own experiences, but those of the wider customer base too. Customers look for constant brand reassurance that their product is market competitive and simplifying their lives.
“If every aspect of a consumer’s financial life is based on their smartphone, it is tech first then product second,” another participant in our roundtable commented.
And so, a fascinating debate turned into a real eye opener. The fintechs are targeting those people who want the immediate satisfaction of a well presented and packaged product, in a time saving way. Delivering services in the moment when needed, and in a way that makes us feel reassured and pleasantly disconnected from the fact it is a financial transaction at all.
National Head of Financial Services