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Banking CIOs, your customers are the CEO

Mike Altendorf

Banks need only to look at the high street to see their future in black and white, or rather black or red. BHS, Toys R Us and House of Fraser are just some of the great British brands leaving empty shop fronts up and down the country. And if the banks don’t watch out, it’s looking likely that they will be next.

Just like department stores, who thought their customers would never switch to Amazon or ASOS, the banks laughed in the face of the upstarts and the startups. They dismissed FinTech and DevOps, ignored successful digital consumer channels in other industries and didn’t make their customer’s experience the number one priority.

However, this is exactly how the challenger banks, Monzo, Atom Bank and Starling, are making a splash, as well as the big banks that are thriving, like HSBC with First Direct. They’re fanatical about customer service and are driving it forward with new technologies, and now no one can argue it’s just a passing fad. The other banks must catch up, or they’ll go the way of the struggling retailers. Size alone will not guarantee survival; it’s not possible to be too big to fail. It’s those that embrace technology and agility, and those that work for their customers as if they were the CEO, that will prevail.

As a worst-case scenario, take TSB and their calamitous IT failure in April 2018. They did not allow for burst capacity at peak times during the migration, and the app couldn’t cope with its own popularity. They did not use lean techniques to continually improve their services, and the priority for those in charge seemed to be self-promotion rather than the customer’s experience. After six weeks, the data transfer still wasn’t delivering as promised and they earned themselves an investigation by regulators the FCA and the Bank of England’s Prudential Regulation Authority, and thousands of lost customers.

The wave of fraud attacks that followed created a disastrous double-whammy for the bank, with 70 times more attacks than normal. Smaller IT failures plagued TSB throughout the summer culminating in customers being locked out of their accounts again recently and finally, the CEO, Paul Pester stepped down September 4, 2018 after being heavily criticised by the Treasury Select Committee.

Yes, TSB needed to do the data transfer, but they did it all wrong and did so in a spectacular and public fashion. TSB called themselves a challenger bank but behaved like a legacy bank, embracing the worst of both worlds. With the tech rather than the customer-focused approach that they took, even if it all went well, TSB would still have had two days of downtime for their mobile app – unacceptable in this day and age. I am sure the grim irony of the fact that the way most customers would have contacted the help centre for help was through the mobile app was lost on most of the management team.

None of these issues is new. It happened to NatWest, RBS and Ulster Bank in 2012 when a seemingly simple software update caused a massive meltdown affecting millions of customers. Six years later, it is astounding that banks have not learned the lesson. They may have thought they could get away with it then, however, FinTech has come a long way in that time, and challenger banks are now truly challenging the status quo. Many banks have some modernising to do not just to remain competitive, but to remain in business, because frankly, consumers expect, nay deserve, better.

However, there is hope. The key to survival for the banks is simple: your customer is your CEO, and it is technology that will drive their experience forward. If they can innovate, update their business models, and put customers at the heart of everything they do, then they, too, will thrive. It means a total redesign of operating models and working practices: cloud adoption, seamless integration, incremental innovation and implementing tools that allow new products to go to market in weeks, saving months of time and reams of cash. It means perfectionist-fuelled customer service driven by technology, not in spite of it.

Keep customers at the very heart and soul of the business, rather than cross-border management politics or a devoted marriage to legacy systems and ways of working. Embrace the secure cloud, like Google, Apple, Facebook and Amazon, rather than hide in silos. Live the brand and customer value proposition, like the challenger banks. Scale incidentally; start small, low risk and build from there with cloud technology and ‘headless’ architecture, like ASOS. Take the best from FinTech and capitalise on their size and the massive amounts of data possessed by megabanks. Invest in analytics and performance measurement to understand precisely what customers experience.

The future is bright for those banks willing to learn from mistakes, innovate their way to the top and take the best from the neo-banks and the challengers, whilst retaining their brand power and customer base. They need to put their customers and their experience first. If they don’t heed this final warning, it’s easy to see what will happen. They only need to look at the British high street. They will go the way of House of Fraser or Toys R Us. They will fail.

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About Mark Chillingworth 253 Articles
Mark Chillingworth has over 20 years of journalism and editing experience across all media platforms including online, live events, print magazines and television.

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Nick Reeks

Interesting perspective Mark. However, although it’s clear that the context of customer experience needs to be taken onboard, is the complexity of legacy transitions not beIng underestimated? Not looking to excuse the handling but are there not areas where the wider business team should perhaps participate in change events not just blaming IT or IT solving all the “unknown unknowns” before they occur?

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