What do you want from your bank in the future?
Will you ever trust your bank again? Or are you excited about paying bills on your mobile phone? Join our online debate...
Saturday 18 September 2010
Britain's banks were back in the firing line this week. The Financial Ombudsman Service reported that nine out of 10 complaints that were rejected by banks in the first six months of the year had to be overturned in the customer's favour. The picture painted is of a banking industry which doesn't listen to its customers and doesn't care about such old-fashioned qualities as good service or value for money.
Coming three years after the collapse of Northern Rock and two years after Lehman Brothers went bust, it's obvious that trust in our once-proud banking institutions is at an all-time low. Is there anything banks can do to regain our trust? What can we expect from them in the future and how will it improve the way we bank?
The Independent is launching a major online debate on the future of banking next week – at www.independent.co. uk/bankingfuture – with guest blogs and videos from a series of banking bigwigs and leading consumer figures. Bankers set out their vision of the future, while consumer campaigners explain what they expect.
Leading the online debate is Peter Vicary-Smith, the chief executive of Which?, who was instrumental in forming The Future of Banking Commission earlier this year. The commission made a series of recommendations in June.
"Banks must be structured so that they can fail without the catastrophic consequences to their customers and the wider economy that we have seen," Vicary-Smith demands. "We believe that a key to achieving this would be the creation of 'living wills', detailing how the collapse of a bank would be managed. What's more, a new class of 'safe haven' accounts should be established with a 100 per cent guarantee, but which would only be invested in safe assets and would therefore have a lower return," he says.
"Finally, to tackle mis-selling and the sales-based culture disliked by customers and branch staff alike, banks should cease paying sales commission to front-line staff. Instead, staff should receive bonuses linked to levels of customer satisfaction, the fair treatment of consumers, and resolution of complaints."
Andrew Hagger of Moneynet.co.uk, who writes our weekly Money Insider column (p68), believes the future doesn't necessarily look so bright for banking customers. "I think we'll move even more towards a three-tier banking system where you will be able to have a basic bank account and ATM card still available for free – but if you want anything extra such as an overdraft facility you'll end up paying a monthly fee, possibly as part of a packaged account," he warns.
Meanwhile, he predicts that more well-heeled customers will be bombarded with bespoke services, for which they'll be charged a fat fee. In short, there will be still more costs and charges in the future. That's a vision that alarms many, of course.
But in return, the banks are beginning to promise us more convenience as they embrace greater use of technology, such as mobile phones. Matt Colebrook is the chief executive of the HSBC-owned online bank first direct, which was launched in 1989. He says the immediate future of banking will be driven by mobiles.
"The mobile phone has become the ultimate intelligent device, and I predict in the next three or four years it will become the predominant channel for banking services," says Colebrook. "The next generation of banking customers view their mobile phone as their information terminals, which means that businesses will have to adapt to make sure they provide their services in a format that is easy to use through this medium."
Hagger agrees. "There will be a continued move towards contactless cards and mobile banking, particularly with apps for iPhone and iPad. Hopefully, with increased technology, banks will be able to market products via text or email that are more in tune with a customer's individual financial situation as opposed to the blanket or scattergun marketing that takes place at present."
Chris Skinner, chairman of the Financial Services Club – a talking shop for bank bosses – says social media will play an important part in people's relationships with their bank in the future. "Technology is now a social channel, and banks are struggling to work out how to be social. After all, so many of them are, by nature, antisocial. Looking to the future, it is technically possible for a consumer to build their own bank using plug-and-play apps from different providers to suit their individual requirements," says Skinner. "This will be a challenge to banks, requiring them to open up their closely guarded systems and technologies as customers are now in control."
It's through social media such as Twitter and Facebook that banks will hope to regain trust with customers in the future, says Colebrook. "I have no doubt that social media will become a serious factor in customers' decisions," he says. "The big frontier for the banking industry is trust, and conversations, whether between a bank and a consumer or between consumers themselves will be absolutely key in establishing the groundwork for the industry to build that trust."
Is it ever going to be possible for Britain's banks to regain the trust of fed-up customers? The banks will clearly do whatever they can to rebuild trust, but the battle may actually be built on customer service, not technology or price, says Hagger. "Customer service as opposed to price will play a bigger part when it comes to consumers choosing a bank, especially now that complaints data is published for all to see," he says. "It will be interesting to see if the Metro Bank customer-centric strategy proves a success when rolled out on a bigger scale – something I'm sure the established high-street players are monitoring closely."
Jan Smith is managing director of the banking consultancy, The Virtual Company. She believes that the growing popularity of online banking, along with improvements in technology and security, could lead to even more bank branches being shut, alongside the proposed scrapping of cheques in 2018.
"There is a generation of children coming to the market in the next five years that has grown up in a world where virtual interaction is the norm. How important will a branch network be to these customers of the future? Will they even want to talk to a human being to do their banking?" she asks. She points to the success of online giants such as Moneysupermarket. com to suggest that banking in the future could become much more of a transactional relationship.
However, if customers still want branches, the banks would keep them. Smith says: "The banking system doesn't change by following a process. It isn't branches being replaced by telephone, in turn being replaced by online and mobile phones. It's about reacting to customers whatever they need."
Colebrook echoes that view. "When we introduced telephone banking, it was a reaction to customers who wanted a different way to access their banking. As new ways to bank mature, the industry will have to evolve to deal with the technologies."
The bad news is that new technology is unlikely to lead to cheaper services. "While new technology can bring cost-saving benefits to banks, it's unlikely these will be passed on to customers," warns Hagger.
So how will we benefit? Through greater convenience and easier ways to move cash around, allowing us to take control of our money.
Is that what you want? Add your opinion to the debate at www.independent.co.uk/bankingfuture
'It would be nice if online banking was more usable'
What do the future customers of today's banks want from their finance institutions? More transparency about charges, a more usable experience online, and more ethical responsibility, according to Joshi Eichner Herrmann, a 21-year-old undergraduate at the University of Cambridge. Here, he sets out his vision for the banks of the future.
"The banks need to be much more transparent about the way they make money and how they charge us. In the long term, no one appreciates having a great interest rate on their savings if they are hit with sudden inexplicable charges when they use their card abroad or mistakenly surpass their overdraft limit.
"It would also be nice if the banks made online banking a bit more usable
before they expect everyone to give up visiting branches. Both banks that I use have rudimentary websites that log you out if you hit the "back" button, or time you out when you go to make some tea.
"If they can't make a system which is secure without requiring us to carry around a silly little calculator-like device in our pockets then maybe they should invest a bit more in the technology. Technological advances have made lots of things we do – like checking our emails or reading the news – really easy to do on the move, but banking hasn't reached that stage yet.
"Another thing I would hope for in banking is ethical responsibility. I think the heightened awareness of social and environmental issues in recent years means that more people will demand that their bank pays attention to the impact its borrowing is having on the world.
"It simply isn't palatable in the 21st century to know that your money is helping out arms firms in South America or funding GM crops in the subcontinent, and people would appreciate more choice in this respect."
Simon's piece will be followed by five blog posts examining the future of the banking industry. Follow Banking Future on the Independent blogs.
Budget 2015: George Osborne is set to get tough with further cuts in public spending
Bargain Hunter: Our exclusive deal cuts the cost of buying foreign currency by 20 per cent
Five Questions On: GB Energy's new tariff
Simon Read: 'Taylor Swift tickets purchased on Viagogo were cancelled hours before the concert'
Bank-beating exchange rates on your international payments
- 1 Nathan Collier: Montana man inspired by same-sex marriage ruling requests right to wed two wives
- 2 People all over the world are getting semicolon tattoos to draw attention to mental health
- 3 Van driver who comforted Clark Carlisle and called 999 after suicide attempt dies age 24
- 4 James Blunt was special guest on the highest-rating Top Gear episode ever
- 5 The biggest first date turnoff has been revealed
Nathan Collier: Montana man inspired by same-sex marriage ruling requests right to wed two wives
Greece crisis: IMF was pushed around by Angela Merkel and Nicholas Sarkozy – and now it is being humiliated
'I wish the BBC would stop calling it Islamic State' – David Cameron unleashes frustration at broadcaster
Forget little green men – aliens will look like humans, says Cambridge University evolution expert
Greece crisis: The wider lesson is that it’s time to abandon this failed experiment in currencies
Girl, 7, stares down hate preacher at Ohio festival with pro-LGBT rainbow flag gesture
iJobs Money & Business
£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...
£15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...
£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....
£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...
Day In a Page
Previously two semi-detached properties, this five-bedroom home is spread over three floors with a large breakfast kitchen, orangery, office and gym on the second floor.
This five-bedroom home enjoys countryside views over the Blyth estuary to Southwold, offering flexible living space with a ground-floor annexe - ideal for use as a holiday let.
Close to the market town of Eye, this four-bedroom detached home offers a double-height living room which takes the place of the original, 19th-century, chapel nave.
Dating back to the 19th century, this four-bedroom home needs modernising. Spanning three storeys, the red-brick house has a fireplace, a small terrace and a cellar.
Just outside of Cambridge, this single-storey home offers three double bedrooms, a living room with vaulted timber ceiling and ladder steps that lead to a mezzanine study area.
This six-bedroom Georgian home is on three floors with open fireplaces, a two oven Aga, an annexe, and cottage gardens with outbuildings and a car barn.
A former coach house, Glebe Farm Stable is now a three-bedroom cottage with a double car barn, an attached office, kennels and an outbuilding that's currently used as a gym.
Located beside an impressive Victorian viaduct, this four-bedroom home has an open-plan living area that is glazed on two sides, with skylights and high ceilings.
A former furniture workshop, this three-bedroom home has high ceilings and painted brick walls, in a village setting only fifteen miles from the coast.
This five-bedroom stone townhouse features a pine staircase and an Inglenuk fireplace, double doors from the lounge give access to an enclosed courtyard.
This five-bedroom, detached home blends traditional and modern design; the sleek kitchen features a gas hob and oven set within an exposed chimney breast.
Moored in Chelsea's Cheyne Walk, this houseboat offers two double bedrooms and a teak deck that's ideal for al-fresco dining.
Surrounded by woodland, this five-bedroom manor house has plenty of outdoor storage space in the form of three converted loose boxes, two smaller outhouses and a woodstore.
This six-bedroom home is set amongst three acres of grounds. Currently a large family home, Clift Hill has potential to make a B&B or countryside retreat, subject to change of use permissions.
This Grade II-listed three-bedroom home is situated on a private road, just a short walk from the sandy beaches of Frinton-on-Sea.
Less than five miles from Malmesbury, this four-bedroom cottage comes with equestrian facilities and gardens that extend to approximately three acres.
Spanning three storeys, this late-Victorian five-bedroom farmhouse is a spacious family home with a modern interior and B&B potential.
With an original church arch, this triplex one-bedroom church conversion has a light, spacious, feel and comes with a secure off-street parking space.
This recently-refurbished three-bedroom home has bi-folding doors that lead out to a decked seating area - ideal for alfresco dining this summer.
Well-located for coastal walks and popular restaurants, this detached four-bedroom home offers views over farmland, to the Solent, the Purbecks and Bournemouth.
If you love high ceilings, school conversions like this one are bang on the money. This two-bedroom flat is minutes from Burgess Park and the foodie haven at Borough Market.
Set within a church conversion in Bermondsey, this two-bedroom maisonette combines existing features, such as original arches and brickwork, with a contemporary finish.
In the pretty market town of Bungay, this grade II-listed Mill House is arranged over four floors, offering four bedrooms and three reception areas.
This four-bedroom Edwardian home offers a combination of original features and contemporary design after a renovation by the current owners.
This four-bedroom home offers a vaulted ceiling in a breakfast room that's ideal for summer entertaining with doors that open to the patio and garden.
On the market for the first time in more than 50 years, this six-bedroom home is a project with vast potential - spread over three floors of living space.
This five-bedroom home comes with a range of outbuildings including a large barn which could be converted into a self-contained granny-flat or rental.
Surrounded by rolling countryside, this four-bedroom barn conversion comes with a self-contained, one-bedroom annexe that could serve as an office or a holiday let.
Located near Harrogate town centre, this five-bedroom Victorian terrace is arranged over three storeys while a current study serves as an optional sixth bedroom.
A ground-floor flat in a country house, located a mile from Sway; this two-bedroom home would make an ideal weekend retreat on the edge of the New Forest.
On a popular residential lane in Caterham on the Hill, this four-bedroom family home offers a secluded garden and a convenient location for local schools and public transport.
Just a short walk from Westerham green, this three-bedroom cottage has a light kitchen with exposed brickwork and double doors that lead to a south-facing garden.
In a prime spot opposite the River Thames, this one-bedroom flat has an 18sq ft reception room with glass doors that open out to a private terrace.
Set in the hills above Llanwrda Village, west Wales, this 18th-century three-bedroom farmhouse has holiday-let potential from a separate barn conversion and annexe.
This charming end-of-terrace townhouse is arranged over three floors, with two double bedrooms and a private courtyard garden located at the rear of the property.
Located in the University area, this semi-detached five-bedroom home is arranged over three floors - there's even a rear garden and off-road parking too.
Only a few minutes' drive from the charming town of Marlow, this two-bedroom home sits on the private riverside estate of Harleyford.
This detached four-bedroom home in Middleyard is arranged over two floors, with features that include a wood-burning stove and bespoke oak staircase.
In a row of eight detached Georgian residences, this five-bedroom home offers views of The Sound, Mount Edgcumbe and Cornwall from its impressive veranda and full-length balcony.
If you love cooking for friends this two-bedroom flat - complete with views of the iconic Battersea Power Station and an open-plan kitchen/dining area - will go down a treat.
Located above Grasmere village, this five-bedroom home is arranged over three floors and offers countryside views across Grasmere Lake towards Silver Howe.
This four-bedroom detached home comes with a double carport, useful workshop, garden and two walkways that offer views of the adjacent countryside.
With space for an equestrian business, a greenhouse for growing your own veg, a wine store and a gym; this five-bedroom home has all the ingredients for a country retreat.
The decked roof terrace of this two-bedroom flat is perfect for summer drinks while large windows and ample storage space make for a light and spacious interior.
Set sail for this four-bedroom farmhouse in Cowes. With five acres of land and an indoor pool, this home oozes character. There is even potential to let a one-bedroom annexe.
Surrounded by approximately 15 acres of grounds, this six-bedroom grade II-listed home has been extensively refurbished yet retains many period features.
This four-bedroom home comes with a two-bedroom cottage and commercial office, with planning to extend, in a stunning courtyard setting.
In a pretty Norfolk village, this four-bedroom family home is surrounded by landscaped gardens, with even a self-contained annex for guests.
A few miles from the seaside at Perranporth, this four-bedroom farmhouse sits amongst nine acres of idyllic grounds - including a lake and two barns used as holiday lets.
This five-bedroom home is arranged over three floors of a converted Victorian hospital, offering spectacular views of the Pentland Hills - only three miles from the city centre.