New rules allowing customers to switch bank accounts within a week will put pressure on financial institutions to review the way they treat both new and existing customers.
And it is about time that banks put customers at the heart of the business, according to Syed Hasan, founder and CEO of ResponseTek.
The new rules came into effect on September 13 and are part of a government review that aims to break the dominance of the top three banks.
Customers could save themselves money by switching banks, and the promise of a seven-day hassle-free turnaround is attractive.
“Financial institutions can improve their customer experiences and become more customer-centric. Banks need to continually monitor their customers – once a month is not good enough,” explained Syed.
“If customers are switching banks then service is a key component. It took 12 years for this to happen but it is very positive for customers and organisations,” he added.
Syed said banks should be continually monitoring their customers and focussing on keeping their existing customers by improving customer experience, instead of spending money on new marketing campaigns to attract new customers.
His company is ResponseTek which designs and sells a range of innovative customer experience management software.
‘Key is engagement with employees and we offer several strategies to help businesses. This is an opportunity for banks to truly look at customer retention and what they offer in terms of customer experience,” said Syed.
Bank customers are notoriously reluctant to move because of the perceived difficulties involved and a feeling that rival lenders are no different.
Research by YouGov, commissioned by business services provider SAS suggested around 5 million UK current account holders will switch banks in the next year as a result of the changes. It found that 2 in 5 customers had not switched in the past because they believed the process to be time-consuming although 1 in 4 said they didn’t think their current bank offered the best customer service.
Research suggests consumer switching between retail banks could increase significantly from historic levels of 2 to 3 per cent.
Savvy consumers can now scour the market for the package that best suits them and banks will now have to work hard to differentiate their offerings.