Bri­tain’s scan­dal-hit banks pre­pared for a mo­bile makeover

The China Post - - BUSINESS -

With rep­u­ta­tions tar­nished by the fi­nan­cial cri­sis and a string of scan­dals, the UK’s top banks are try­ing to adapt and move ahead by em­brac­ing mo­bile tech­nol­ogy.

Four years ago, Lloyds Bank­ing Group did not have a sin­gle cus­tomer ac­cess­ing ser­vices via a smart­phone, but to­day there are 5 mil­lion us­ing such apps — and count­ing.

“This pro­vides huge op­por­tu­ni­ties for how we serve our cus­tomers,” said Nick Wil­liams, con­sumer dig­i­tal di­rec­tor at Lloyds.

The trend is echoed across the in­dus­try. In 2015, Bri­tain’s bank­ing in­dus­try body BBA ex­pects 427 mil­lion branch trans­ac­tions for the whole sec­tor, com­pared to 895 mil­lion trans­ac­tions on mo­bile phones.

Bri­tish con­sumers are now among the top users of bank­ing smart­phone ap­pli­ca­tions in de­vel­oped na­tions.

“UK con­sumers were rel­a­tively slow in their adop­tion of online bank­ing but have em­braced mo­bile bank­ing thanks to the ease and con­ve­nience of man­ag­ing your money on the move,” said Philip Ben­ton, an an­a­lyst at Euromon­i­tor In­ter­na­tional.

“It’s un­der­stand­able that the UK re­tail bank­ing sec­tor is bet­ting on these new tech­nolo­gies.”

A re­cent Euromon­i­tor sur­vey found 36 per­cent of Bri­tish con­sumers have used a smart­phone to ac­cess bank­ing ser­vices in the past month.

That com­pares with 44 per­cent in the United States, 39 per­cent in Aus­tralia, 32 per­cent in France and 19 per­cent in Ger­many and Ja­pan.

“It’s an im­por­tant evo­lu­tion of the re­la­tion be­tween banks and their cus­tomers. This could be the fu­ture of re­tail bank­ing,” BBA spokesman Robert Watts told AFP.

Branch Clo­sures

The fi­nan­cial cri­sis, scan­dals over rig­ging the in­ter­bank and for­eign ex­change mar­kets and con­sumer chal­lenges of mis­sold fi­nan­cial prod­ucts have un­der­mined trust in Bri­tain’s top banks — and hit their bal­ance sheets.

Lloyds and other lenders have spent about £26 bil­lion (US$41 bil­lion) alone on com­pen­sa­tion for hav­ing wrongly sold Pay­ment Pro­tec­tion In­sur­ance (PPI).

The four main banks — Bar­clays, HSBC, Lloyds and RBS — still dom­i­nate the mar­ket, hold­ing about three quar­ters of all cur­rent ac­counts in 2014, ac­cord­ing to the Com­pe­ti­tion and Mar­kets Au­thor­ity.

But their hold is be­ing chal­lenged by for­eign ri­vals, no­tably the Span­ish bank­ing group San­tander, and newer es­tab­lish­ments such as Metro Bank, Tesco Bank, Vir­gin Money or up­starts like Atom and Fi­dor.

Some of these newer ri­vals have been quick to use mo­bile tech­nol­ogy to win over cus­tomers, no­tably young peo­ple ac­cus­tomed to shop­ping and buy­ing mu­sic on their phones — forc­ing the big lenders to in­no­vate.

Mo­bile bank­ing of­fers flex­i­bil­ity for users as well as a new mar­ket for prod­ucts that an­a­lyze their spend­ing to help them man­age their fi­nances, with no need for ex­pen­sive branches.

Branch trans­ac­tions are pre­dicted to fall by 37 per­cent by 2020, while mo­bile ones are set to rise by 162 per­cent, ac­cord­ing to the BBA.

There are about 10,000 bank branches in the UK, but there were al­most 500 clo­sures in 2014 as big banks stream­line their ser­vices and cut jobs.

Crit­ics say the ma­jor banks still main­tain a struc­ture that is much more ex­pen­sive than their newer com­peti­tors.

“The trans­mis­sion of data is cru­cial be­tween the bank and its cus­tomers. The big banks are too big to do that” in an in­no­va­tive and ef­fi­cient way, said Ed­ward Twiddy, chief op­er­at­ing and in­no­va­tion of­fi­cer at Atom Bank, a purely online busi­ness run by a staff of about 100 peo­ple.

There are still ma­jor chal­lenges in shift­ing to dig­i­tal bank­ing, how­ever, sug­gest­ing lenders have some way be­fore they can dis­pense with their old op­er­at­ing sys­tems.

Royal Bank of Scot­land, for ex­am­ple, has ex­pe­ri­enced a num­ber of IT prob­lems, in­clud­ing ear­lier this sum­mer, when al­most 600,000 pay­ment or­ders were af­fected. The bank rec­om­mended clients call cus­tomer ser­vices — or visit a branch.

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