Splendid Unlimited

Is it do or die for the high street bank?

Is it do or die for the high street bank?Splendid's Benedict Ireland

August 15th 2016

This week, the government division CMA (Competition and Markets Authority) has published a directive intended to ensure that banks take advantage of technology in order to do the hard work for their customers. But what does it all mean for customers in the real world? Benedict Ireland, Head of UX at Splendid Unlimited has been looking into the detail.

There are three main components of the directive:

Banks must implement ‘open banking by 2018 (PSD2): This means that banks must open up their banking platforms in order to enable a customer’s data to be viewed in places other than the banks digital and physical estate.

Banks must be open about their quality of service: A consistent measure across banks will rate the bank’s performance against competitors so that customers can make more informed decisions about the service they are getting from their bank.

Banks must send periodic ‘event-based’ notifications: When banks change the specification of an account type, or change T&Cs, they are required to let the customer know. They will now also be responsible for highlighting when overdraft charges will start for a missed payment, and will be required to provide a ‘grace period’. These notifications are also required to contain updates on quality of service.

The government has been increasing pressure on the banks to perform better for several years now, with measures such as changing the rules around account switching and increasing the number of available banking licenses in the UK.

The account switching legislation means that your chosen incumbent bank must handle most of the hassle of switching your account, dealing with the outgoing bank to switch your current account in around two weeks.

These measures in isolation aren’t hugely impactful, but when combined they set the scene for some truly disruptive banking opportunities.

We’ve seen similar legislation have underwhelming impact in other sectors, such as utilities, and our work with SSE has highlighted where opportunities for market disruption are still largely unexplored. Google themselves are skirting round the periphery and accumulating a number of companies such as learning thermostat makers Nest, who are well-placed to give them a foot into the energy sector. But the energy sector still has very much a watching brief as margins get ever tighter.

While many high street banks are actively countering government measures, the tide of change now feels both inevitable and exciting.

Many new ‘challenger’ banks are waiting in the wings, with contenders such as Atom, Starling and Mondo grabbing both headlines and the imagination of early adopters. It seems customers aren’t so opposed to internet-only banks if the waiting lists of new customers are to be believed. Once these banks obtain full banking licenses, it can be only a matter of time before they start to weaken the stranglehold of the major high-street players.

All provide immediate and accurate financial data to customers, but also have truly great user experience built into their apps. Clearly apps, and the digital estate, are of paramount importance for internet-only banks, and this incredible acceleration of technology is exactly what the government are after. And of course, it can only be good for the customer.

Consider that many high-street banks can’t provide this level of immediacy and response in their core data services, it’s clear that panic is setting in. Not only does the government demand it, but more importantly the customers do.

But is this really true disruption? We believe not. The products being offered (current accounts, savings accounts, ISAs etc.) are still the same products the high-street banks offer, so not what we would describe as challenging the current model of finance.

The interesting extension of this is how we can REALLY disrupt the market, by reimagining models of finance in ways that are currently not being provided by either traditional banks or challengers.

If the high-street banks continue to do nothing more than meet the letter of the legislation, the danger is that they will become purely safety deposit boxes, repositories for your money as customers turn to others for financial services, products, advice, management and that personal relationship new market entrants can provide. Where your money is won't actually matter. As with all relationships you have to put the effort in, it can't be purely one sided where the onus is so heavily on the customer to do all the legwork.

It might be painful, but grasp it and these changes bring with them a massive opportunity to become truly relevant and connected to customers lives.

Footnote: At Splendid Unlimited, we have worked with a number of leading Financial Services clients and as both experience design professionals and as consumers we are extremely excited about the possibilities. For further information, thoughts, comments or assistance with your own products and services, please get in touch.

Benedict Ireland


Benedict Ireland

Head of UX


0207 395 4800


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