So, it was with this positive mental attitude that we attended Wired’s Smarter conference from 13th – 15th October this year. And there was one talk in particular that we were keen to see: Anne Boden, CEO and Founder of Starling Bank.
Earlier this year we launched our small business banking report “Open Minded Banking” and we work with Mastercard, Cash Plus and Fiserv, so the financial services sector – particularly challenger banks – are a frequent topic of discussion in the virtual corridors that our strategy team now occupy.
Deftly interviewed by Natasha Barnal, Business Editor of Wired UK, Anne provided some fascinating insight into how the pandemic has impacted Starling, their competitive attitude and her thoughts on where the industry is heading. We’ve paraphrased a gripping twenty minute conversation (Anne is a firebrand if you haven’t seen her in action!) and the result is five conversation starters to arm you for your next big challenger bank chinwag down at The [Socially Distanced] Kings Arms:
We have entered the land of opportunity for many of the service providers who previously might not have had an overly-enamoured customer base. Banks, telcos, utilities companies – all of life’s essentials have become more and more relied upon. But this is because their customers are experiencing trouble and strife.
There is a huge opportunity to prove your worth and to grow your customer base, but it has to be handled delicately.
For customers who were on the fence about using digital services, this is the watershed moment in which the choice was taken out of their hands.
The pandemic has forced through years, perhaps even decades, of technological behaviour change in a matter of weeks and months. Plus, it’s commonly known that recessions can act as a catalyst for innovation and evolution and this time around is no different.
It’s a bit scary and a bit weird, but it’s the perfect moment to be launching new, digitally-driven products and services.
New product features (such as card freezing and minimal fees) were what the original wave of challenger banks built their name on. However, features are easily imitated and much of that first mover advantage has eroded pretty swiftly.
Fortunately this isn’t something that concerns Anne. As she succinctly put it:
“They [big banks] can copy lots of the things that we do, but they’re building on existing technology – so it increases their cost base instead of reducing it. We have lots of new features and get great Net Promoter Scores, but we’re doing this on new technology and therefore at a lower cost base. We’ll always pursue new features – and the big banks will copy – but our profitability and cost-base is where we’ll beat them.”
So good technology and business fundamentals will win out, it all sounds so simple doesn’t it? But when product features are imitated so often, it also puts the impetus on building a distinctive banking brand to gain market share.
The fact that many challenger banks look very similar and lack distinctiveness is something we wrote about back in January of 2019.
The spread of the Covid-19 virus could be the death knell for cold, hard, potentially contagious cash – at least in the UK economy where contactless and mobile payments are ubiquitous. And the use of plastic cards themselves could decline as the use and sophistication of mobile wallets only grows. Coupling this ‘evolution of tender’ with the impact of further branch closures, and all of a sudden the traditional banking landscape looks very different from how it does now.
The customer journey, the key tenets of a brand experience, and the way that people see money are all being turned on their head. How does a banking brand manifest itself now?
Now obviously Anne might be slightly biased on this very last point, but we have to say that we buy into the theory that this is the time when challenger banks come of age and where innovation shifts up a gear into serious competition. With mass user adoption of digital services, vastly improved customer experiences, and a tech stack that empowers rather than encumbers – the power balance is shifting into the hands of the banks that are rewriting the rule book.
So there you have it, five big themes and every one of them a good reason to pause and rethink how you currently view modern business banking. Whether you’re a challenger bank, an incumbent, or even just a human – it is an uncertain time for all and we’re intrigued to see how it all shakes out.
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Click here to read our “Open Minded Banking” report.
Or click here to get in touch with our Strategy team and let them know what you think about their ramblings.