Over eight million UK banking customers will soon embark on a very unusual journey. As a result of the enforcement of EU competition law and the government sale of Northern Rock assets, many customers are expected to transfer their banking relationships from one provider to another. Given the sheer number of people impacted, the customer experience is sure to be a hot topic before, during and after migration.
Lloyds Banking Group and Royal Bank of Scotland will transfer over seven million customers and 950 branches to new providers before the end of 2013. For RBS customers, the move to Santander was agreed back in 2010. Lloyds customers will follow closely behind, with the more recent announcement that The Co-operative Bank is the preferred bidder for the ‘Verde’ branches.
These movements do not represent the full extent of change for the UK banking customer. In November, last year, the Chancellor announced the sale of 75 Northern Rock branches and one million customer relationships to Virgin Money. Often associated with a ‘market challenger’ philosophy, does the change mean customers are about to notice a significant difference in the way they experience banking?
Some would say that the impact on customers will depend on what they want to get from their bank. No doubt there will those who take the view that “here comes a new bank, same as the old one”. Others will have many questions. Understanding why they are in the ‘divested group’ will be one line of questioning, while the future state of complex product holdings may be a priority for others. And what of customer groups with dormant accounts or long-term low touch products? They may simply react in surprise on first receipt of a newly branded communication.
To ask or not to ask is not the only question. Another key area of focus will be the branch channel itself, with Virgin looking into the potential of railway station branches and The Co-operative Bank’s access to its own large existing retail footprint. Some reports indicate current accounts will remain steady on transfer to the new provider with savings accounts proving the most likely area for customer switching, post transfer. Perhaps the only point of clarity is that there is great uncertainty as to how affected customers will respond.
Leading organisations will look to maximise the opportunity to create a differentiated experience for their new customers. Acquiring banks have the data, freshness of product and regulatory backing to deepen their relationship with these new customers. Critical factors in their success will include:
- customer journey mapping to identify ‘moments of truth’ at which loyalty and advocacy can be built
- best practice communication methods, including digital, face-to-face and telephony, for a smooth multi-channel transition
- ensuring transferred accounts are retained in the period immediately following migration while new customers become familiar with their new provider’s systems, processes and communications
- a cross-sales strategy, both across retail banking products and into other banking relationships e.g. business
- robust and timely methods for capturing the voice of transferred customers to ensure they are heard and not simply counted.
If they deliver on these success factors, acquiring banks should be able to benefit from a rare opportunity to transform their customer book.
By Ryan Dawson, Executive Advisor in the UK