Reshaping the landscape
Lloyds Banking Group (LBG) and Royal Bank of Scotland (RBS) will transfer more than 7 million customers and 950 branches to new providers before the end of 2013. For RBS customers the path is clear, with a move to Santander agreed in 2010. The transfer of LBG customers follows close behind, with the recent news that The Co-operative Bank is the preferred bidder for the ‘Verde’ branches.
In addition, there was the Chancellor’s announcement in November 2011 of the sale of 75 Northern Rock branches and 1 million customer relationships to Virgin Money. With a recognisable UK brand associated with a ‘market challenger’ philosophy, are customers about to see a significant difference in the way they experience banking?
The impact on customers will depend on their combination of product holdings. No doubt some will take the view that “here comes a new bank, same as the old one.” Others will have many questions. They may want clarity on why they are in the ‘divested group’ or information on the future state of complex product holdings. Other customer groups, for example those with dormant accounts or long-term low touch products, may simply react in surprise on receipt of a newly branded communication.
Another key area of focus will be the branch channel itself. For example, Virgin is looking into the potential of railway station branches. Meanwhile, The Co-operative Bank has access to a 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 seek 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 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 customers become familiar with their new provider’s systems, processes and communications
- A cross-sales strategy, encompassing both Retail Banking products and 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 benefit from a rare opportunity to transform their customer book.
By Ryan Dawson, Executive Advisor in the UK