Helen Edwards on Branding: How banks keep you in line

Helen Edwards
Helen Edwards

Despite awful service, inertia stops people moving their accounts. Is a change imminent however?

Here's something to think about next time you're in the queue at the bank. What is the strongest force in consumer behaviour? You'll have plenty of time to ponder, with the dozen or so people in front of you, and just the single teller at the grille. The rest have all gone to lunch, even though the bank managers know from long experience that this is the busiest time of the day.

As you shuffle forward an inch, you silently vow to switch banks - but you won't, because the strongest force in consumer behaviour is precisely what will keep you where you are. It is inertia; the dead-weight pull that dampens decisiveness, and masquerades, to anyone foolish enough to interpret it this way, as customer loyalty.

UK bank bosses must sit back in wonderment at the power of this mysterious force. The big four give the impression of trying to do everything they can to lose their tiresome retail customers, so that they can concentrate on the profitable business of invest-ment banking.

Yet they can't shake them off. It's like the plot of the classic Mel Brooks film, The Producers, where the theatre needs a sure-fire flop to avoid an audit, and mounts a musical production of the tackiest script it can find, only to see the crowds flock in.

In the banks' recent scripts are some absolute shockers. They are accused of maintaining 'secret' accounts for high-profit savers only. They have fought their customers and the Office of Fair Trading (OFT) in the Supreme Court to retain the right to charge £20 for sending a letter.

Most recently they have been hauled over the coals for mis-selling PPI. Small wonder that net promoter scores for two of our biggest banks are negative, which means that people are more likely to damn their bank than recommend it.

Yet these same customers stay put. According to a 2008 OFT study, the mean average time that people stay with the same bank in the UK is more than 10 years, with churn rates among the lowest in Europe. Meanwhile, management consultancy Bain & Company, in a recent briefing report, described British retail bank consumers as 'disgruntled hostages'.

How bad do the banks have to get before people finally overcome the force of inertia and seek out better service elsewhere?

One person interested in the answer is Vernon Hill, who is seeking to revolutionise British high-street banking with his Metro Bank formula, blasting through category norms as he did with his hugely successful Commerce Bank in the US.

Hill's approach is to create attractive retail environments where the product happens to be banking. Premises are called 'stores', and are open seven days a week. Accounts can be created in 15 minutes, bank cards and PINs are provided straight away and loans are approved on the spot. To reduce queues, the stores have coin-counting machines, so traders don't hold up everyone behind them with their heaps of small change.

Just six Metro Bank stores are operational so far, so Hill won't have made a dent on the likes of Lloyds and HSBC just yet - but the ambition is for 200 by 2020. With a little help from technological advances that could make account-switching a simpler process, and a bit more self-inflicted damage by the big four, who knows, maybe Metro Bank will be the one that jolts us out of our stubborn passivity.

- Helen Edwards has a PhD in marketing, an MBA from London Business School and is a partner at Passionbrand, where she works with some of the world's biggest advertisers

30 SECONDS ON ... ALTERNATIVE RETAIL BANKS

- Metro Bank is not the only alternative offer for 'disgruntled hostages' seeking a more customer-oriented banking experience.

- First Direct Founded in 1989 and owned by HSBC, First Direct is known for customer service and claims one in four of its account holders joined after a personal recommendation. However, after 22 years it has only just over 1m customers.

- The Co-operative Bank Established for more than 100 years, The Co-operative Bank has suffered from the 'not enough branches' barrier to growth.

Consumer acceptance of internet and telephone banking should have caused its customer base to soar, yet it now claims a little more than 4m customer accounts - out of a market of more than 70m.

- Nationwide 'Proud to be different', Nationwide has taken the fight to the big banks since deregulation allowed building societies to compete with them in 1986. In some ways, though, Nationwide now looks dangerously similar to them, with its recent branch closures coming under scrutiny.

- Virgin Money Aims to give customers a better deal - but does not have a current account in its product line-up. News that it was showing interest in 600 branches being sold by Lloyds suggests that might change.

Discussion

Before commenting please read our rules for commenting on articles.

If you see a comment you find offensive, you can flag it as inappropriate. In the top right-hand corner of an individual comment, you will see 'flag as inappropriate'. Clicking this prompts us to review the comment. For further information see our rules for commenting on articles.

comments powered by Disqus
Brand Republic Jobs

subscribe now

Latest

Leaked document shows Nokia to be rebranded as Microsoft Mobile
Nike lays-off hardware staff in move that casts doubt on future of FuelBand
Greenpeace says save the bees or humans will die
What brands need to know about changes to VAT and online downloads in 2015
Jimmy Savile victims urged to claim compensation in new ad campaign
UKIP launches biggest  ad campaign and stirs up 'racist' accusations
Apple boss Tim Cook provides voiceover on ad touting firm's renewed green commitments
John Lewis walks consumers through its history to celebrate 150 years of business
Waitrose boosts content strategy with 'Weekend Kitchen with Waitrose' C4 tie-up
Hottest virals: Cute puppies star in Pedigree ad, plus Idris Elba and Fruyo
Amnesty International burns candles to illuminate new hope
Toyota achieves the impossible by calming angry Roman drivers
Tom of Finland's 'homoerotic' drawings made into stamps
YouTube reveals user habits to appeal to 'older' marketers
Ex-M&S marketing chief Steven Sharp consulting at WPP
Wolff Olins reveals new CEO after Apple poaches Karl Heiselman
Glasgow offers £30,000 prize to best digital idea for 2014 Commonwealth Games
Google's revenues surge but shares drop as it grapples with transition to mobile
Facebook beats Twitter to most 'marketing friendly' social media site crown, says DMA
Fableists believe children like Finn should be outdoors enjoying life
Homebase, Baileys and Camelot join the line-up at Media360
MasterCard renews Rugby World Cup sponsorship to push cashless message
Lynx unleashes £9m 'Peace invasion' campaign
Social Brands 100 Youth: Pizza Hut most social youth brand in UK
Cheryl Cole is wild and arresting in new L'Oreal work
Morrisons told not to show alcohol ads during YouTube nursery rhymes
O2 head of brand Shadi Halliwell departs after 23 years at company in restructure
Tesco hit by further sales decline as it turns to digital Clubcard and social network
Branding guru Wally Olins dies aged 83
Duracell short film captures epic Transatlantic voyage