CMA retail banking investigation – hand power back to the consumer
The final report of the Competition and Markets Authority’s (CMA) retail banking market investigation, concludes that older and larger banks do not have to compete hard enough for customers’ business, and smaller and newer banks find it difficult to grow. This means that many people are paying more than they should and are not benefiting from new services.
Mike Blanchard, head of customer intelligence solutions, SAS UK & Ireland, said:
“Governing bodies have once again reaffirmed their commitment to protecting the interests of customers by handing power back to the consumer.
“Despite nearly 60% of current account customers staying with the same bank for more than 10 years, consumer confidence in financial services remains low. As a result, we are seeing a new army of entrants emerge that have developed a customer-centric approach to capitalise on the perceived lack of care and attention that the finance sector has historically shown.
“To demonstrate compliance with the principles of treating customers fairly and protect their market share in what should, in theory, be a more competitive landscape then all financial institutions need to work harder to retain and attract customers.
“To maintain market share and foster an environment of trust with existing and prospective customers, banks need to develop financial products that use the wealth of insights available to drive a more personalised service that offers customers the right financial products. For example, targeting consumers that prefer short-term lending with products that offer lower levels of interest rates or special discounts and promotions.
“Our research with the centre for economics and business research shows that adoption of big data analytics in retail banking will reach 81% and boost the sector by £15bn up to 2020. By using data analytics, retail banks can tailor current accounts and banking services so they’re more in line with a particular customer’s interests, demographics, location and account history. This will enable them to boost consumer confidence, grow margins and maintain market share whilst reassuring the regulator that they are acting in the best interests of customers.”