UK consumers are turning their backs on the big brands in favour of competitors

UK consumers are turning their backs on the big brands in favour of competitors

Nearly two-thirds (64%) of UK current account holders would prefer to bank online or via a mobile app than via telephone or in-branch banking (29%), according to a recent survey by YouGov and business process specialist Genpact.

The research, Changing customer expectations and the demand for new service models in banking, found that the trend is being led by the so-called ‘internet generation’ – those aged 25-34 – also known as Generation Y.  This age group is most likely to prefer banking online or via a mobile application (75%) and the least likely to prefer to visit a branch (11%). This compares to 34% of people aged 55 and over who prefer to visit a bank branch.

The study also found that 29% of the 2,337 respondents surveyed had not used their bank’s call centre service. According to Genpact, that is evidence of the increasing need for self-service as opposed to bank-staff services.

“This survey is a clear signal that the industry must change its approach and begin to direct resources away from call centres and branches and towards better, more effective facilities for customers to do their own banking,” said Hugh Morris, Genpact’s vice president of banking, financial services and insurance, Europe. “It shows unequivocally that consumers are moving away from the ‘branch and telephone banking’ model and demanding a more ‘virtual banking’ services model.”

The gradual decline of branch banking is not new, and has been underway for many years. Research published by property advisory firm Jones Lang LaSalle in August found that half of Europe’s bank branches may need to be cut by 2020 to keep pace with trends such as diminishing customer loyalty and rising usage of online and mobile technology.

“Fundamentally, this survey has revealed that British banks must rethink their service delivery models,” added Morris. “The legacy, intermediated operating models dating back to the 20th century that are still in use today need to be overhauled in order to cater to the banking preferences of the next generation who want direct access to do their own banking.”

Separate research by IT firm GFT Technologies in November found stark differences between countries in terms of how they viewed the future of banking. The biggest users of mobile banking were in Spain and Brazil, where 63% and 62% respectively said they would use it. Germany was the most cautious about the new technology, where only 26% of respondents would use it. 58% of Germans responded ‘no’ to mobile banking, while only 11% of people in Spain thought the same. More people in the US (47%) said they would use mobile banking than in the UK (38%). The report was also notable for its prediction that one billion people would be using mobile banking by 2017.

In the UK, all major banking institutions already offer a mobile banking app. HSBC rolled out a revised app in September that added the ability for customers to make bill payments and transfer funds between HSBC accounts, while Nationwide Building Society has won awards for its offering, which offers all of the above as well as the ability to view and cancel direct debits and regular payments. Barclays has its own Pingit mobile app, which allows users to make peer-to-peer payments via mobile. Pingit has been downloaded 1.8 million times, according to its own figures.

In emerging markets, mobile banking is often seen as a means to connect with ‘unbanked’ customers that have no access to traditional banking services, especially in rural areas. Morris added that there are regions in India and Africa where banking transactions can be carried out via SMS, smartphone or tablet without the need to ever visit a branch. The rise of well-known mobile payment schemes such as M-Pesa in Kenya and India and others has become a fixture of industry discussion on the topic.

Back in January 2013, telecoms research firm Juniper Research predicted that mobile banking would hit one billion users by 2017. Meanwhile in September 2012, a report published by technology provider Avanade found that one-third of UK consumers expected to do all their banking using smartphones by 2020, and two-thirds expected everyone to be using mobile banking in some capacity by 2017.