For a challenger bank that uses fintech as a differentiator there are only so many customers it can win. Furthermore the customers that they do win probably have another account, and this is most likely with a traditional bank.
When I look at what’s on offer from the challenger banks I must admit I get excited about the digital services. Some of the functionality available on a mobile today is fantastic.
But after a while it all blends in to one as other banks does the same. And usually if it was not enough of a tease to get me to switch banks anyway. In the meantime my traditional bank has really improved its digital services.
But give me a financial incentive I am all ears. When I read that TSB was offering higher interest rates to customers to make up for the problems caused by the IT disaster, I considered whether I should switch to TSB. I mean the system will get fixed.
This is the challenge for new banks. The traditional players will catch up in tech terms. Okay they have huge cost bases, which are a disadvantage to them, but the new banks aren’t exactly using their low cost base advantage to offer higher interest rates.
I would be interested to hear what people want from challenger banks. Is the new tech enough to win you over or do you want more financial incentives?
With the seven day switching service in place to make it easy for consumers to change current account suppliers, if people have a good reason to change current account providers they will. But so far take up has been very low.
It will be interesting to see what impact the TSB IT problems will have on the banks customer numbers. I expect the interest rate offer might convince people, that were thinking about leaving, to stay put.