Is it finally time for your local bank branch to be virtual? 

Banks are some of the oldest business institutions in the world.

Given how long they’ve had to modernise, why, then, are they so bad at keeping up with the ever-changing business landscape?

Exacerbated by the on-going coronavirus pandemic and resultant economic recession, digital “challenger” banks have been stealing market share from the incumbent banks of the UK, who increasingly rely on government bailouts from 2008 to today. 

13 July 2020   \\ Finance                                  Author: Alexander Boast

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Poor data infrastructure continues to plague the major banks, such as the TSB/Lloyds data migration disaster when customers of one could see the financial details of others, so challenger banks have the advantage here, because their relative newness has allowed them to benefit from established data governance regimes.

Consequently, more agile and data-driven financial institutions are able to offer an improved customer experience.

One of the major benefits often cited for physical bank branches is the ability to get to know and converse with the staff. This benefit is typically espoused anecdotally by older customers who thanks to the virus will be seeking to avoid physical contact – the solution? Livechat.

The power of technology has empowered all banks to create a seamless virtual experience that could never replace but certainly complements face-to-face activity.

Combine this with that fact that challenger or “digital” banks are also able to offer:

Interest free overdrafts – all credit cards, major or minor, in the UK were quick to offer no interest on overdrafts and credit cards alongside the governments furlough scheme and other benefits arising in response to the pandemic.

Business and personal help available – many challenger banks pride themselves on the support they give Small-to-medium enterprises and entrepreneurs and can arguably offer an improved, more personal level of support.

Payday loans – most payday loan lenders should be viewed with suspicion, but that does not mean that established traditional and digital banks don’t offer them online.

With more and more headlines referencing the closing of bank branches and the loss of jobs,

should we be more understanding that this is the natural result of our changing approach to banking? Whilst research shows that less affluent and smaller communities prefer to use cash, is it time for them to embrace the digital experience and the various benefits such as cashback and loyalty points? 

Whilst it is important for banks to try and offer as inclusive options as possible, when taking into account circumstances such as the coronavirus, isn’t it time that we modernise for the benefit of the many, not the few?

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