Are banks doing enough to help people?

Twelve years on from the glob­al finan­cial cri­sis, you might antic­i­pate bankers have devel­oped high­er lev­els of empa­thy with the British pub­lic. After all, in 2008, it was the tax­pay­er who foot­ed the bill for prop­ping up fall­en giants such as Roy­al Bank of Scot­land and Lloyds Bank­ing Group. 

In ear­ly-2020, as coro­n­avirus start­ed to wreak hav­oc on the UK econ­o­my, many were seek­ing pay­back. They want­ed to see banks under­take a moral duty to sup­port soci­ety and help indus­tri­al sec­tors that had been hit by the pan­dem­ic.

“The UK gov­ern­ment bailed out the banks to the tune of £500 bil­lion in the 2008 finan­cial cri­sis. The UK tax­pay­er took the brunt of this and arguably is still pay­ing for it today,” says Richard Skel­lett, founder of char­i­ty Dig­i­tal Anthro­pol­o­gy.

“Despite this sup­port, I would argue the banks have lit­tle or no rela­tion­ship with their cus­tomers. Banks have lost their way, start­ing with remov­ing author­i­ty from bank man­agers.”

The view that banks owe some­thing to the British peo­ple has undoubt­ed­ly become more wide­spread over the past decade. Bene­dict Ire­land, head of expe­ri­ence at Splen­did Unlim­it­ed, is among them.

Banks have lost their way, start­ing with remov­ing author­i­ty from bank man­agers

Hav­ing worked with HSBC exten­sive­ly, he believes the banks that have invest­ed in dig­i­tal tools in the years lead­ing up to the pan­dem­ic are ulti­mate­ly those able to help the most, par­tic­u­lar­ly giv­en the increased dig­i­tal migra­tion of cus­tomers since the start of the out­break.

“Banks should have a moral oblig­a­tion to help cus­tomers cope finan­cial­ly,” says Skel­lett. “They need to have a ‘human under­stand­ing’ approach. This means enabling peo­ple to bud­get bet­ter, man­age their bills and main­tain their mort­gages.”

Are banks getting better at supporting customers?

Despite this, those who have been work­ing in part­ner­ship with the banks in recent years say while atti­tudes with­in these organ­i­sa­tions have shift­ed – they do want to help – their sys­tems and tech­nolo­gies have lim­it­ed their abil­i­ty to respond ade­quate­ly to the issues pre­sent­ed by the pan­dem­ic.

“Banks have a gen­er­a­tional oppor­tu­ni­ty to tru­ly sup­port cus­tomers through an unprece­dent­ed cri­sis, but years of inac­tion on creak­ing infra­struc­ture is thwart­ing best inten­tions to pro­tect lives and liveli­hoods,” says from Simon Wil­son, direc­tor of glob­al pay­ments solu­tions at Icon Solu­tions, which has been work­ing with HSBC and Lloyds Bank­ing Group, among oth­er well-known Euro­pean bank­ing giants.

Wil­son says the banks are doing every­thing they can to sup­port peo­ple who have been hit finan­cial­ly by COVID-19, but the speed of their response has been under­mined by lack­lus­tre dig­i­tal inno­va­tion in the years lead­ing up to the pan­dem­ic.

“At a time where cus­tomers have nec­es­sar­i­ly embraced dig­i­tal plat­forms and need per­son­alised, imme­di­ate and reli­able ser­vices to meet their unique and rapid­ly chang­ing cir­cum­stances, lega­cy sys­tems that are inflex­i­ble, expen­sive and inhib­it inno­va­tion just no longer cut it,” he says.

Trans­for­ma­tion must be a pri­or­i­ty, but this is eas­i­er said than done. “With cus­tomers need­ing sup­port now and inter­nal resources under pres­sure, trans­for­ma­tions that have his­tor­i­cal­ly been risky and take years are a hard sell,” says Wil­son.

What’s holding banks back from digital transformation?

So why are banks so slow to embrace dig­i­tal trans­for­ma­tion? And has this lack of trans­for­ma­tion in the years pri­or to COVID-19 harmed their abil­i­ty to help soci­ety now?

Fab­rice Gout­te­broze, man­ag­ing direc­tor of Sir­ma Group’s S&G Tech­nol­o­gy Ser­vices, says the indus­try is “noto­ri­ous­ly change averse” because of its laser-like focus on trend analy­sis and mod­el­ling.

“The entire ethos of the indus­try is pred­i­cat­ed on the assump­tion that analy­sis, and mod­el­ling based on expe­ri­ence, are key suc­cess fac­tors for a bank,” says Gout­te­broze. “This, by far, trumps inno­va­tion and change. As a result, it tends to get caught and paral­ysed by unfore­seen events.”

Giv­en the wide­spread crit­i­cism of the banks for not trans­lat­ing inno­va­tion into social action, it is easy to for­get that three years ago the Com­pe­ti­tion and Mar­kets Author­i­ty out­lined the Open Bank­ing pro­gramme. The project was designed to free up the data held by banks to stim­u­late inno­va­tion, enhance com­pe­ti­tion and allow new chal­lengers into the mar­ket. It was also sup­posed to lead to an explo­sion of new ser­vices.

There is some evi­dence that this has worked, how­ev­er. Non-bank enti­ties, which com­pete with the lega­cy high street bank­ing cohort, have stepped up dur­ing the pan­dem­ic, offer­ing indi­vid­u­als and busi­ness­es speedy access to loans, new accounts and pay­ment ser­vices.  But, cru­cial­ly, there has been lim­it­ed help for those with the great­est need.

“There has been no short­age of new mon­ey man­age­ment and invest­ment apps, but pre­cious lit­tle for oth­er busi­ness sec­tors or peo­ple who aren’t already afflu­ent, sophis­ti­cat­ed investors,” says Sara Korch­maros, chief com­mer­cial offi­cer at retail tech­nol­o­gy plat­form Recash.

“As a result, the orig­i­nal vision for Open Bank­ing – to extend the ben­e­fits to oth­er sec­tors – has remained large­ly unful­filled.”

Other ways that banks can help

While this assess­ment of Open Banking’s suc­cess may be jus­ti­fied, it does not tell the full sto­ry of inno­va­tion across the UK bank­ing sec­tor more broad­ly. In real­i­ty, banks have been help­ing soci­ety in dozens of oth­er ways.

“There have been some great exam­ples of banks sup­port­ing their cus­tomers dur­ing the pan­dem­ic, offer­ing mul­ti­ple mort­gage hol­i­days, remov­ing over­draft fees, keep­ing branch­es open and even pro­vid­ing helplines to pro­vide expert help,” says Kam Chana, prod­uct inno­va­tion direc­tor at Temenos. “These are all valu­able, but more can be done.”

Gre­tel, a com­pa­ny that spe­cialis­es in reunit­ing indi­vid­u­als with cash in accounts they have for­got­ten about, says one step would be to raise aware­ness about the £50 bil­lion in assets that is cur­rent­ly scat­tered through­out the finan­cial ser­vices indus­try unclaimed.

“Over 20 mil­lion peo­ple aren’t aware of the dor­mant assets they have sit­ting in for­got­ten accounts and invest­ments,” says Dun­can Stevens, the company’s chief exec­u­tive. “Imag­ine the impact if peo­ple could be reunit­ed with that mon­ey.”

While there is a “moral imper­a­tive on banks to sup­port the glob­al econ­o­my”, Stevens says the require­ment should be broad­er. “The respon­si­bil­i­ty to sup­port lies with all finan­cial ser­vices providers to make acces­si­bil­i­ty to this mon­ey as quick and sim­ple as pos­si­ble in light of the finan­cial impact of the pan­dem­ic,” he says.

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