Will The New Banks Innovate?


In my previous post I talked about how far behind our banks are in embracing mobile technology and social media, at least compared with some other banks in Europe.

In a similar but more wide ranging way, Chris Skinner at the Financial Services Club blog has recently lamented the fact that the new entrants into the banking market, Tesco Bank, Virgin and Metro Bank, are essentially launching with a traditional branch-based approach to banking.

Where’s the new bank without branches?
Where’s the next First Direct?
Where’s the solely mobile phone-based bank?
Answer: there isn’t one.

It’s a good point.

Whilst the added competition in the banking market will definitely be welcome, there hardly seems to be much innovation being pushed in the banking industry, if these new banks are anything to go by.

That’s as long as you don’t count “good customer service” and “not ripping off customers” as innovation which in some cases it could be said to be for some of our exisiting banks.

The post also looks at the expected number of branches per bank by the end of 2011, with the Post Office having the largest number; “In December 2009, the UK Government encouraged the Post Office to offer full financial services, including full banking services. This is under review right now, with the Post Office’s main retailing opportunity will be in the masses and underbanked, rather than premium banking, due to the fact they are typically full of people buying stamps or getting pensions and other benefits paid.”

It’s not particularly surprising that the new banks are relying on a network of branches to gain market share, (although I’ve previously moaned that Metro Bank is only looking to open branches in London) but with more and more of us happy to bank online (and indeed, carrying out most of our banking tasks on the web), it’s surprising that at least one of the new entrants is focussing on their online experience.

Whilst they’ll all no doubt have reasonable online presences, none of them seem to be putting the web at the heart of their proposition.

Creative Commons License photo credit: TheTruthAbout…

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