My New Bank is Apple
The banking sector in the UK is changing in a direction never seen before. I have suggested before that the next entrants into the banking sector will be from somewhere altogether different. That may just be happening at a slightly faster pace than before.
The UK is dominated by 5 big banks. The number and names change but it has pretty much always been that way, that a few big banks dominate the market.
The question that is starting to be asked, and will be asked by the next generation is ‘What do I need a bank for?’. When I was younger I needed somewhere for my wages to be paid into and to have a card to use the cash machine when I needed, I also liked having a cheque book. In essence I just wanted easy access to my money.
Easy access. That is what the next generation want.
I Bank With Apple
Or Amazon, Google, Paypal etc…
Bear with me here. I used to use my debit card to pay for things, these days when shopping on-line I use Paypal a lot. I trust Paypal as they give me some guarantees over my purchase and I don’t need to get off the sofa to find my debit card (yes lazy, I know). It is easy, convenient and comes out of my bank by direct debit. Amazon store my card details, so does Google, it really is all rather easy.
So I ask myself what my bank does, a question that will frequently be asked by the next generation.
Take Apple Pay. Forbes magazine suggest that adoption of Apple pay in the UK will be quicker than in the US. There is a competitor product due to launch called Zapp which will be live in the UK later this year. Gradually our payment methods are moving into apps, everything more convenient.
When you start to make everything electronic and automated then does it really matter where your salary is paid?
The Brand Trust Issue
There is little doubt that the bank brands have been damaged. There is also an increased level of loyalty toward the major on-line brands. Apple has a unique following and customer loyalty far beyond that of any UK bank brand.
In some research provided by Forbes, brand trust was quoted as;
Technographics data from Q1 2015, 27% of UK online consumers owning an iPhone would trust Apple to provide a mobile digital wallet but they are still more likely to trust PayPal (43%), a bank (41%), a credit card network (40%), and Amazon (32%)
If you were to put the same survey to the generation born post 2000 I would hazard to guess that the percentages in favour of the new brands would be much higher. Ask the same generation to name the top 5 UK banks then I would doubt many could. The banking world and the perception of it is changing, fast.
The competitors for the various bank services is growing, innovating and doing things that the buyer wants. There are alternative providers for payments, lending, foreign exchange, pretty much everything. With most transactions now being electronic, and with independent internet banking platforms pretty close there is scope for your whole banking to move to an Apple, Amazon etc. The point being that for every bank service there will be an alternative that is more customer focused.
The next five years will be seriously interesting for UK banks. Banks being interesting? Whatever next…
By Dave Farmer
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