A recent survey carried out by the UK’s Competition and Markets Authority (CMA) asked over 34,000 bank customers about their opinion of the quality of service they receive. The results provided more evidence that operating online brings more benefits, but why is this the case?
The Power of Digital Offers and Promotions
Look into opening an online bank account and you’ll see that there are many offers on the table, particularly if you’re looking to switch from one bank to another. Some internet banks offer a welcome bonus while others have a cashback deal or simply give you a cash reward. While traditional High Street banks also offer deals like this, we should bear in mind that this survey covered service quality, so the results perhaps suggest that customers find the online offers easier to understand, compare and use.
A similar trend can be seen in other industries, such as iGaming, where welcome offers are used as a tool to encourage new players to sign up and try their games. These deals include free spins, cash bonuses and cashback, meaning that newcomers can easily check out a range of promotions before getting started. A look at the latest casino offers for new customers reveals it’s easy to collect a deal that combines free spins with bonus funds, with ongoing promotions for existing players available after the welcome package has been claimed.
Credit: wuestenigel, Creative Commons
Ease of Use and Quality of Service
Is the ease of use another reason that digital banks perform strongly in this twice-yearly survey? All the major banks have online platforms too, but there must be a reason why Monzo was named as the best provider, with 80% saying that they would recommend this service to others. Starling Bank was in second place and both of these companies operate with no traditional branch network.
On the other hand, the Royal Bank of Scotland Group was rock bottom on the list with a 48% recommendation figure and HSBC was the lowest-ranked for business accounts. Adam Land, who is senior director at the CMA, pointed out that how people are treated by their banks “can make an enormous difference” in their lives.
The list of pros and cons of internet-only banks suggests that lower overheads mean that they can often offer better deals, higher interest rates and lower fees. Yet, the lack of a branch network hasn’t turned into the negative that might have been expected. Perhaps this is due to online banks having the freedom to create a set of processes that have been specifically designed for this way of operating, and the public seemingly being happy with this way of handling their cash.
This study of why online banks have higher satisfaction levels mentions that they have worked hard to create processes that are easy to use and avoid many of the roadblocks and issues that customers tend to find frustrating about High Street banks.
It seems plausible that the traditional banks will learn from their online rivals and improve their online service over time, but for the moment the appeal of the digital-only banks remains strong and this isn’t something that we can say is due to a single factor.