Earlier this year the Financial Conduct Authority (FCA) confirmed that 29 firms had applied for authorisation to become banks in the UK. This was a direct result of the regulator relaxing rules last year for new banking entrants so that it would be easier for firms to become banks, and helping to bolster competition in the market place at the same time.
The relaxation of the rules included lowering the minimum capital requirement for new banks in a bid to stimulate start-ups. Previously this had been one of the key barriers to entry, with would be banks having to have huge capital sums available to prove their strength, so you can pretty much guarantee before this move the 29 figure would of been a lot lower. This also helps explain why prior to the rules being relaxed the UK has only seen one new high street bank open its doors in over 100 years, Metro Bank, which now boasts 27 stores in London and the surrounding areas.
So with so many banking applications now being put forward and considered, UK adults could see more banks opening, and be faced with more choice than ever, be it regionally or nationally. The key to the success of these banks will be communicating to the public how they are different to every other bank in existence which UK adults already bank with. Most banking customers don’t stick with their current bank out of loyalty, they do it because they think there is very little difference with other banks, and breaking through this mind set has always been a hugely difficult, if not impossible, task.
First Direct has cornered the market on excellent customer service; it comes top in nearly every single consumer satisfaction poll on banking. Santander is doing well in innovation through its 123 products and Metro Bank is still the only bank that opens its branches (or as they call them ‘stores’) to customers 7 days a week. UK adults don’t want more of the same, they want something different, genuine competition and a reason to move from their bank, who they have probably banked with for more than 20 years. How these new banks get their key messages across, about their proposition, what they stand for and most importantly why the public should bank with them will be vital in securing footfall, or online registrations.
Advertising alone will not achieve this. I worked on the launch of Metro Bank and it famously used no advertising at all for its launch. PR alone helped secure customers through the door on launch day. The launch, of one store alone in Holborn, was covered by every national newspaper the next day, ran on every key national TV and radio channel and generated coverage further afield in as far as France and Russia. The day itself was a media scrum, a thrilling one and one that genuinely got people opening accounts. Advertising would not have done this, and PR is often much more cost effective. And the proof is in the results, brand recognition for the Metro Bank brand shot up after launch and has done exceptionally well ever since.
Would banking entrants need to be considering PR now ahead of launch, to make sure their bank has the best chance of getting the right customers through the door. You only get one chance to launch and get it right – mistakes will always be remembered.