Tips to optimise your business’ cash flow

Priscilla Jokhoo, Business Services Director at the Fédération Française du Prêt à Porter Féminin, who has organised the Paris Traffic fashion trade fair for the last three years, began by saying, "Fashion seasonality leads to very long cycles: between the time you create a garment and the time it brings you your first euro - about 18 months - you will spend your time writing cheques!"

Priscilla Jokhoo assists around a hundred brands a year on a daily basis, at each stage of their economic development. Her verdict is clear: "Most failures are not due to a bad product or bad positioning, but occur for two reasons: lack of structuring, and/or too rapid growth. Remember that this is impossible: you can only self-fund".

Anticipate your working capital requirements

Cash flow structure varies according to the stages of a brand's development. This principle shows, for example, that accounts payable are relatively more important for a young company.

"When you start your business, you will have leverage on accounts receivable, but little leverage on accounts payable. Then, when the company is over three years old and can prove its financial health, it can negotiate with its suppliers, which will reduce its liabilities. But your B2B customers will ask you for payment terms", explained Aline Abeya, France & Benelux Sales Manager at Webhelp Payment Services.

As a result, cash flow levels vary greatly from one stage to another and may decrease sharply, putting the company in difficulty. Anticipation is therefore essential!

Watch your credit ratings

"Your credit ratings are crucial over the entire life of your business. They are issued by the main credit insurers and rating agencies that analyse corporate balance sheets and are connected to national sources of banking incidents and failures. All suppliers throughout the world can access at least one of these sources that gives you a credit rating. You must also make your business social security and VAT payments without delay because they affect your credit ratings", Aline Abeya recommended.

Another recommendation: send your first balance sheet to the three main credit insurers: Euler Hermes, Atradius and Coface.

"You must communicate with them at every stage of your business life. If you have had to cope with a difficult situation, you must explain the reaons and the solutions adopted," explained Aline Abeya.

What is the advantage of a good credit rating? It gives you leverage to negotiate with your national and international suppliers. For example, you can try to find a contract-based solution over several seasons: your supplier may then be able to grant you discounts.

Leverage best practices with your customers

Several recommendations involving customers will avoid unpaid or late payments:

  • use a specialist lawyer to draw up solid General Terms and Conditions of Sale (GTCS)
  • insist on signed Purchase Orders, without exception!
  • ensure that invoices are properly drawn up in accordance with the standards and practices of the countries concerned
  • issue an invoice upon delivery
  • request payments before delivery if you are a young company
  • carry out quality control prior to delivery.

And Priscilla Jokhoo added: "In many situations, I have found that certain customers have exploited loopholes in poorly drafted GTCS! You should also pay close attention to your customers' General Conditions of Purchase (GCP), for example, with respect to returning unsold items".

Use leverage to improve cash flow

Positive leverage effects on your cash flow: in the case of a first order, you should not hesitate to require a deposit payment, usually 30%.

"Your customer can very well understand that you expect him to make a real commitment to your brand, and not just an order "to see how it goes", Aline Abeya pointed out.

Also note the possibility of granting a 0.5 to 3% cash payment discount.

Webhelp Payment Services manages the accounts receivable as soon as the order is placed. In practice, once you have made a delivery, it is potentially too late, as the payment method or time may not have been appropriate to your customer's situation.

"Webhelp Payment Services gives you prior recommendations about orders with respect to the country where your customer is located: this is very important because it reduces the risks of non-payment at the order stage. Webhelp Payment Services' assistance extends to the collection of multi-country and multi-currency funds", said Aline ABEYA.

On the strength of its experience in the textile market, Webhelp Payment Services has entered into partnerships with financial institutions that rely on its wholesale management services to help brands source and finance their sales.

> To receive the pdf of the "Cash is king" presentation at the 2018 Traffic fashion trade fair, do not hesitate to ask Aline Abeya.

 

 


Key features of a B2B marketplace

Creating a B2B MarketPlace may seem a complex task and it is difficult to get it right when there are so many things you need to remember. Here is a list of 6 key points to keep in mind before launching your MarketPlace!

The business model

Commission is based on business volume.
A MarketPlace business model is not the same as that of an e-commerce site. The latter is based on the volume of business and the number of vendors. A MarketPlace generally charges its vendors a monthly subscription to cover all or part of its fixed costs and a commission on the volume of business generated.
Just a simple example: if the marketplace takes a net commission of 10% on €100,000 of business volume and bills its vendors for a subscription of €100 each month, it will earn €20,000.
This principle of remuneration requires a dedicated marketplace trading account, as well as good organisation, particularly with respect to management control.
Please note: commission and subscription rates vary much more than on B2C marketplaces. (Commission rates range from 3 to 50% and subscription rates from 0 to 1,000 euros a month.)

The operator's customers are its vendors

Unlike a classic e-commerce site, the end customers of the platform are not its customers, but the vendors. It is to the vendors that you sell a commercial intermediation contract and the vendors are those who pay your commissions through their sales.
They must therefore be the focus of your attention and you must specify the services offered (logistics, invoicing, export assistance, etc.) that justify your remuneration and will earn their loyalty and encourage them to make maximum sales on the platform.

Customer experience depends on vendors

On an e-commerce site, the operator has full control over the customer experience.
This is not the case on a marketplace site.
Vendors play a key role in this customer experience; they are responsible for the product or service, its shipment and for all after-sales service. The operator must, for its part, manage its brand, the brand promise, litigation and ultimately, the customer experience. The operator must therefore impose rules on its vendors (standard presentation, editorial constraints, rules of conduct for customer relations, etc.) to ensure a positive and consistent customer experience.

For the end customer, the operator is a trusted third party

On a marketplace site, the operator has no control over certain key elements (customer complaints, reimbursement rates, process quality, etc.), which makes it a third party in the buyer-vendor transaction.
It must therefore act as a trusted third party and intermediary for the buyer. To assume this role, the operator must have a clear view of the quality of the relationship between its vendors and the end customers.
To avoid having to mediate in disputes that could have been avoided, the operator must support its vendors as they increase in competence with respect to customer relations and if necessary, encourage them to outsource customer relations to an experienced partner.
The operator becomes a trusted third party, and no longer just an intermediary in customer-vendor disputes.

Promotional offer management is complex

There are two ways of making a promotional offer on a marketplace site:
– The operator creates promotions on its offer or its own funds (10% discount on the first order).
– The operator creates promotional offers and invites its vendors to participate. These offers will then be showcased on the platform. In this case, it is the vendors who bear the cost of the promotion.
Promotional operations on a marketplace site are complex, because they do not only apply to its own products.
They can become even more complex, depending on the business model:
– One vendor per product item (no competition).
– Several vendors per product item (competition that tends to lower prices).

Managing payment methods and financial flows is complex and regulated

On a marketplace site, when a payment is collected, only the commission goes to the operator. The remainder must be paid to the vendor. This distribution leads to accounting, financial and regulatory complexity. Basically, the operator offers a service: collection on behalf of third parties.
This payment service is regulated in Europe and supervised in France by the French Prudential Supervision and Resolution Authority (ACPR) and the Banque de France.
To use this service, you must work with an approved partner such as Webhelp Payment Services.
Your payment partner will take full charge of managing payment flows (deducting commission, cash in, cash out). In a B2B context, it is important to choose a specialist payment company that allows you to offer your end customers B2B-specific payment methods and terms.

Do you now feel ready to start creating your Marketplace? Please do not hesitate to contact us to find out about the opportunities and choices available for setting up a Marketplace and a fluid, appropriate and upgradeable payment management system.

If you liked this article, feel free to share it or visit our site!


Tips to conquer an Italian market

Italy is a priority market for fashion and ready-to-wear brands, hence the dedicated Italy workshop that took place during the 2018 Traffic trade show. Here we give you an overview and top tips from Anne-Laure Druguet, Director of Projects at the Fédération Française de Prêt à Porter Féminin, and Claudio Milani, CEO of Webhelp Payment Services in Italy and Greece.

"Italy is France's number 1 customer, followed by Germany, the United Kingdom, Spain and the United States," says Anne-Laure Druguet, Director of Projects at the Fédération Française de Prêt à Porter Féminin, who specialises in helping French brands export.

In fact, the nature of the Italian market appears to make it an unmissable opportunity for France's ready-to-wear brands:

  • €66 billion annually, with a positive trend
  • 10.5% of France's exports in terms of value (up 7.1% on 2016)
  • In 2016, Italian women spent 10 billion euros on clothes, with the Italian menswear sales volume approaching 7 billion euros.
  • Distribution: mainly through franchises, chain stores and the retail sector (47%), followed chiefly by multi-brand stores (24%), department stores (13%), and online sales (5%).
  • There are big differences between Italy's regions, with the North being a more buoyant market.

1 – Make sure you have the right agent in Italy

Our assessment above focuses more on quantity, but Claudio Milani, CEO of Webhelp Payment Services in Italy and Greece, was more interested in talking about quality: “There are a huge number of stores in Italy, even in small towns and villages. With the odd exception, you can't “sell on your own” in Italy; you have to go through one or more agents, at regional or national level. Contrastingly, committing to a retail network appears to be a risky business."

But should your agent be single-brand or multi-brand? Claudio Milani says, "A small or medium-sized company would be ill-advised to take on a single-brand agent."

And Anne-Laure Druguet adds, "It's important you have the right fit with your agent and ensure you have the same objectives and development potential. You must also make sure you pin down your methods, such as reporting frequency, and agree a mutually binding commitment in writing.”

The Federation offers French brands help with drawing up agent contracts.

Claudio Milani hammers home the point with a quip: "You know who our best allies are? Agents. And our worst enemies? Agents." Hence his advice: “Find the best possible fit between your brand, your products and your agent”.

2 – Choose the safest payment methods and conditions

Like any market, the Italian market has its own particular payment methods, conditions and practices.

Webhelp Payment Services takes care of customer collection management and trade receivable management and acts as an insurance intermediary in various countries, including Italy. This means that Webhelp Payment Services enables you to personalise your payment methods and conditions individually to each of your clients.

To find out more, and in particular for details of the payment methods and conditions best suited to the Italian market and the best way to protect yourself from non-payment, feel free to get in touch with Claudio Milani.

3 – Devise a strategy tailored to the Italian market

As Claudio Milani says, “It's not enough to set yourself financial objectives in penetrating the Italian market. You have to devise, challenge and then implement your own specific strategy”.

This strategy must be consistent with your brand identity and culture. "But beware of imposing your own rules: think globally but act locally," adds Claudio Milani.

4 – Find the balance between sales and finance

Claudio Milani's last piece of advice: “If you focus solely on increasing sales, you'll expose yourself to a lot of risks. And if you put too much emphasis on financial security, you're in danger of missing some great opportunities. You have to strike the right balance to be successful!"

 

For more information, go to our website.


International B2B e-commerce: 5 mistakes to avoid

B2B ecommerce

Increasing numbers of B2B businesses both large and small are setting their sights on trading internationally through an e-commerce platform. To give yourself the best chance of making a decent fist of it, Axel Mouquet, CEO of Webhelp Payment Services, proffers his advice and explains which mistakes to avoid.

At Webhelp Payment Services, we know all about trading internationally: we cover 35 countries and we collect 80% of our payments (€1,5 billion a year) outside France on behalf of B2B vendors.

As a payment institution, at Webhelp Payment Services we help our clients to devise and manage their B2B payment strategy. Our shared objective is to improve the customer experience and develop a secure business.

To this end, we offer risk management, transaction management and non-payment management services, working internationally with brands such as Conrad, Aniel, IPH, Procsea, Conforama, Le Duff and Rungis International Market.

From day-to-day practice and our observation of the market, we have identified 5 avoidable mistakes:

    1. The ‘everywhere-at-once, all-at-once’ strategy. The temptation is to launch in several countries at the same time instead of introducing a gradual rollout (which is more advisable as we shall see later). In this faulty model, the starting point is often the home-country e-commerce website or the reference website, which is then cloned and rolled out simultaneously in the different languages and countries. Typically, this is done by employing translators to translate the existing content. But you can bet your bottom dollar (or euro) that it won’t work!
    2. A succession of ‘cut-and-paste’ openings. In this variation on the faulty model above, the plan is to proceed country by country, simply ‘cutting and pasting’ from one site to the next. But here too you’ll be heading for trouble, as B2B conventions vary hugely from country to country. You have to understand and follow not only the law but also business practice, decision-making cycles and order-validation circuits for example. It’s therefore a no-brainer: you must redesign the site – and the customer experience – for each country or region.
    3. Staking everything on adwords. This is perhaps the costliest strategy: the company invests a fortune on buying adwords in the hope that this will capture demand. Of course, you must not neglect or forget about digital marketing, but human contact is important too! In B2B commerce, building a relationship of trust – between professionals – is crucial, especially when your business is starting out. You have to devise a sales force deployment strategy on the ground or operating in the local language. And later you will have to regularly tweak your mix of digital and on-the-ground presence.
    4. Over-centralising your business. Is your company based in Paris, Lyon or Bordeaux? Then it’s there that all of your international operations will be based. We cannot say it often enough: in B2B you must ensure you have a physical presence local to your customers. And your customers will want to check that this presence is on offer, even if it is just a sales or logistics service. In B2B, digital commerce will never do away with borders completely!
    5. Having the same payment conditions everywhere. To speed things up when rolling out your B2B e-commerce platform internationally, it is tempting to standardise your payment conditions. But experience shows that even within Europe there are major differences here, and some of them may even put you at risk. There are differences between payment conditions, respecting payment deadlines, legal aspects of the market, etc., and you also have to take into account local competition, prices and products and services on offer. And in B2B, assessing customer credit risk is crucial. Webhelp offers a range of specific international commerce solutions.

    In summary, our advice is not to spread your resources too thin and to tailor your offer to each locality. To become an international business you will have to identify the key success factors for each country and focus your efforts on them.

    And here are 5 examples of approaches that work well, where we have helped our customers grow their B2B business internationally.

    1. Introduce a gradual, tailored rollout. The idea is to be realistic, starting with the country or region that appears to present the fewest operational difficulties and learning all the lessons you can before expanding elsewhere. On each occasion, you must take the time to understand the specific characteristics of the local demand. You should implement a carefully thought-out, localised approach incorporating co-design and co-construction.
    2. Use the marketplace model. The marketplace model has certainly proved its worth in B2C and now represents a tremendous opportunity in B2B since all the tools and methods are already available. This strategy enables you to construct your offer locally, minimising the risks, investment and any logistical problems involved. And you also have the option of signing up dependable salespeople with a good reputation who are already in place. At Webhelp, we think this model is becoming the go-to approach and that you should consider it very carefully. In other words, you’ll have to have very good reasons not to adopt a marketplace-based approach!
    3. Make sure you have localised payment strategies. This is where Webhelp Payment Services comes in: devising, implementing and managing the complete payment circuit, with the option of including credit insurance, constructing a secure business model for the country in question and taking into account specific customer risks. In this respect we are able to provide tailor-made solutions on the basis of conventional or pooled distribution of profits/risks.
    4. Build locally with international partners. Your success is conditional upon knowing the ins and outs of B2B practices in the country or region concerned. Giving yourself the ability to identify and work with international partners gives you a decisive advantage. Especially if your growth objectives – organic or external – are ambitious.
    5. Develop a local sales force. As we have seen, B2B is not all about digital technology. You should consider gradually introducing sales forces on the ground.


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Are High Street Stores Now The Weakest Link For Retailers?

As I have often detailed here, omnichannel is here to stay. Customer expectations today demand that the experience they have of a brand is just as good online as offline and however they choose to communicate, the service will be great.

That’s what customers expect today, but for many brands it is still not a reality. This article in eCommerce News about retailers in Sweden shows that for retail brands there it is often the physical store that is ruining the omnichannel experience. High street stores are becoming the weakest link.

A quarter of Swedish shoppers feel that they get a much more personal experience when shopping online, according to a new study.

Can you imagine that statement from a couple of years ago when the personal in-store experience was considered to be the reason why people will keep on returning to real stores.

Customers know that brands know about them and this helps retailers identify what customers like, what they are not interested in, and how to offer timely deals that will encourage more purchases. All this information is easier to gather in the online environment, but now there appears to be a backlash against the way that the real in-store experience differs – because the employees of the store do not know you when you walk in off the street!

Naturally the real in-store experience will always remain the weakest link if customer expectations for personalisation are increasing to the point where customers want to be treated as individuals when they walk into a store.

Building this kind of in-store personalisation can be complex, but it depends on the approach. The UK retailer Mothercare wrapped an online receipt system around all their existing processes – so after a purchase was made if the customer gave their email address for the receipt details then the system could match up their details to previous spending and offer additional deals.

This does rely on personalisation after a purchase though. Facebook offers location-aware technology to retailers so they can be aware of which customers that already “like” their brand are nearby to a store. This can be cross-matched with other demographic information to send offers direct to the phone of the customer.

Utilising a system like this also restricts the brand to only working with customers who are active mobile users of Facebook, but I do think that some kind of “logging in” will become more common when customers enter a store they like – probably using apps available from the retailer.

If a customer is encouraged to let the app know that they are in-store and the retailers makes it attractive enough to do this then not only can the in-store experience be personalised, but the retailer gets even more data on what the customer is interested in.

Most of us have now become used to reading news online to the extent that some major newspapers, like The Independent, no longer even provide a printed edition. The online news experience lets us comment on stories and share articles that are interesting. It is a far richer experience that the traditional consumption on news printed on paper and this kind of paradigm shift is taking place with retailers. The online experience is now so good and personalised to the individual; those shoppers want to feel the same way when they walk in a store.

What do you think about these changing expectations? How will it affect retail on the High Street? You can leave your thoughts or comments below.


What did we learn from Black Friday 2015?

A couple of weeks on from Black Friday in the UK and what have we learned?

 

Well, as predicted in The Drum recently, the omnichannel experience is now more important than ever. Creating a seamless customer experience all year round is more important than discounts on a single day. However, Black Friday was still extremely popular so what happened this year?

 

First, it became clear that the online discounts are becoming more popular than those discounts available in-store. I was watching the TV news and thankfully didn't see the traditional scenes of people fighting over TV sets, which fits with retailers saying this year that the in-store rush has eased. Conversely online shopping was up 36% with £1.1bn spent by online bargain hunters.

 

Contrast this with the midnight store openings. At Boots on Oxford Street only journalists were present. Other stores opening early at five or six in the morning found very few customers prepared to brave the cold weather conditions. Analysts also indicated that the recent terror attacks in Paris could have affected the desire for shoppers to line up in the streets all night, but I think the real reason for this change is just that shoppers have moved online.

 

15 major retail websites crashed on Friday. Big names such as Argos, Tesco, and John Lewis all suffered website issues demonstrating that even with all the planning and expectation, the sheer amount of customers all trying to shop online at the same time on the same day can create a nightmare for the IT team managing these ecommerce platforms.

 

Retail analyst Richard Hyman has suggested that about a quarter of UK retailers ignored Black Friday altogether. He said that next year there may be an adjustment in how stores adjust their opening hours and staffing levels, based on the trend for more shoppers to just engage online.

 

The real question for many retailers will be whether Black Friday is worth the effort and discounting. Asda was
the most public refusal this year, although other major brands such as Next and Jigsaw also ignored it. These retailers have all suggested that they would prefer to spread discounts over the entire holiday shopping season rather than focusing on a single day

.

The jury is still out. Black Friday 2015 was an enormous success for online retailers this year, but the message is far more mixed from the High Street. I’m sure it will be taking place again in 2016, but it will be interesting to see how those retailers with both an in-store and online offer manage to promote the event.

 

See how 10 top UK retailers performed on Black Friday

 

 


Banks Are Not Just Being Challenged; They All Need to Change to Survive

I’ve written previously about the wave of “challenger banks” sweeping the UK banking and financial services market. There is a great opportunity for new brands to focus on improving service to the customer and taking market share from the big established brands.

But change in this market is coming from beyond new brands on the High Street alone. Digital banking is changing the banking sector in several ways:

Payment by phone

Services such as Apple Pay are now commonly accepted and stores with low-value items – like coffee chains – are experimenting with their own phone payment systems that connect into the loyalty programme. No more lost cardboard loyalty cards!

Niche services by app

Individual apps for individual banking services are here. Want to transfer money overseas? There will be an app offering this service. Want a loan to buy a car? Why not use a peer-to-peer app? Niche players are using the app store to offer almost every kind of possible banking service.

Location based services

Banks are already using location-based advertising across social networks so it’s only a small leap of the imagination to assume that they will use the same customer insight to directly offer their own services soon. For example, sending an offer on a loan if they can see you are spending more than usual in a month and are currently out shopping again.

Customer analytics

The data available on customers is now so complete that behaviour can be predicted before it takes place. For example, customers that will have trouble maintaining payments on their Visa card can be contacted before the problems become critical.

Omnichannel banking

It goes without saying that customers today expect the service at their bank to blend seamlessly between the branch and their online experience. But think about the reality – are most banks anywhere close to what customers expect? If you check out a new mortgage online and walk into a branch the next day, how would it affect your impression of the bank if the in-branch team were already aware of the type of mortgage you are interested in without you needing to explain all over again?

I think there is a potential existential crisis for the entire banking industry if they do not pay enough attention to these changes. Niche players offering individual financial services via apps can usually undercut the major banks because they do not have the overheads of a national branch network, so in theory these niche service providers should be able to win an enormous amount of business from the traditional banks.

Customer loyalty and inertia will prevent much of the potential business loss, but if customers are increasingly dissatisfied with the service they receive then they will look for an alternative. Why give customers a reason to go looking for a new service provider?

I think that a focus on how to deliver an omnichannel approach to customer service is now critical for all the major banks – as a way of retaining existing customers and for attracting new customers with a combination of their established brand and great service.

What do you think about the changing banking sector? Leave a comment here or get in touch via my LinkedIn profile.

 

Image courtesy Ken Teegardin.


UK Retail Leads in Omnichannel Adoption

Consulting firm Kurt Salmon recently published their 2015 analysis of the retail omnichannel market in Europe. Being British and focused on omnichannel developments in the UK the most striking results that leap out from the research is that British retailers are far ahead of their European counterparts.

The research focused on four different areas; mobile, online, social, and cross channel. It stated that every company surveyed could improve their cross channel offering, but in the other areas there are clear winners.

The leading companies were Topshop, Wallis, and Miss Selfridge, followed by department stores John Lewis and House of Fraser.  A particularly good result was for the Arcadia group, with Topshop the top brand overall across all metrics.

An interesting observation from the survey was that one area where British stores appear far behind continental Europe is in offering stock checking options on the website. Having the ability to go online and check that an item of stock can be found in a store is a strong driver for customers to visit a store. If they need an item quickly it helps immensely to check stock levels or even having the ability to check stock and then reserve the items.

This is a great example of how the online store can be married to the physical store in a way that makes both online and offline work together. Retailers looking to drive cross channel engagement need to consider exactly how to enable customers to use the right channel at the right time, without an enormous cost of switching.

Given that the weakest area for all companies in this research was support for customers across multiple channels there is still plenty of work to be done. Perhaps by next year, some of these companies can have a much stronger omnichannel offer for their customers.

What do you think about the state of omnichannel adoption in retailers across Europe? Leave a comment here or get in touch via my LinkedIn profile.

 

Image via melenita2012


Retail Banks: Are The Challenger Banks Enough?

UK retail banking has been through quite a change in the past 6 or 7 years from the previously unimagined bank runs on Northern Rock to nationalisation and back again. With the government now unwinding state investments in Lloyds and RBS and new ‘challenger’ brands emerging is the industry performing how customers expect?

No. Even with the High Street shake up driven by the challengers, this is an industry where customer expectations are diverging from what the banks are offering.

Look at retail for an example of how brands are reacting to customer expectations. House of Fraser is a great example as I was discussing some of their omnichannel strategy on LinkedIn last week. HoF is reorganising their management and customer focused teams to be driven entirely by the needs of their customer, whether that customer is in a store or online. They are removing the distinction and trying to offer a great service to all customers – not just those on preferred channels.

What is the reality in banking? Well, a recent publication by the British Bankers Association (BBA) features some revealing statistics:

  • 10.6 million banking app logins every day
  • 22.9 million banking apps downloaded
  • £2.9 billion a week transferred using apps
  • 43% decline in telephone contact to banks from 2008 to 2013
  • 6% decline in branch use in the past year

Look at the final two. Visits to bank branches are declining dramatically year on year and the use of telephone banking has been in freefall since 2008. Customers want more. They want the same convenience in banking that they can find from other industries – like retail.

Imagine going to a car dealer and being told that it’s easier to get a new car if you stick with the same manufacturer as your present one, and you can’t compare the prices of alternatives once the dealer gives you a quote on a vehicle?

It sounds absurd, but isn’t this how banks still treat customers? It’s often easier to get new products from the one that has your current account and if a product such as a loan or insurance is offered, how easy is it to run a quick comparison with a rival bank?

The challenger brands are shaking up retail banking on the High Street. Opening hours are being improved and services are becoming easier to purchase, but the entire industry is facing a new challenge from market entrants.

Companies that offer individual financial services are often able to give customers a better deal because they have a narrow product focus and no need to manage a branch network. Even big non-financial brands are offering financial services. You can ask car manufacturer Renault, or any of the big supermarkets, for a personal loan.

The Financial Tech (FinTech) market is also growing fast. Individual financial services offered via apps means that customers can download a tool, get a quick quote on a product and choose whether to use it, at any time of day or night.

So how can the challenger banks and the big established banking brands compete in this new world of financial services? By improving the customer experience. Customers still trust and respect their banks. This is where they have always conducted financial services and it remains the most obvious place to go for most customers. Peer-to-peer lending might be exploding in popularity, but it is still dwarfed by the amount of personal loans issued by the big banking brands.

But, as the BBA research indicates, if the gap between customer expectations and the reality of how banks treat customers get wider then there will be an exodus. Customers are already impatient. If the situation gets worse, the traditional brands and even the High Street challengers will look archaic in the way they treat customers.

What every bank executive needs to be thinking right now is how do I place the customer at the heart of what we do? How do we make it easy to ask questions? How do we make it easy to obtain services when the customer needs them? How do we make the customer journey so easy that banks inspire loyalty from happy customers?

The customer experience is now the number one priority for all banking brands, including the challengers, but it’s not just me saying this. Take a look at the BBA research for yourself by visiting their website here.

What do you think of the way that the challenger banks are changing UK banking and whether it is enough to keep up with customer expectations? Leave a comment here or tweet me on @DavidTurnerCXO