The future of our banks?

The future look of the British high street is a story that appears to have no end. For years, merchants have highlighted the problems of town parking fees, growth of out-of-town shopping centres and this week’s bugbear, the so-called charity muggers or ‘chuggers’ who patrol our streets at lunchtimes asking us to sign up to different causes. The Government is so concerned about this issue that it appointed retail expert and TV presenter Mary Portas to review the future of our high streets.

And whilst we should be concerned about whether our town centres are welcoming and real places of enterprise, we should be ready to adapt to the new brands we will see from day-to-day. Among the new pawnbrokers and discount stores that have taken over the empty shells, we will also be seeing new faces in the banking industry.

Last week Marks & Spencer opened the first of 20 high-street bank branches it plans to open this year. Previously the retailer offered credit cards, travel money as well as insurance products, but the move into current accounts and subsequently the mortgage market hails a new era for banking.

Not only will we be seeing M&S branches opening across the country, the Co-operative bank has also finalised the purchase of Lloyds TSB branches. The Co-op, renowned for its ethical banking and high customer service, will triple the size of its business, now with 1,000 branches on the high street.

Let us not forget other newcomers such as Metro Bank and Virgin Money, nor the re-emergence and popularity of local building societies.

The financial landscape is changing day-to-day, but will it ultimately make a difference in how we manage our money and will it have an impact on the business of the current banking giants?

Trust in the banking sector is at an all-time low. While much of what is talked about in the press is a million-miles away from our local branches, it is no doubt having an effect in how people see the industry. The aftermath of NatWest’s technical issues highlights that people want a simple system that works for them day-to-day. Whilst stories blaming bankers for every single flaw in the economy are both frivolous and ludicrous, it still does not extinguish the belief for many that the system only serves the few.

The surge in media coverage for ethical banks demonstrates that people are interested in institutions that operate differently to traditional banks, but it does not detract from the fact that most people would choose an account that gives them better interest or extra deals.

Many headlines have focussed on the monthly cost of M&S’s accounts, between £15-£20, yet who’s not to say that people will be unwilling to pay for that service and the extras it includes? The fact customers with existing Lloyds TSB accounts will not be able to transfer their existing account to another Lloyds branch means that there will be thousands of new customers on the market.

Traditionally people were reluctant to switch their accounts out of necessity, but now their hand has been forced, it will allow the newcomers to react. Healthy competition may begin to develop in the UK banking sector.

And who’s to say the challenges end here? Multi-million pound investments into new branches to enhance the consumer experience can only challenge the existing brands and the way we do our banking.

Banks have to adapt to our ever-changing habits and lifestyles. Those who cannot meet our needs may simply see their customers walk away.

Banks like Barclays have excelled in rolling out mobile technology to their customers and maximising the in-branch customer experience, but is this enough?

How would the big banks react if competitors such as Tesco Bank kept their branches open until 10pm? What is to stop people from doing their shopping and banking late in the evening without driving around the block? Innovations like contactless payments and pinging money are excellent, but you cannot underestimate how reassuring it is to be served by a person at any given time.

The immediate effects may not be entirely noticeable at first and nor should we expect these new banks to expand exponentially.

It will take time to build up trust and reputation, but change in this instance will be good for us all.