As with many quotes passed around the internet, the true intent behind the oft-repeated line in the title is a little more nuanced than what initially meets the eye.

“You never let a serious crisis go to waste. And what I mean by that is it's an opportunity to do things you think you could not do before.”

Rahm Emanuel

As the former Mayor of Chicago (2011 – 2019), Chief of Staff to Barack Obama (2009 – 2010) and Senior Advisor to Bill Clinton (1993 – 1998), Rahm has encountered more than his fair share of crises.

His advice, to never let one go to waste, anchors around the principal of using it to enact dramatic change. Change that, perhaps, was already on the cards but seemed too difficult, unnecessary or politically unpalatable in the past.

We’ve seen crises be successfully used to execute dramatic transformation time and time again, from Beijing using the 2008 Olympics to clean up the city air to Denmark’s largest energy company, Danish Oil and Natural Gas, using the 2012 gas price crash to transform into Ørsted, now a global leader in renewable energy.

Obviously, this isn’t the first major crisis for finance. However, 2008 was a question of credit and trust with the solution ultimately being structural. To the average banking customer, over a decade later (particularly those living outside the city centres where neo banks thrive) little has changed.

2020 is a very different crisis.

The COVID-19 crisis is one where, rather than being the instigators, the banking sector can become one of the great saviours. Indeed, as Société Générale CEO Frédéric Oudéa has said - banks will be “the doctors of the economy”.

Now is the critical time.

To date banks have performed admirably. From processing 1.6 million mortgage holidays (as of Friday 24 April) to swiftly freezing fees and enabling interest free overdrafts to those in need. It’s been a financial mobilisation like none before.

However, COVID-19 has laid bare the severity of the limitations within banking operations. Existing processes, where manual intervention papers over the cracks in an otherwise “digital” workflow, have fallen over, with only brilliant scrambling keeping everything in working order.

Not all banks will become the doctors, and others will fall out of favour quickly after the job is done. The true winners will be those which embrace this opportunity of radical transformation.

What the people are saying

For the past two months we have been researching, analysing and speaking with banking customers to get at the heart of what they need - From well-off savers investing in their future to those recently furloughed worrying about next week’s shop.

The one common theme across everyone was their view on banks: Untrustworthy utilities.

The untrustworthy side is plain to see. In 2018 – a decade after the financial crisis – 66% of British adults did not believe banks worked in the interest of society and in the two years since this sentiment has barely changed. In 2020 only 25% of British adults have a “favourable” or “very favourable” opinion of the industry, and the industry NPS averages at -10. The ramifications of 2008 are still being felt, having been burned in the psyche of the populace.

The utility side of the equation is more curious, with the added intrigue of our research telling us that if we solve this, the trust issue would all but disappear.

We decided to dig deeper.

Banks need to be more than utilities

For consumers, banking has been the same for generations. Yes, the apps have become a little bit nicer and the functionality a little bit easier, but nothing fundamental. Nothing to make anyone sit up and pay attention.

It’s a trap that almost all banking institutions have found themselves in. Listening to what their customers want, but not understanding what they need. Or even worse, understanding what their customers need, but not being able to act on it.

What we found is something that is easy to say and impossible to do, without the right set up.

What customers truly need isn’t ultra-high interest savings accounts or 0% balance transfer credit cards, although these products are nice.

What customers need is genuinely contextual insight with a human touch. They need help navigating this strange, unfamiliar world and they want dignity and understanding as they do so.

While we’re still in the process of speaking with customers and refining the insights, the initial themes being uncovered are compelling.

  1. More than 95% of time customers spend with their bank is via mobile apps. How banking institutions demonstrate authenticity and drive accountability through digital channels is critical.
  2. With the exception of the relatively niche market who have embraced the neo banks, customers desire the permanency and perceived safety of a branch. To truly expand beyond core demographics, digital channels must establish the same element of trust.
  3. Transparency and unbiased advice is critical, with 82% of customers we spoke to saying they don’t completely trust advice from their bank, often believing they are being sold something unnecessary. There is an open question on how banks most effectively use data to ensure the best possible outcome for customers.
  4. In the land of the utility, inertia is king. Today every provider is perceived the same, meaning for consumers there is no benefit to switching. Any institution that acts now to build something beyond “you’ve spent too much on coffee” will see a significant first mover advantage.

Each of these are much deeper and broader than listed here. As we progress our research, we are getting a more complete picture on what customer say they want, what they actually need, and understand the difference with greater clarity.

If these themes resonate with what you’re hearing from your customers, get in touch. We would love to explore how to address these together.

What’s next?

COVID-19 is a tragedy, with as yet untold suffering and hardship. But it has also forced banks to confront the fact that normal wasn’t actually working.

Banks must use this crisis to go back to the drawing board. Do the things that at the start of 2020 seemed impossible and begin to rethink, refactor and truly disrupt their own organisations.

As Microsoft CEO Satya Nadella put it, “We’ve seen two years’ worth of digital transformation in two months.”

Banks need to ask themselves, are you ready up to do the same?

No matter what the answer is, we are here to help. Whether you need ground up structuring of a transformation programme or simply strategic insight at just the right moment.

Talk to us, as we all prepare to enter a brave new world.

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