Open banking legislation: How can FMCG thinking help banks in this brave new world


Image credit: Geograph - http://www.geograph.org.uk/photo/2762262

The way financial organisations pitch for consumer business is changing.


Banks and building societies operate in what the Edelman Trust Barometer calls ‘a climate of stagnant distrust’, in which institutions continue to struggle in the aftermath of the 2008 financial crisis and repeated bonus scandals.


Beyond this, the new Open Banking Legislation is set to open up consumer data to competing financial service providers, including third-party money managers and comparison apps. This will, in turn, enable customers to do businesses with banks in exciting new ways.


Caught between consumer discontentment and an increasingly flexible future, personal banking must evolve. And to disrupt the disruptors, the banks might look in a surprising direction: to the world of FMCG (Fast-Moving Consumer Goods).


Heritage brands in that sector have long faced competition from upstart startups. They’ve met the challenge by doubling down on their established values, focusing on customer relationships, and taking the agile, innovative approach of the startups to heart.


The problem


Banks are now faced with more aware, less loyal consumers. Those looking for offers on savings, mortgages, pensions and other instruments will be enabled by a new wave of tools to evaluate banks’ offers. Early adopters are unafraid to drop a financial service for a better offer or a banking brand more in line with their values.


New services are on offer. Revolut provides easy, fee-free money transfers; Monzo and Triodos offer smartphone-based cash-free banking, the latter with an ethical, business-friendly approach.


Conventional banking is also up for reinvention. Metrobank has succeeded by putting customer experience at the heart of their business, treating their offering as a commodity which customers purchase to demonstrate their values and brand loyalty. Their service is immersive, friendly, accessible and well priced; they even call their branches ‘stores’.




With changes like these on the cards, it won’t take long for consumers’ “but I’ve always banked here” habits to break, and banking brands are at risk of becoming dinosaurs. Everyone’s going to think differently about financial services in five years’ time: especially the people who provide them.


How FMCG thinking helps

There are parallels between this new paradigm in banking and the last decade in FMCG.

Both sectors have seen big heritage brands losing market share to small, agile startups. The big names are relatively slow-moving. Their heavy infrastructure is difficult to redesign, while a startup has the luxury of tailoring its solutions to the market from scratch. In many cases, heritage brands have been focussed on serving markets of 20 years ago – not necessarily the millennial market of here and now.


Major brands in FMCG have been able to ride out the change, however, by making the most of their advantages, putting their customers first and thinking like a startup to become as agile as possible.


Double down on heritage


Although their reputations have been damaged by crisis and misconduct, big name banks still have hundreds of years’ experience to pull from. Banks have been a byword for responsibility, respectability and permanence. Rediscovering that heritage, and the associated recognition and trust that the smaller players don’t have can be a solid differentiator for the big four.


In the post-OBL world, banks could recover their trusted status by helping customers cope with information overload. Consider the Bitcoin bubble - an environment in which people are investing in something they don’t fully understand. In financial terms - especially in banking, where people’s personal assets are at stake - unknowns are damaging. A message based on safety and security could go far. It’s the same logic Heinz and Hellman’s use. No unknown quantities: just that familiar, reliable taste, guaranteed.


Think customer-first


What does this mean for banks? Do what you’ve always done, but do it differently.

Assess every customer touchpoint, invest heavily in your customer experience and consider every customer channel. Everything from your online chat functionality to your social media channels and call centres must speak the same language.


Successful FMCG brands lever their soft power: an approach that brings customers on board by making them feel they have a meaningful relationship with the brand and its product.


Maltesers have had the same basic recipe since 1937, but when it comes to their messaging and relationship with customers, they’ve always been willing to change. Originally targeted at female slimmers, the snacks were presented as ‘energy balls’. Now they’re ‘looking on the light side’ to reach disabled customers – providing an accepting, delightful moment in a troubling world.


Likewise, Cawston Press have used soft power to build a new relationship with their customers. Thirty years ago, 100% pure fruit juice was its own selling point; here and now, Cawston presents itself as a quality alternative soft drink for adults. Artistic, stylish representations of ingredients replace photography; packaging and design appeal to a vintage British aesthetic.


In banking, there’s a reason Metrobank have led the way in store design. That’s partly because they don’t think the term means the colour of their carpet or the height of their counters. Instead, it means soft power: focusing their attention on the things that make customers loyal. What Metrobank have truly redesigned is the experience of using a bank. They stay open later; they train staff to remember customers and build rapport with them, and they prioritise using tech channels their customers already use every day.


The big four could be ahead of startups in this regard. They have established customer relationships; they have a store of customer data; they have an existing network of customer-facing staff. Nothing has to be built from scratch: it’s a matter of changing the way the existing experience works.


Operate more flexibly


Innovation is a big deal for leading FMCG brands. Innovation teams constantly explore new ways to approach their sector; not changing things for the sake of it, but looking for improvements that can be made and incentives to make them.


At Millennial 20/20 2017, our co-panellist and Gillette Director of Marketing Francisco Tortora told us that managing his brand meant treating it as “a 150-year-old startup”. This doesn’t mean abandoning the values at the heart of his brand. Instead, it means giving up established ways of operating if their only value is traditional.


In this way, Barclays are positioning themselves as leaders in the banking space. They had the first cash machine in the UK, they brought Pingit to the UK market, and they’re building their customers’ digital literacy with their Digital Eagles and Cyber Security Challenge campaigns.


This is the kind of innovation the financial sector needs to replicate and push to as far as possible.


Sectors transform as technology develops and consumer perspectives shift. In FMCG, the pace of change has increased rapidly in the last decade. Heritage brands there have stayed current by making full use of their brand values, focusing their attention on customer needs, and forcing themselves to be as agile as possible.


Racing to the bottom – doing what they’ve always done, only with more intensity – would have seen them left behind.


For Kellogg's and Heinz, read Lloyds and HSBC. Banks have an opportunity and obligation to reimagine what banking means in 2018 and beyond. The sector is about to change dramatically.


#MetroBank #BrandDevelopment