InvestmentsDec 4 2013

‘Big five’ banks need more rivals

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For me, this is a basic necessity in running a bank. Being able to gain the trust of your customers should be the main priority for any challenger bank. The simplest and most effective way to do this is to build secure, long-lasting relationships with clients. Nobody wants to be put on hold or put through to an automated message when speaking to his bank. I also think it is important for a customer to be able to speak to the same person every time they call their bank. That same person should know the ins and outs of the customer’s story and seek to understand what they need.

Expert knowledge also needs to be at the forefront of a new bank’s strategy. For too long, banks have hired staff who are there to push products onto people that may or may not need them.

A one-size-fits-all approach is doomed to fail and customers need to feel like individuals with individual needs. So recruiting and training well-qualified staff is essential.

I believe too that the days are numbered for the traditional branch model of banking. Nowadays technology allows you to still have face-to-face contact from the comfort of your home or office and this is something the banking industry needs to embrace.

How else can a new challenger bank differentiate itself from the traditional high street banks? Well, it is clear the traditional banks are more reluctant than ever to lend to small businesses. Such firms are the lifeblood of the economy and I wholeheartedly believe the UK’s economy will only flourish in the future if small and medium enterprises are given the resources they need to grow.

On that point, it was recently announced that RBS is to sell off some of its branches to relaunch the Williams & Glyn’s brand as a challenger bank. It is expected to debut in 2015. I welcome this; in fact, I think the RBS break-up should be more radical in order to drive increased competition in SME banking in particular.

While the current plans may have an impact on the retail banking side of things, they will do little to stimulate business growth or support SMEs. This could be achieved by breaking up RBS’s business banking services. If it is simply a branch sell-off, then there is no fundamental change taking place.


The government has rightly placed huge emphasis on SMEs in driving economic recovery and long-term growth, but the SME banking market appears to be off the table when it comes to competition. Make no mistake, the small business market will be plagued by the same lack of competition as seen in the retail market.