Traditional banks' procedures to open new accounts are so cumbersome and time consuming, they could drive customers into the more efficient arms of challengers, writes Chris Skinner.
For all my rants and raves about banks needing to digitalise, I’ve always been a traditionalist when it comes to my own accounts. I like to have a ‘relationship manager’ so that I can call someone and get help when needed. I like to have a branch, so I can go somewhere and shout if necessary. And I like to have a call centre to call, just to tell them about things such as my card being blocked.
But I am changing my mind. Having opened a couple of challenger bank accounts, I found that it is quick and easy: in one case, it took about 10 minutes online and, in the other, I don’t even remember opening it.
So, here’s the latest issue with my mainstream, traditional bank: opening an account.
Onboarding saga
I have a personal and business account with my traditional bank, which I’ve had for years. I am now starting another new business with a colleague, so arranged a date to see the ‘account opening manager’ (AOM) in a branch on a day I happened to be in London, which is rare these days. Unfortunately, on that particular day in October 2018, the AOM had rung in with an emergency related to her son and so could not see us. I told my partner to proceed with a meeting without me and take it from there.
She thus saw the AOM a couple of weeks later, as I was travelling overseas, and went through all the account opening details. The AOM then e-mailed confirmation of all these details afterwards, requesting that I send my onboarding info to her by return e-mail. This included a request for my current bank account information, plus scanned copies of my passport, driving licence and utility bills.
Due to my travels at that time, I thought I’d send that information when the Christmas holidays kicked in – this was in late November – only to find a follow-up e-mail the day before I was about to take my winter break saying that I’d missed the deadline to send the information and we would have to start the process all over again.
Holidays ensued and so I finally got together with my business partner in March 2019 and called the AOM she had talked to in November. The AOM had been promoted in the interim, and could not deal with our account opening request, so gave us the telephone number of the business banking team instead. I called the business banking team and, after 10 minutes waiting to get through to a human, the person on the end of the telephone told me that it would be a month before a meeting could be arranged to open an account, offering mid-April dates.
If you tracked my few lines of summary above, you will realise that we are talking six months to open an account with a major UK bank. Instead of having decent account opening facilities, the bank appears to have what I would call account avoidance facilities, creating so many blocks to new business that I am amazed it gets any. As a result, I’ve started an online account opening with a challenger bank and it is proving remarkably easy.
Why is it that the large, traditional bank is so cumbersome, demanding a branch meeting with an AOM who is almost impossible to find? Because of the large, traditional old processes that are creaking at the seams. Nevertheless, what surprised me the most is that this large, traditional bank with these old processes is opening 1000 new small business accounts a week. Maybe it is not the bank's fault; maybe it is just there’s too much demand for too few resources.
Challenger opportunity
Either way, I see the emergence of a group of small business-focused banks under the challenger brands as a massive opportunity for changing the frustrations outlined above. Taking it a step further, the fact some challenger banks are offering digital financial management in partnership with accounting tools, such as Xero and Holvi, is a game changer.
Watch out, you old, traditional banks. Just because your creaking processes are working at the moment and you’re getting 1000 account openings a week, the fact that you make this so impossibly difficult for the customer is going to drive a wave of change in the future to embrace your new competitors. And I am one of them – just the first of many.
Chris Skinner is an independent financial commentator and chairman of the London-based Financial Services Club.
