Countries covered: United Kingdom
Direct banks, defined as branchless retail banking businesses, continue to proliferate. Direct banking businesses are being established by banks and nonbanks alike. While most US-based direct banks have developed their strategies around an Internet-based delivery model, this is not the case in the United Kingdom. The UK market, which has offered direct banking for a decade, is very much oriented around the call center, putting the telephone squarely at the center of the delivery model. The Internet, for most UK-based direct banks, is just now emerging as a complementary channel.
The success of direct banking in the UK is impressive. Millions of accounts and billions of deposits now reside with these upstart financial institutions. As a result, an interesting hypothesis arises: if research indicates that the UK's direct banks are successful among consumers, and since those banks are call center oriented, what might be learned about those banks' call center service levels? What combination of interpersonal and technical strategies might these institutions be employing? And most importantly, what lessons could other banks (both direct and full service) take away from the success of the UK's direct banks?
This TowerGroup Research note discusses the trends toward direct banking and identifies key drivers behind that movement. It also details direct banking programs from the UK's leading call center banks and presents lessons from that model that can be applied to banking call centers of all types.
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Direct banks (defined as branchless retail banks) continue to proliferate and are being formed by banks and nonbanks alike. For established full service banks, direct banking represents a strategy to attract a geographically diverse customer base, to market to a different consumer demographic, and perhaps to migrate certain customers to a lower-cost delivery channel. For nonbanks, direct banking allows penetration into a newly dynamic retail banking marketplace.
Most US-based direct banks have developed their strategies around an Internet-based delivery model. This is not the case for direct banks in the United Kingdom, which are predominantly oriented around the call center. The Internet, for most UK-based direct banks, is just now emerging as a complementary channel.
The objectives of the call center differ greatly between full service banks and direct banks. Call center objectives of multiple channel banks tend to be oriented toward high efficiency and low cost, while those of direct banks are oriented toward service. For direct banks, the level of service provided by the call center is parallel to the marble and mahogany in the physical bank: it represents brand, competency, and professionalism.
There is evidence of a strong link between the success of direct banks and their call center customer service. An independent European telemarketing agency released its results of a study of call center quality in autumn 1999. It surveyed 135 UK businesses in 10 industries. The top 3 UK call centers in the survey (across all industries) belonged to direct banks.
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