UK banks need to hit re-set on customer engagement as industry sentiment stagnates, according to SAP.

Over half of UK SMEs (52%) are reassessing their bank’s suitability for them, reports SAP. Similarly, less than a quarter (22%) of UK consumers are currently satisfied with their bank’s support.

The SAP research highlights, not for the first time, a marked contrast between what consumers tell researchers. And how they actually behave, when one considers actual switching rates over the years.

The UK current account switching service facilitated 1,277,484 switches between 1 July 2022 and 30 June 2023.

While the latest numbers are trending upwards, it means that switching rates are only now back where they were when seven-day switching was rolled out in 2013. Specifically, in 2012 there were 1.2 million switches.

But SAP argues its research highlights a need for banks to think differently and create stronger empathetic customer relationships. 

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A closer look at segment insights

SAP’s research looks at how gender, age, business type and turnover determine the variety of customer attitudes and behaviours.

It finds that there are marked gender differences in how customers work with their bank. For example, almost one fifth (19%) of females check their account after every transaction (compared to just 14% of males). Females are also almost three times less likely to have moved money from online-only providers to high-street banks (11% of males vs 4% of females).

The emerging call is that of ‘gender relevance’. There is, therefore an opportunity for banks to relook at their products and messaging. That is to ensure gender relevance and to address different needs and behaviours.

Age too determines banking behaviour. SAP reports that customers look for different financial options and services based on digital and financial maturity. Baby boomers, those aged 55 and over, are more than twice as likely to switch provider based on sign-up offers and better interest rates compared with Gen Z audience (36% vs 16%). Meanwhile, appetite to adopt digital services paints a different picture. Almost a quarter (24%) of Gen Z have switched their bank in the last year based on digital experiences. Less than one in 10 (9%) of baby boomers have done the same.

“The message from UK banking customers is clear. Providers are failing to deliver the personalised services and support and this is breeding dissatisfaction. The time is now for banks to hit the re-set button and ditch the one-size-fits-all approach to targeting and recognise each segment acts and behaves differently,” said Anuj Kumar, Industry Strategy and GTM lead for Financial Services at SAP, UK.

‘Banks need to re-think how they engage with SMEs’

It’s a similar story for SMEs with turnover influencing banking behaviours and engagement. Businesses that turn over between £100m and £499m are almost twice as likely to be reliant on their bank for support and guidance during the cost-of-living crisis than those that generate between £10m and £49m each year (61% vs 37%).

Michael Walsh, Head of Financial Services, UK, said: “SMEs are key to the growth of UK. Banks need to re-think how they engage with the SMEs. Size, experience of the executive, industry and the SME’s own growth ambitions are significant factors driving how they use the Financial Services sector. Typically focus has been on working capital (financing, lending, overdrafts). With the ever-increasing digitisation of capabilities, bank’s need to re-think how they serve SMEs. Future focus has to be about support to help SMEs access new customer bases with collaborative ecosystem and networks leveraging emerging intelligent platform technologies.”