Customer satisfaction and compliance: the risk of division in banking

Consumers are no longer loyal, and banks know it. 30% of customers have at least two accounts. 12% have four or more. As it stands, the UK average is approximately three accounts per person.

For those with multiple accounts, it’s typical to hold one with an established high-street bank and the other with a challenger offering.

So, while established and challenger banks are in increasingly tough competition with one another, they’re ultimately peers taking care of the same customers. 

Products change, but some preferences remain…

What attracts a consumer to one type of bank over another comes down to factors like advertising, app features and support.

But a banking customer's fundamental needs have not changed. They still prioritise quick and easy payments and protection against fraud and financial crime. 

However, recent evidence suggests that these customers have quite different experiences depending on whether they’re transacting with their challenger or traditional bank account.

This implies increasing difficulties in blending customer satisfaction and compliance, and ensuring the two harmoniously co-exist. 

How compliance measures can define a customer's financial world 

The root cause of contrasting experiences isn’t necessarily apps or product types. Rather, different interpretations of fast-moving regulatory rules around KYC and AML screening.

The risk here is that those two core customer priorities we mentioned will potentially split apart.

In such a situation, challenger banks – who’ve built brands on low friction – would offer ease. While high-street names would be more likely to sell on robust fraud protection controls. 

But banks who come together to align fraud controls have an amazing opportunity: to grow alongside each other, do right by the consumer and set a great example for modern financial services. Let's explore...

Balancing experience and compliance: the approach scope

It’s safe to say that 2024 was a mixed year for challenger banks. The FCA issued fines to Metro and Starling for inadequate screening controls, but challenger offerings dominated the top slots of customer satisfaction surveys. Then there are the established banks, who fared less well on customer satisfaction but did not face severe regulatory penalties.

These contrasting customer experiences and regulatory responses indicate different underlying financial crime prevention frameworks and processes.

Differences which risk siloing banks and capping growth. And asking customers (who we know appreciate new ways of banking but are largely provider-agnostic) to essentially, and unfairly, “pick a side”.

Customer satisfaction and compliance: coexistence makes you more competitive 

So, there's an undeniable case for closer collaboration between challenger banks and established organisations.

For example, sharing intelligence, referencing the same high-quality risk data and opening the dialogue on how compliance requirements like pKYC are interpreted depending on service models.

Collaboration of this nature gives banks and consumers the best of both.

Consumers get their fundamental needs met: quick and easy payments, plus protection from fraud and scams.

Banks of all descriptions can grow in line with FCA guidelines. by diversifying into credit offerings or carving out new spaces as in-branch banking declines.  

Aligning fraud controls: the opportunity of unity 

Synectics can help you solve the customer satisfaction vs compliance conundrum. We offer the largest pool of continuously evolving risk intelligence, which is constantly added to by fraud teams, monitoring systems and trustworthy third parties.

Our banking customer community totals two-thirds of the sector’s biggest names, who we can connect you to via confidential forums and intelligence sharing groups.

And, because of our unbeatable insight into banking’s fraud exposure and financial crime controls, we can help you craft strategy based on real-time performance intelligence.

Interested in learning more? Click here for a 30-minute call.  

British consumers to prefer platform banking, study - ThePaypers

20% of Brits haven’t visited a bank branch since before - KPMG UK

McKinsey – “The future of UK fintech: 2015-2035”

A very dark chapter in the challenger bank story’ - FTAdvise

Latest banking satisfaction survey results revealed by CMA - GOV.UK

With physical bank branches disappearing, how will the UK’s move to digital finance play out