Each year, the Chancellor’s Mansion House speech is a significant moment in the political and business calendar. And given the tumultuous year we’ve had so far, the stakes feel higher on this occasion.
There have been grounds for tentative economic optimism in recent months, from the Government’s new industrial strategy to growing business and consumer confidence. But recent headwinds have provided sobering resistance to some of this optimism.
The GDP contraction in May, warnings from the OBR on economic resilience, and a shock rise in inflation this week serve to remind us that recovery will not be a straight road.
Against this backdrop, Tuesday’s speech marked an opportunity for Rachel Reeves to strike a chord with UK PLC, calming nerves of uncertainty and instilling confidence in the pursuit of sustainable growth.
Customer satisfaction in the banking sector
The reforms announced this week are intended to unlock growth opportunities for businesses across all sectors, in particular those in the financial services space.
Following the influx of regulatory measures and consumer protections after the global financial crisis, the operating environment now appears notably different for our financial institutions.
From a service perspective, this shift comes as the sector finds itself on an upward trajectory.
Over the past year, customer satisfaction with banks and building societies has risen by 1.8 points to 81.1, according to our latest UK Customer Satisfaction Index (UKCSI), which showed improvement across every sector. That puts the sector 3.8 points above the UKCSI all-sector average, making it the second-highest performing overall.
Though not the only factor at play, it is hard to discount the positive influence that a heightened focus on customer satisfaction following the introduction of the FCA’s Consumer Duty has had here. Particularly with the strong emphasis on the role of the board to ensure an end-to-end customer focus and oversight role.
The importance of a service culture
Regulation in any sector should be designed with the customer at its core. At the same time, it isn’t there to burden boardrooms with unnecessary red tape that stifles innovation and growth.
Ultimately, our research shows that regulation is likely to be most effective when it positively influences and supports organisational culture. It also needs to prioritise customer outcomes over minimum requirements or standards.
That said, regulation alone can only do so much. For example, leadership and training are crucial components of building an effective service-led culture, and increasingly, boards are recognising the value these factors bring in terms of return on investment and the superior service they enable.
Looking to the top performing banks in our latest UKCSI, those excelling have not only embraced the relentless customer focus championed by Consumer Duty (and generally have done long before it was introduced), but also deployed their service proposition as a core part of the customer offer and have been able to balance human intervention with appropriate use of technology, – positioning this clearly in their marketing and advertising, and understanding the long-term business benefits of doing so.
Whatever the evolving regulatory landscape looks like in the future, all organisations should grasp the recent strong UKCSI results as an opportunity to focus in on the customer, to both continue to improve outcomes and build a sustainable business model that drives long-term success.
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