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Britain’s banks embrace new technology

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Biggest lenders respond to the demand for mobile services.

Video meetings and voice-recognition are set to replace passwords, pin numbers and lengthy branch visits as Britain’s biggest lenders embrace new technology to meet demand for faster banking services.

HSBC, one of the large high-street banks attempting to catch up with digital innovation and new nimble technology start-ups, is unveiling a site called Link Screen. It enables businesses in need of a loan, credit card or overdraft to speak with an adviser and view relevant documents online, instead of being forced to visit a branch.

The site, accessible via mobile or computer, allows customers to electronically sign for the loan, cutting out the need to post documents while reducing the time it takes to gain the funds by about a half.

The move comes as lenders race to launch digital applications to meet growing consumer demand for mobile-based services to bank on-the-go, and cut costs.

Lloyds Banking Group last week revealed it is allowing people to hold mortgage interviews via a video link from their home or office.

Other banks have recently unveiled voice recognition technology. Santander UK announced last week that customers will be able to tell their phones to recount their spending habits, and will soon be able to make payments this way as well. HSBC and Barclays launched voice recognition as a way for customers to log into their account, instead of having to type in a PIN.

“Expectations of banks are rapidly changing, and we understand that we must adapt. The reality is customers demand faster and simpler access to their banking services, when and how they want,” says Richard Davies, chief operating officer for UK commercial banking at HSBC.

Almost half of new HSBC business accounts were opened online last year, compared with 10 per cent in 2013.

The shift of customers to mobile is soaring. Figures from consultancy CACI show that current account customers visited their branch 427m times last year, less than half the 895m logins on a mobile app. The group forecasts that the number of branch visits is expected to fall to 268m by 2020, while mobile app usage is on track to reach 2.3bn logins.

However, the move by high-street banks to close branches in an attempt to cut costs is alienating some customers.

“Large numbers of consumers want banking to be easier, to take less time, but banks have to be mindful of the fact there is going to be a segment of the population that are not banking digitally, who do rely on branches,” says James Daley, founder of consumer group Fairer Finance.

Royal Bank of Scotland is poised to close a further 50 branches in the coming months, according to people familiar with the situation. The bank is carrying out these measures because of a drop in footfall in branches and in an effort to cut costs after it reported its eighth successive net annual loss for 2015.

Lloyds said in February that it would close 29 branches in the next few months as part of plans unveiled in 2014 to shut 200 across the country over three years.

Some 179 branch closures have been announced so far this year, of which 48 are the last bank to have remained in town.

“The demand for digital banking should not have surprised the big banks,” says Derek French, head of the campaign for community banking.

“They have no excuse for accelerating branch closures when not having fully in place the alternatives, for branch-dependent small businesses and others, promised to government over a year ago when the ‘last bank in town’ keep open pledges were cancelled,” he adds.

Although the UK’s largest banks, and a number of new challengers, have an agreement with the Post Office as a way for customers to deposit cash and cheques among other services, Mr French says its offering “has a long way to go”.

Security concerns are now creeping up the agenda as digital services proliferate. A recent report by Temenos, a banking software provider, warned that regulators will “have to stay ahead of the game” and ensure that cyber crime “does not become the next big global crisis”.

Other parties must help protect against cyber risk. Sir Bernard Hogan-Howe, the commissioner of the Metropolitan Police, last week suggested that banks should no longer refund some instances of online fraud, in the view it rewards customers for being lax over security.

Online banking fraud increased by 48 per cent to £60.4m from 2013 to 2014, while overall card fraud losses rose by 6 per cent to £479m, according to Financial Fraud Action UK.

However, Richard Lloyd, executive director of consumer group Which? describes the Met chief’s proposal as “astonishingly misjudged”.

“When Which? investigated last year, we found too often that banks were dragging their feet when dealing with fraud. The priority should be for banks to better protect their customers, rather than trying to shift blame on to the victims of fraud.”

In spite of mounting concerns over cyber security and discontent over branch closures, bankers and analysts say the big lenders will continue to evolve their digital services in an attempt to slash costs and stave off growing competition from technology companies such as PayPal and peer-to-peer lenders.

 


 

 

http://www.ft.com/cms/s/0/f0264952-f5d4-11e5-96db-fc683b5e52db.html#axzz44T2fbShi Date Accessed: 31/03/16 – Financial Times (FT.com), Britain’s Banks Embrace New Technology

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