Telling the truth about SME life today

Big brands need to put customers first

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One thing is for certain, trust in these utility behemoths, is now irreversibly broken. No repair job, no multi-million pound advertising blandishments, no way back.

Regardless of the market sector, if you betray the consumer, they will never forgive you. And consumers surely feel betrayed. Trust has been obliterated and nothing material can be done to repair it. No matter what consultants tell them, no matter how hard they try to reform, it is too late.

Following the financial crisis of 2008, trust in banks plummeted, leaving the industry wide open for criticism.

Efforts have been made to address this criticism, with the British Bankers Association calling for the relaxation of rules for challenger banks in order to improve competition within the industry. 

However the disgraced giants of banking remain absolutely fundamental cornerstones of our economies. For all their sins in treating customers as convenient ATMs and abusing their relationship, they also retain strengths that should sustain their futures.

They may not be trusted for their ethics, but they are trusted to hold money safely. Energy companies likewise, to source and supply energy. It is just that they are no longer seen to have the integrity to deal with people, to serve and to be fair.

The parallels between industries is so striking that one wonders if indeed there is something more to it. Is this actually the inevitable end-game of global free-market capitalism

Companies get too big and lose touch with decency, driven on by quarterly reporting rather than any sense of mission. What sectors that have utility status might one day follow this rocky road Grocery retailers Automotive, travel, publishing companies Who knows

What we do know is that the collapse of trust in utilities does not mean the collapse of the utilities. Five major retail banks own the best part of 30m UK customers. The low profitability of 60% of their customers suggests an inevitability of retreat. But can a future where RBS or HSBC surrenders 10m customers really be contemplated by these banking giants One suspects not.

So if you were at the helm, what would you do The majority of your customers lose you money. Underserved, overcharged and, frankly, underwhelmed, they mostly loathe you, and what you stand for. Yet they need your service. Or, at least, they need a service.

In both energy and banking sectors, tiny ant-like challengers are springing up, backed by lots of smart capital. Some merely copy the extant ways of doing business, effectively repackaging the same old services, and same old products with new brands. 

It is an expensive game and head-to-head with the Big Bad Boys, it will be a fight to the lowest common denominator. Like the World War 1 trench strategy, the casualties will be heavy on both sides.

Meantime, the real threat to the banks and to the energy firms is not from mini-mes, but from bright digital operators, operating with light footprints. They have worked out that they can utilise the existing infrastructure without the cost-drag, and also deliver innovative, interesting and engaging services and products for modern customers who no longer trust the old players. 

Reassure people that their money is safely held in the established infrastructure and you have a sustainable challenge that might catch fire like parched Californian hillsides.

The banks and the energy companies may be vast, but they are slow, and they are hampered by much bigger issues than most of us could contemplate – mis-selling scandals, regulation, executive pay, government pressure and delinquent technology, to name just a few.

They now have to decide. Will they let the ants carry off their lunch, or will they strategise for a world where they continue to provide just the infrastructure and the secure vaults under their old brands  

Spanish banking giant BBVA has recently purchased Simple, the US digital banking service, suggesting that some of the established players may themselves use light digital brands, with innovation and interaction with customers at their heart.

A future without the behemoths looks unlikely. But a future where they use newer, more trustworthy, digital brands to re-engage with customers looks highly probable. Oh, and, by the way, that future is here today.

Alex Letts is chief executive of Ffrees, a provider of digital current accounts. 



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