Interactive Investor

Monzo and other challengers winning service race with high-street rivals

18th August 2020 14:38

Liz Bury from interactive investor

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Newer banks punch above their weight when it comes to customer satisfaction, according to the Competitions and Markets Authority.

Challenger banks trounce their high-street rivals when it comes to customer service levels, according to figures from the Competition and Markets Authority (CMA).

Newcomer Monzo ranked top for overall service quality as well as for online and mobile banking as it entered the listing for the first time.

Monzo was one of four non-traditional banks to dominate the top four spots in all service measures apart from branch services.

The survey asks customers how likely they are to recommend their provider to friends or family.

Mobile-only brand Starling Bank - set up by former Allied Irish Banks chief operating officer Anne Boden in 2014 - came in top for overdraft services, while Metro Bank, established in 2010, was number one for its branches.

Gareth Shaw, head of money at Which?, says: “Some challenger banks are doing an impressive job at keeping their customers happy, and their scores should serve as a wake-up call to the big household names that better customer service is needed to keep up with the competition.

“With coronavirus putting huge pressure on people’s personal finances it’s important for banks to provide access and support for customers. Anyone unhappy with the level of service they get from their bank should consider switching to a new provider.”

Nationwide was the only traditional banking brand to show up in the top three spots of any service category, coming in at number two behind Metro Bank for its branches. 

In third place for branch services was Virgin Money, a challenger brand which was bought in 2018 by Clydesdale and Yorkshire Bank.

The telephone and internet brand First Direct, which appeared on the scene as a swashbuckling start-up back in 1989, also made a good showing in the top spots for overall service, overdrafts and online banking. It was bought by HSBC in 1992.

The findings suggest that older UK banking brands have work to do to catch up with their app- and online-savvy rivals on service.

Royal Bank of Scotland and NatWest were among the more well-established and bigger banking brands to be found languishing lower down the league tables. 

A NatWest spokesperson says:

“We’ve been listening to customers’ feedback and are investing in improvements such as trialling new technology to make banking easier by way of biometrics, as well as video banking and introducing technology to help reduce queuing times in branches.”

Monzo, seen as a digital banking pioneer, did garner more negative coverage earlier this year, after posting a pre-tax loss of £113.8 million for the year to the end of February 2020.

TS Anil took over from Monzo founder Tom Blomfield as chief executive in May 2020. 

Anil says:

“To be ranked number four for overdraft services is a huge accomplishment. We launched overdrafts just two years ago with a view to make borrowing more transparent and to change the industry.” 

Monzo customers can adjust or cancel their overdraft within the banking mobile app and can see the how much the overdraft will cost in pounds and pence.

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