Perception drag in Retail Banking

4 banks cum fraud


We have now completed our analysis of the pereception of “traditional” high street banks vs new “Challenger” banks. We analysed social media from October 2018 to January 2019 for the “Traditional” banks NatWest and Lloyds, and “Challenger banks” Monzo and Revolut to understand how they were perceived, how it differed, and what lessons could be learned. This is covered in our latest research, “Banking in a Fintech World”. In brief, the “Challenger banks” are better perceived, for a number of reasons both positive and negative. An earlier post showing the overall picture as it emerged is over here).

One of the main reasons that Traditional banks do less well than Challenger banks is that negative stories from long ago in the past keep on surfacing, dragging down perception in the here and now. This can be seen in the chart above, these major spikes are around the topic “fraud” (other areas e.g. mis-selling etc are similar). What you will notice in the chart above is the signifcant down spikes in the topic are from Lloyds and NatWest, as is most of the activity (dots).

Look at the major downspike stories in this period on October 27th – Lhere, loyds faces a probe alongside KPMG over HBOS possible fraud a decade ago! 

However, all is not lost – Lloyds had an upspike on November 14th – it was shortlisted for an award for anti fraud detection system. Not quite the same magnitude, but a useful positive addition to perception around fraud.

Of course, it can also be undone. On November 12th, NatWest co-released a video on how to keep yourself safe from scams & fraud over the Christmas period and garnered a lot of positive attention, but then on November 26th there was “Fury over NatWest ‘mocking’ response to bank fraud”. An internal email, joking about a scam, was accidentally forwarded to the victim by bank. staff.

The Challenger banks, being newer, as yet have not been as badly hit by Fraud issues, especially historical ones  (this is generally true for most of the negative issues at present) – but there is no rule saying they won’t succumb. In fact, just after we completed the study, Revolut got into quite a lot of trouble for an advertising campaign , to the extent of being threatened with possible investigation by the UK Financial Conduct Authority.

(Update 28/02 – Revolut has again created a perception downspike – but as the analysis above shows, this will add to the “perception drag”)

When we look at the impact of these spikes over time, the impact of these stories time and again is to drag down the perception of the bank – we call this “perception drag”, and it requires countering “good news” to bring it back. This drag has a negative impact if one is in competition with other banks for new customers, as increasingly people go online (90%+) for recommendations and advice, so negative perceptions increasingly matter. Also, our own experience in customer service work is that positive perceptions help in the customer satisfaction and retention arena, and as it is usually far less expensive to retain an existing customer than attract a new one this has a major impact on value creation.

For a copy of the full report get in touch