The personal touch in Finance and Banking, where has it gone?

Introduction

For a number of years it has felt like the personal touch in finance and banking has gone, with most customers treated not as an individual but as a numerical exercise. Long gone are the days of sitting with your Bank Manager to discuss a Mortgage or Loan, or even a Financial Advisor to discuss your Pension contributions and retirement forecast.

So we’re asking, where has the personal touch gone?

Regulation

The UK has some of the most stringent financial regulations in the world, introduced to protect consumers, businesses and the wider economy from financial malpractice, fraud, unnecessary risk and economic shocks. However, the result of this regulation has been to channel both consumers and financial institutions into a very binary way of doing things. In an effort to protect both parties, the ‘computer says no’ approach to decision making has taken over.

Financial Advice

Where financial advice is given, there is a great responsibility for the advisor to get it 100% right, 100% of the time. However, without a crystal ball to understand the wider economy and customers ever changing personal circumstances, this is all but impossible. As a result, many financial advisors focus on high-net-worth individuals where their time and effort will be rewarded at a greater level than less wealthy individuals. Quite simply the advice charges on £100k investment are higher than for £10k, however the compliance process and paperwork can be broadly similar for the advisor.

Automation

To avoid the liabilities and responsibility that come with offering financial advice, there are now online platforms for everything from Crypto to Pensions, ISA’s to Share Funds. The responsibility for making the choice lies with the individual and not the company, which leaves the consumer in a tricky position if they do not fully understand all the risks. A world of information to make sense of.

AI v Human

Individual Decision Making

Regulation has all but eliminated individual decision making from the personal touch in finance and banking. The days of the Bank Manager or Mortgage Advisor making an informed decision on your general custom, financial history, employment history and even your family standing are now gone. Regulated financial institutions now take a holistic view of decisions using comprehensive questionnaires, AI, credit ratings and algorithms. Head office sets the standards for branches and contact centres to follow.

High Street Banking

A ‘Banking Hub’ was not even a consideration 10 years ago, but in a time when finding a high street branch is like finding a needle in a haystack, they are a lifeline for many people. For complex questions, a friendly face or help that isn’t available on the App, the bank branch is still essential for supporting individuals. The Nationwide has even integrated this into recent marketing campaigns!

So is there no sign of the personal touch in banking and finance?

High Net Worth Individuals

If you’re lucky enough to be wealthy you may bank with a boutique institution, have a Business Accountant or Independent Financial Advisor. If not, you may face the same challenge as many of us, making financial decisions based on advice from friends and family, comparison sites and the likes of Martin Lewis (who we are a fan of). We would advise you do seek out a Financial Advisor for a review regardless of your net worth.

Angel Investors

Individuals or organisations such as Purple Shoots are more likely to look at a combination of the individual and business plan to make a decision about offering financial support. If you are an entrepreneur and the banks have turned you down, don’t give up hope, you may find a ‘dragon’ willing to invest.

Support Organisations

On the other end of the scale, if you are in debt there are agencies which have skilled professionals who you can talk to. These include Step Change Debt Charity, National Debt Line, Business Debt Line, Citizens Advice and Money Helper.

Summary

Automation, algorithms and compliance have largely removed the personal touch in finance and banking. However, the digital age has opened up a vast choice of financial products, online guidance, recommendations and reviews. AI advisors are already becoming popular, their ability to crunch a wealth of data and make an almost instantaneous decision very appealing. Indeed, our very own award-winning contact centre software, Omnireach, is heavily built around AI.

However, this blog is based on personal observations by the team in our office, yours may be different…