Financial products can be complex. It can be hard to explain derivatives, say, or annuities.
Complexity is what most often gets blamed for the communications breakdown that exists between many financial providers and their customers.
But actually, do you buy that?
Do you buy that it’s hard to explain a savings account or loan or why it is good…. or not so good?
Should it be hard to explain why a business loan suits the businesses it was designed to help?
Not really. The trouble is, that sometimes products don’t get designed with the customer in mind. Instead of solving genuine customer problems, they’re created to solve internal issues – issues like profit, shareholder value or risk & capital ratios – issues that are not really that relevant to the average customer. That’s why reconnecting with customers is so important.
If you design a business loan that lasts for strictly 1 year, demands that the borrower “mortgage the house” and jump through hoops to satisfy a computer than only sometimes “says yes”, then it can get quite tricky to explain the benefits in plain English.
Start trying to tell a business that their loan doesn’t look attractive because it’s not large enough or doesn’t tick a particular box and it gets downright difficult.
Yet that’s what many providers of business finance find themselves trying to do.
They justify the same old products day-in-day-out, irrespective of what their customers need and irrespective of how hard it becomes to “sell the benefits” of the small business loans they provide. British businesses come in all shapes and sizes; they serve a huge variety of sectors and needs and use all sorts of innovative ways of working to do so. Usually, we’re proud of diversity, so why should one size fit all when it comes to funding for business?
Maybe the reason that financial institutions get stuck talking to customers has nothing to do with product complexity. Perhaps it has nothing to do with a failure to grasp social media, or the regulations that control what people can say. Perhaps banks don’t need to get better at using plain English or go back to basics, perhaps they just need to realise that products need to be designed with the end users in mind.
Financial institutions have spent years creating products that solved internal issues. The new breed of peer to business lenders are not institutions. They are “enablers” that help customers find answers to the problems that matter most. Instead of rigid products and tight lending criteria, customers will design their own loans with terms that suit them and their particular business needs.
The world is changing. It’s no longer enough to have shiny ad campaigns, glossy leaflets or a celebrity endorsement. Customers have woken up and are demanding something more genuine – it’s happening across all walks of life, be it politics, retail….. or financial services.