Naked Banking: The Truth About Banks And You is written by Steve Hogg, Paul Riseborough, and Karolina Morys, and is out on 5 October.
In this book we take you behind the veil of retail banking to explain how it really works. As industry insiders working for one of the UK’s highest profile new ‘challenger’ banks we are perhaps uniquely placed to do so. We will show you why the big banks always seem to do the wrong thing: from designing products they know will rip customers o to cutting branches they know their customers rely on – over a thousand between 2015 and 2017 alone.
The story starts with the way banks are set up – their business models. Weighed down by lots of underutilized, poorly designed branches in the wrong places and creaking information technology infrastructure, banks have big bills to pay. To meet them and still make a good return for shareholders, banks have in recent years viewed ‘product innovation’ as the solution, developing more and more new products to deliver increased revenue to the bank. Simple products that everyone understands are now a thing of the past.
This is more than just a story of big banks and their product strategies. We will show you how individual customer behaviour – the way we think and act when it comes to our personal finances – actually plays into the hands of the big banks. Product managers know customers have blind spots and biases and they develop products to take financial advantage of them. We will show you how they do it.
We will also give you a sense of what it’s like to be a product manager at a big bank – what they are asked to do, how they are rewarded, and the type of working environment they nd themselves operating in. As serving product managers we know better than most what the big banks are up to. And we reveal why the things product managers at the big banks are told to focus on – and which are important to them progressing in their careers – are often a million miles away from the things that matter to customers.
Sometimes you just want to know how to avoid tripping up when it comes to your nances and this book will help you in that regard too. We detail the specific product management strategies used by banks to part you from your money. Some are more obvious than others. Cutting the interest rate on your savings account a few months after you opened it is annoying but at least something you can understand. But what about inverse interest-rate tiers on your current account? Or ‘representative’ annual percentage rates (APRs) when you apply for a loan? The truth is that product managers have dreamt up every trick in the book to slowly – sometimes imperceptibly – earn more and more out of you. We thought it was about time someone documented what these tricks are, explained why product managers use them and pointed out what you can do to avoid them, or at least use them to your advantage.
Of course, it’s not just about avoiding the pitfalls. A question we get asked all the time is “how do I get the best out of my banking, then?” Here we provide some pointers as to what you can do to organize your personal finances that little bit better. Some sensible steps, and a healthy dose of personal discipline, will allow most of us to bank in a way that is simple, understandable, and worry-free.
We also make some recommendations for things that banks could and should do to put customers first. From a potentially painful move away from the function of ‘free banking’ to taking more steps to ensure we all understand how products work, the opportunities for banks to become more transparent and customer focused are many indeed. We will show you how a new relationship based on a fair value exchange between banks and their customers could point to a brighter future for both.
The future doesn’t stop there though. Retail banking is in a state of flux and there are reasons to believe that something more customer focused will emerge. From the promise of open banking, where personal banking data can be shared with other financial services companies to ensure products are better tailored to specific customer needs, to more thoughtfully designed services and processes, banks are starting to think more deeply about what customers want and need. is new dawn o ers banks the chance to build leaner, more agile organizations, better able to respond to customer demands and deliver new products and services quickly. We’ll take you through what we think it all means.
We decided to write this book because we believe that good banking is important. Important to start-up businesses needing advice on how to nance their growth. Important to young people learning how to better manage their money and save for their futures. Important for our economy and our society so that we can grow as a country and pay our way in the world. Yet the current state of affairs is not good enough. The big banks, almost without exception, have let us all down with their too-clever-by-half products and poor service cultures. The path to redemption starts with a clear-eyed view of what has gone wrong and this is our contribution to that debate.
Should you believe anything we say in this book? We are, after all, still working in the industry, albeit for a bank that is trying hard to change the status quo. You’ll be your own judge of that. Our aims for this book are modest: that you understand how banks work a bit better, grasp how the products they sell actually operate so you have a bit more money in your pocket, and that you reward the best banks – the banks putting customer service and simple products first – with your business, and not just the big banks. Because for all their gleaming headquarters, bumper pro ts, fancy adverts, and thousands of employees, it is you – the customer – who holds the key to better banking.
Naked Banking is out on 5 October.
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