Dear Challenger Banks

I love what you are doing.  I see a revolution emerging at the moment that puts financial control and transparency back in the consumers hands.  I love the innovation, the interfaces and the technology that you have built and I really like the ease of use which has left me scratching my head why it has taken so long to get to this point.

I do however have some headlines that I think you should pay notice to:

Banks are snatching back PPI payouts: They’ve paid out £25bn after years of mis-selling

Barclays offers redress for unsuitable financial advice

Santander sets aside £43m for investment advice redress

HSBC estimates £96m bill for investment advice mis-selling

I googled “financial advice redress” and literally pages of headlines with huge mis-selling figures from many of the high street banks.  I was really spoilt for choice.

I know that you have designed propositions that are brilliant to use and exciting. I know this as I am a happy Monzo Customer and currently looking at Starling Bank to move my family’s banking to when it launches.

However, I am also a financial planner and every day I go to work, I get to deal with clients that have an array of banking stories, some of them are horrific and some of the things I see that they have been sold by their trusted banking organisation leaves me pretty peeved off.

Let me be honest here, the banking world has systemically let many consumers down over the years and it would be really disappointing if you continued this trend.  You have a chance to change all of this and actually rebuild some of the trust that many of the big players took for granted.

I have seen some of the financial advisory partnerships with challenger banks emerge and some of them seem great on the surface.

I do however have some thoughts if you are looking to cross sell financial advice to your future customers:

1) Your customers are human beings, they don’t deserve to be sold to as “data”.  Many banks figured out years ago that there wasn’t enough money in the traditional method of banking and that the fees they could charge for portfolio management and flogging products to clients would make shareholders happy.  Please see the above headlines to see how this story unfolded.

2) Having a financial advice strategy based around maximising shareholder returns is not a good strategy for clients.  This usually means bad outcomes, unfortunately too many to count in the last few years.  I am yet to see a model of one of the big firms where shareholders and clients both win.  I would love however to be proven wrong as always.

3) The livelihoods of consumers (i.e. savings and pensions) should not be subject to “targets”   The days when people had targets on boards in the back rooms of banks should be gone.  It would be crass to bring this culture into the digital world.  Your consumers deserve better and once they lose that trust it never comes back.  

A quote probably sums this up best –

“Those who cannot learn from history are doomed to repeat it”

So good luck with the next few years and beyond but please take the Trust you have created with your innovation and treat the livelihoods of people with the respect that it deserves.