How Technology Failures Can Damage Your Brand

Banking technology failure has been top of the agenda recently, and whether it is TSB customers shunning the bank after an IT meltdown, or VISA users finding their cards wouldn’t work after a night out, Consumer Intelligence research shows that your customers won’t give you the benefit of the doubt if your systems fail.

Financial services customers are becoming ever less trusting of the brands whose technology lets them down, releasing their data to third parties or failing to work at a vital time.

“Over half of people are concerned over using digital and online banking after recent data breaches and technology failures and are taking action to ensure they don’t have problems again,” says Andy Buller, travel money expert at Consumer Intelligence.

“With many of them choosing to switch bank or apply for alternative products, it is clear that customers are not prepared to give banks a second chance if their data is leaked or the technology fails them.

“That’s why it is vital to ensure that sufficient tests and live-proving is carried out before new services or updates go live — otherwise you are placing your reputation on the line.”

A lack of testing behind TSB

Failures at TSB, which have cost the bank over 12,000 customers, were caused in part by a lack of testing. The recent IBM report into the problems concluded that “TSB migrated customers on to a new IT platform without sufficient testing. IBM has not seen evidence of the application of a rigorous set of go-live criteria to prove production readiness.”

Rigorous live-proving could have prevented these issues, but the company chose to go live early with its updated platform.

Andy Buller says he is worried that, given the pressure to introduce technological innovation as fast as possible, we may see more issues like this.

“When it is a race to be first, it is easy to put things out before they are ready,” he says. “But as we have seen, not testing properly is a false economy, which can lead to huge issues down the line.”

Huge numbers of banking customers affected by issues

New research from Consumer Intelligence shows that large numbers of people have been affected by banking issues in the last year. Nearly a third (30%) of all respondents had been affected by technology failure or data breach, of which 80% had been in the banking industry. TSB and VISA represented the bulk of the issues, with 49% affected by TSB, 48% affected by VISA and just three per cent by issues with other banks.

But even those who are unaffected are nervous

A third of people have been directly affected, but the ripple effect has been wider. Over half (56%) of respondents are concerned about the safety of their digital and online banking, and nearly half (48%) are changing their behaviour because of it.

Affected banks will lose customers

Those who have changed their behaviour have done a variety of things, some of which will damage the banks directly. These include applying for new products and services, being wary about who has their data, and switching banks altogether.

Behaviour changes after technology issues

Password changes

The positive side of recent failures and breaches is increased interest in security. Those who ticked the ‘other’ box on the survey to ask how their behaviour had changed, had mainly decided to change their banking password more often. Although 34% have never changed their banking password, 15% change it monthly, 11% annually and a similar percentage every six months.

“Increased security consciousness may be the silver lining behind this year’s banking failures,” Andy Buller says.

“Everyone should take responsibility for helping to keep their data safe.”

No second chances

For those brands who do experience technological issues, reputational failure amongst consumers may dog you for some time.

Over forty per cent of people agreed or strongly agreed that they took account of previous issues with banking technology when deciding which products to apply for, while only 20% disagreed or strongly disagreed that they did.

“Those who experience technology failure are likely to find a dip in new applications, as well as switching away by existing customers,” Andy Buller said. “Customers have long memories and they are concerned when technology fails. It is far better to ensure that your customers are well-served in the first place, only putting out new technology updates when they have been tested thoroughly and keeping your bank office technology in tip top condition.
“Our study shows that this is a genuine concern for customers, and banks need to react.”

Why do you need consumer research?

At Consumer Intelligence we believe that it is the businesses that adopt an unwavering focus on their customers who will survive and grow.
We make it our mission to help you achieve this by providing tools and services to enable you to better understand consumers’ attitudes and behaviours, as well as the means to analyse this data and take positive business decisions as a result.

Download our Guide to 'Understanding Consumer Attitudes' to learn how our output goes beyond research and data to uncover genuinely exciting insights – invaluable nuggets that can help transform your business and your bottom line. 

Consumer Intelligence surveyed 1089 people in June 2018 through Viewsbank  

Post a comment . . .