With 50% of consumers switching savings providers due to disappointing service, are banks any closer to providing what customers want? Pauline McCallion looks at branch versus net banking  
 
The ‘rate tart’ – a consumer who continuously switches financial products to stay on the best deal – is a common phenomenon in today’s financial services industry, but there could be more to switching than simply saving money, according to Moneyfacts.co.uk. The financial comparison site claims service also plays a big part, and online accessibility is beginning to factor highly.

Products and service can be an explosive mix in terms of internet banking – consumers who are taking the initiative and completing applications online themselves, are increasingly being rewarded with lower rates and better products. This is an established trend for simpler products, such as bank accounts or personal loans, but banks and building societies have so far failed to attract consumers looking for more complicated products, such as mortgages, to log on.

Taylor explains: “While many mortgage providers offer the ability to apply via the internet, only three providers have exclusive products that are only available online. So there seems to be a lack of incentive for DIY mortgage applications. There should be significant cost savings for the institution with this channel, but up until now these do not seem to be passed to the consumer.”

The tables are beginning to turn, however, according to Taylor. She cites Direct Line’s recent announcement concerning its first online-only mortgage, to be launched on the 16 June, as evidence of a change in thinking among lenders. Research carried out by Direct Line showed consumers need to be rewarded for completing the application process themselves online. Of the respondents to its survey, 46% said they would be likely to apply online for a better rate, compared to only 26% if the mortgage was available through all channels.

“To gain the confidence of consumers to purchase these more complicated products online, institutions need to ensure they have easily accessible help options, with someone to speak with if needed,” Taylor says.

She also points out that lenders will probably be unwilling to drive all of their business online. “Although it does provide cost saving opportunities, they also potentially miss out on the cross-selling opportunities that branch staff are trained to follow rigorously,” Taylor explains.

So, it seems that logging on to make savings could be catching on with mortgage lenders looking to increase their service offering to borrowers. However, as Taylor points out, this is unlikely to lead to the decline of the branch channel any time soon.