All of the free biscuits and pens, the glossy touch screens, the cash-counters and cheque books that you pick up from branches are all worth nothing if the type of leadership of the bank is wrong.
Let’s face it there is little to differentiate one bank from another. The products are basically the same, the differences in pricing are marginal and banking is fundamentally boring. For most people banking is a necessary utility. Banking is something that you need to operate in the modern world much like gas, electricity and water and not much more interesting. With a fundamentally boring product and little to differentiate between suppliers it isn’t surprising that consumers don’t switch their accounts very often.
The CEOs of the banks will tell anyone who is prepared to listen that their bank is different because of its customer focus and its high level of service. However the problem is that customers simply do not believe this.
The way that banks have been organised has not fundamentally changed since the Victorian days portrayed in the film Mary Poppins. Run from the centre by a set of grey characters who metaphorically punch through the bowler hat, break the umbrella and snap the carnation of anyone within the bank who voices a different opinion. Dissenting voices challenging the status quo have never been welcomed in banks.
To truly bring about a change in the service that banks offer to their customers and to bring the customer into the centre of everything that the banks does requires turning the organisation of banks on their heads.
Rather than the branches and call centre being there to bring in deposits and lend money to meet the demands and targets set by Head Office, the people in the centre need to recognise that their role is to support the most important employees of the bank, those who face off directly to customers in the branches and contact centres. That nothing is more important than to ensure that they are providing everything that the customer-facing staff need to deliver the best service to the customers.
Decision-making also needs to move back from the centre to as close to the customer as possible. That is moving back to a model where the bank manager was what his or her title said ‘the manager of a bank’, not simply a supervisor or order taker. (Some banks are having great success in terms of customer satisfaction and profitability with a move to this model - see http://www.itsafinancialworld.net/2010/11/money-money-money-swedish-bankers-in.html# )
In other industries the idea of the centre being there to support the branches or stores is absolutely the organisational model that they operate. It is a fundamental philosophy of Tesco, where the people in the stores are seen as the most important people in the organisation. It is also true of John Lewis where the partners in the shops are king. In a completely different industry, IT application and business process outsourcing/off-shoring, HCL has gone even further and have moved to a model of Employees First. In this model employees can raise service tickets against executives if they are unhappy with the service that is provided to them. The executives are held to service level agreements to respond to the tickets. The result is that HCL has seen a rise in customer and employee satisfaction as well as profitability.
This problem is not limited to the existing banks, but also applies to the new entrants. With the ever closer scrutiny of the people appointed to be executive in banks by the FSA with the emphasis on previous experience, this forces the banks to give favour to those who have spent many years in the traditional culture of hierarchy, no dissent and management by fear and compliance where the band grade and the number of employees working for you is key to your authority.
That is not to say that some banks are cognisant of the cultural issue and the need to change, however if we are to end up with the types of banks that we the customers want fundamental change in the way that our banks are operated is needed and that does mean the addition of new touch screens or more free dog biscuits.