Guest comment: What will happen to customer service in retail banking now?

On Wednesday 16thJune 2010 Mervyn King disbanded the FSA and by 2012 staff will be redistributed within one of two of the Bank of England’s new supervision units and a separate consumer protection agency. This leaves many unanswered questions in terms of upcoming policy, not least about what action will be taken to address customer service in the interim.

Prior to King’s announcement, the FSA promised to “name and shame” the worst offenders by publishing the number of customer complaints received by individual banks in August this year. Whether the change takes place or not, under this new regulatory regime consumer protection will be taken seriously and banks will need to ensure that improving customer service is forced up the corporate agenda.

Under existing FSA regulation only the total number of complaints to all banks are published and the individual winners and losers in the customer service league table is unknown. What is clear, however, is that the volumes of complaints are increasing. The City Watchdog reported that Britain's banks were hit by 2.65 million complaints in the second half of 2009 – double the number recorded in the same period the year before (1.48m).  It is unsurprising then, that the proposed change in reporting to make individual institutions more accountable has been met with objections. With this regulation already announced, it may be that King will allow it to be pushed through, particularly since the Bank of England will be keen to show action in addressing the rapidly rising consumer discontent.

While the proposed legislation was met with concern among traditional players, the industry’s emphasis on customer service will serve new market entrants well. The challenger brand, Metro Bank, is launching within the month and has put customer service at the very heart of its offering. It seems that Metro Bank will be managed much more like a retail brand, for example branches will be open on weekends as well as week days and opening hours will run from 8am to 8pm. The bank has also promised to support branch services with online and a 24/7, London-based, call centre. It certainly has been designed with customer convenience in mind.

The launch of Metro Bank looks likely to increase the contrast between different banks’ approaches to customer centricity and what good customer service should look like. It will be interesting to see whether Metro Bank will follow the retail business model in terms of maximising customer retention. The likes of Tesco and Amazon have set a precedent on the effective use of customer data for improved cross and up sell opportunities as well as customer retention. With such a strong focus on customer service, Metro Bank is likely to follow this model and fully utilise the customer information available to them. The bank should ensure that customer history and preferences are understood and incorporated into all communication between the customer and the bank across all channels so that conversations are tailored to the individual’s needs.

Metro Bank is setting itself apart from the established players who have a tarnished customer service record. However, as competition in the banking space increases, traditional banks will also need to prioritise their customer service offering.  Demonstrating customer understanding across all channels will be key to improving service and customer satisfaction. With customers demanding more for their money, an ever greater number of banks to choose from, and brand reputation at stake, now is the time for all banks to take action and improve customer service whether new regulation necessitates it or not.

By Jeremy Payne

senior international marketing director

Pegasystems

www.pega.com/

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