In an interview on August 3rd with BBC’s Today programme, the Royal Bank of Scotland’s chief executive Stephen Hester said that “banks have become detached from society” and that they need to reconnect with their customers.
Regardless of whether this was genuinely his belief, or a statement made to appease the government and the public, following three scandals in which RBS was caught up, I wholeheartedly agree with Mr Hester’s sentiment.
Further in the interview he said: “It is very clear to me. A successful business must be built off the back of serving customers well, and until we as an industry can say we are doing that, we won’t have finished the changes we need to make.”
Apart from the structural issues that banks have had to deal with for the past few years, I agree with Mr Hester that they have also largely forgotten their customers. This is due to a number of reasons, but I think it primarily comes down to culture – if you are operating in an environment where there is a misbalanced focus on individual gains and a complete lack of accountability, sooner or later you become too engrossed in what is going on internally, rather on what you need to do to remain relevant externally.
As a result, banks have completely lost their way in terms of ensuring that they provide the right set of services to their customers who are facing a world full of new challenges and opportunities.
Let me give you an example of how disconnected banks are from perspective of the average customer. I have worked and lived across four countries – Bulgaria, The United States, Austria and the UK. During each move I’ve had to set up a separate banking account, which usually is quite a painful process, especially when you are asked to show proof of residence only a week after you’ve settled in the new country. But apart from that, I am yet to find a bank that is good at connecting accounts across countries to accommodate worldwide travellers like myself. I find this appalling.
Back in 2010, official numbers confirmed that more than 200 million people will be living as expatriates. Surely, the worldwide expat market has substantially increased since then, but alas, to this day I haven’t found a reliable enough bank to address my concerns in this specific area. In fact, my current bank provider (which I will not name and shame, but I will tell you that it claims to be one of the most global banks in the world), has provided disappointingly bad service to me when it comes to connecting my UK and US accounts. As a ‘premier’ customer of this bank I believed in its assurance to deliver on the global reach it claimed to have, but unfortunately was left frustrated with their inability to keep that promise. I actually had a conversation with a person who works at that bank about this and his response was not encouraging – he said banks cannot afford to provide service that connects customer accounts on a global level and that I should stick to his bank as it was doing better than other rivals. He is right about the latter, but what he is not right about is that there is no money for the banks in this.
I, as a customer who values global access to my accounts, am willing to pay for that service. But no one is asking me about this. As a result, to my bank I am a lost stream of revenue because it is not tapping into what my true needs are and monetizing those.
Don’t get me wrong – I am not saying banks need to start charging left and right for the services they provide. All I am arguing is that, in agreement with Mr Hester’s comments, banks have indeed become completely detached from their customers, and that what they need to focus on in the near future is having an outside in perspective in order to gain back the trust of this very important group of stakeholders. Said simply, like any successful business, they need to tune back in to what their customers’ needs are and start addressing those. Unless they sort out this fundamental issue, banks will not be able to live up to their main purpose as purveyors of trust and we will be better off keeping our money under the bed in gold coins!