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What bank customers really want

Lorna Bourke’s ideas for a banking revolution.

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by Lorna Bourke on Nov 07, 2009 at 00:01

While the banking experts and regulators argue over the best way to mend our broken banking system, customers remain fed up with poor service and high charges – which, we are warned, will rise still further – and the rip-off mentality of top management which treats us like sheep to be fleeced.

What we want is a banking revolution to provide better and more innovative services, lower charges and for management to take ‘Treating Customers Fairly’ rules, seriously. Clearly the high street banks need to reduce costs. But that should have happened years ago.

How many of us ever visit our bank or even one of its branches? As customers migrate in increasing numbers to internet banking and many of the best products such as savings and deposit accounts are only available online, customers are doing the jobs that hundreds of thousands of bank staff used to do.

But we are not reaping any rewards either in lower charges for basic banking facilities or in better savings products. While the investment bankers were gambling with our money and earning themselves huge bonuses, they forgot to invest in new computer systems to improve efficiency and we are paying the price.

How can the banks justify charging an average of 17.5% for an authorised overdraft when Bank Base Rate stands at 0.5%? More than half of the population doesn’t use an overdraft. Only 17% of bank customers are permanently overdrawn and 13% are overdrawn at times. But these customers bear all the costs of running current accounts.

What we want is a menu system whereby we pay for the services we use on our current account – not the services that the bank chooses to offer or the services that other bank customers are using. There has to be an end to the cross subsidy whereby those who remain in credit – by however small an amount – pay nothing for bank services and all the costs are carried by those who are overdrawn. Why should those who write 15 cheques a month but remain in credit to the tune of an average £25 pay nothing for this service?

Reducing costs means cutting the number of branches drastically – which should be relatively easy with the consolidation that has occurred since the credit crunch. There is now huge duplication. As the use of credit and debit cards increases, the old arguments that the banks need branches to service business customers’ requirement to deposit money overnight is becoming increasingly irrelevant.

What customers want is fast, efficient and preferably on-line money transmission services that work. It is ridiculous that, for example, that Nationwide’s online banking systems will not allow a customer to withdraw more than £10,000 to transfer to another bank account. But you can make any number of £10,000 withdrawals on the same day, paid to the same account. So if you want to move £150,000 from Nationwide to Natwest, you have to do it with 15 separate transactions. If the purpose is to limit fraudulent withdrawals, then the limit should be a daily one.

The big question is, will the new retail banks like Tesco Bank and Sainsbury’s do any better? Starting off with a clean sheet, new computer systems and without the expense of running standalone bank branches, they certainly ought to be able to offer a better and cheaper service. If they stick to consumer banking and don’t try to expand into small business banking, they could even offer a service which is much cheaper. Machines can do most of the things that consumers want their bank to do.

Bank customers have become apathetic over the years because there was so little difference between the offerings from the big four. The former building societies such as Halifax, Alliance & Leicester and Abbey had a chance to make a difference when they demutualised. But they lacked bank managers with real unsecured lending experience to capture anything more than the bottom end of the market – the sector that Tesco and Sainsbury’s are likely to target where risk is assessed by credit scoring computers rather than real live bank managers.

But above all customers are tired of being ripped off by clauses in the small print on unauthorised overdrafts which they didn’t see and they are confused by the increasingly complex terms and conditions on most current, savings and deposit accounts.

A bank that genuinely puts customers first and treats them fairly will be welcomed by all and should be able to carve out a commercially viable share of the current account market. Bring on the competition.

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7 comments so far. Why not have your say?

We want our banks staffed by people who can make decisions and are there to help .

We don't want to have to ring up our banks , as my wife did a couple of days ago , only to be pestered by an annoying set of instructions along the lines of .... 'if you want such and such press 1 .... if you want such and such press 2 ' and so on . My wife pressed the various sets of numbers as instructed . This went on and on until my wife arrived back at the original set of instructions . Only by being patient did she actually , and with a great cheer get someone to talk to .

This is no way to do business . There should be more and smaller banks who can only survive on top class customer service , not this mindless Dalek voice annoyance .

Also we should be encouraged to keep money in our current accounts for longer with decent interest rates .

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I have now transferred my account from Lloyds TSB with whom I have been for at least forty years to SMILE, a part of the Co-opgroup.

Amazingly, having been with Lloyds for this length of tiime, they had the timerity to reduce my overdraft limit to £500 having not been in debt for the last how many years.

I have also just received some inheritance funds so the balance went even higher than usual. What did I get, begging phonecalls from Lloyds to make an appointment to sort out my finances. Naturally I told them the funds were already spoken for and moved them to my BS accounts just to get them out of my way.

In the end as we had an account with the Britannia, part of the Co-op group, I signed up for online banking with them.

No monthly charges, interest on my account, all switching over done within a month as promised, and would you believe an overdraft facility, not requested of £1,000.

Considering I have only just joined them, I was very pleased with is, even though I do not use the facility.

I have had a number of very polite English phone calls just to check that I have received their cards etc and no pestering about the balance.

Would I recommend them - you bet!

gingerman

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I refer to Gingermn's remarks, when I retired from Barclays 8 years ago, this is what my branch was like, and we were proud of our service.

Nowadays, it would seem that customers are an inconvenience, and not as they should be, necessary for the business success.

JMR

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A lot of what Lorna advocates (I deduce) is already in the pipeline. Bank executives are not Martians,even though they have skins like a rhinoceros.

There will be sweeping changes on the same scale as happened when Dr Beeching axed the railways, and Maggy's government snuffed out the coal mines.

The world has moved on, the decade of reckless borrowing is over. The same ridiculous excalation of the notional value of property will not happen again, and another thing which will subdue lending is the fact that cars being made today will last twenty years with careful driving. Also household appliances, TV's and furniture are far better made and last longer than they used to do.

Yes austerity is coming but it will a different kind of austerity.

As regards swinging overdraft rates: I must say it's a touchy subject. Some people never learn how to manage money no matter how hard you try to beat it into their heads. Whilst others find themselves in an insolvent position through no fault of their own. These people should not be forced to pay exponential interest rates but should be given a fair chance to recover.

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Lorna accuses the banks of cross subsidising various services. Does she actually have the evidence to prove this? Couldn't it be that the banks have actually worked out the cost of various services correctly?

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I absolutely agree. We are fed up being treated in this despicable way by all the big Banks. I love the fact that Tesco and Sainsburys are snapping at their heels and can't wait to move my accounts. Bring it on. I do all my banking online but can think of nothing easier than popping into a bank in-house at my local Tesco if required at the same time as doing my shopping. Be afraid big banks - be very afraid.

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Francis

Nov 07, 2009 at 19:41

I agree with everything that has been said about the banks.

However, what people really want is for the clock to be turned back 40 years to the days of mutual banks like the Trustee Savings Bank with Branch Managers in every branch and to the days of honest simple Building Societies.

The curse of greedy shareholders is at the root of the problem and I recognise that many of them were former customers of mutual societies, but I think that without the mad Mrs. T egging everyone on to demutualise the present situation would not have come about.

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