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13 January 2009

Can the Banks Really Change?

Back in November 2008, before the real seriousness of the global financial situation had become apparent, I attended a Retail Financial Services Panel Discussion & Luncheon in Sydney. The topics proposed for the panel includes:

  • Competition and customer acquisition amid the credit crisis
  • Group strategy post-credit crisis - what will consolidation of the sector mean?
  • Life after the 100-point check: The business opportunity and customer experience
  • Innovation in the retail banking sector - how are you going to engage customers moving forward?
  • What is going to positively and negatively impact your customers?
  • Effective and efficient processing via various channels
  • Positive and comprehensive reporting
  • Outsourcing of back-end processing by the major banks
An insight hit me during the panel discussion. Never before had I heard bankers say the words "responsible lending" so many times.

For my sins I have spent most of my adult life working in banking & financial services, so there has been plenty of opportunity for me to hear the words "responsible lending". But in fact, this was the first time ever that I had heard those words fall so liberally from a banker's lips.

Usually the term "responsible lending" falls only from the lips of a banking regulators (ASIC or APRA in Australia).

In addition, the panellists talked a lot about "proper pricing and assessment of risks" ... whatever the 'new' normal is" (Jim Cock, GE). This does not bode well for borrowers. It sounds like banks are not sure how to properly assess risk anymore. For Cock the key message was about the importance of good data so that risk can be effectively priced, he also spoke glowingly of the need for positive credit reporting (which IMHO is a bane in the US and will do us no good as consumers).

Bostock, from the NAB and newly arrived from the UK, noted that the UK had already moved into a phase of asset deflation and that this was having a flow on effect to jobs and mortgage repayments.

Each panellist expressed hope in various forms for the future. Each talked about how they were going to differentiate from their competitors on customer service.

The quote of the day was from Bostock: "There is not a lot of product innovation in retail banking products, so it is all about customer service". Have to admit, as a bank customer & ex-employee, I was LMAO at that comment.

Given that product innovation in retail banking is one of the factors behind the current financial crisis we can all be thankful that the banks are moving away from it. Instead they claim to be focusing on customer service.

I do wonder how much we will feel the joy of this re-found focus on the customer? Especially when it is coupled with a renewed focus on risk and effective pricing of risk. I suspect bank customers are in for rough days ahead as banks try to maintain their profits in a changed world economic landscape.

For the record the panellists were:
Peter Hanlon, Group Executive, Retail and Business Banking, Westpac
Jim Cock, Managing Director GE Money Direct, GE Money Australia & New Zealand
Graham Heunis, Head of Personal Financial Services, HSBC Australia
Tim Bostock, State General Manager Retail Financial Services NSW & ACT, National Australia Bank

By Carruthers via Aide-mémoire

1 comment:

Matt Moore said...

On the one hand, we have the market shrinking as the big banks acquire small fry in trouble. On the other, we have them stating that customer service is their focus.

I have no doubt that there will be customer service initiatives run within banks. But I am sceptical as to whether life for customers will get better.

Competition in commodities (and what most banks offer is a commodity) is generally bad for companies but good for customers.

The interesting area when/if the economy improves will be wealth management. The big banks think this area will be theirs for the taking - but I can see them getting blindsided by smaller players - like they did in home loans a few years back.