Retail banking has been around for over four hundred years so it should work by now. It appears that this is not the case though. As we increasingly automate banking services, the services are fine as long as the process works but, when things go wrong, the cracks begin to show. The issue is that banks have forgotten or do not understand what business process re-engineering (BPR) means.

During the 1990s, there was an explosion of spending associated with BPR. Yet, as we change processes, disintegrate and reintegrate business functions, right ‘source’ and right ‘shore’ our operations, we increasingly cause fragility of people, product, process and systems. This came to mind during three unfortunate encounters I experienced with my bank over the last year or so. The three incidents show a bank that has misaligned people, process and technology and the visible illustrations of the results are quite telling.

Before going into the exact issues, I need to give you a little background on my deposit account – not the numbers or anything – so that the discussions are in context.

The account I use is for privileged customers who are willing to pay a small fee of $300 a year, for a few bells and whistles. The bells and whistles include a pre-authorised overdraft facility of up to $15,000 without notification, a concierge service, automatic insurance on all purchases when using the account card, travel insurance, discounts on restaurants, and so on. It is apparently targeted at the ‘mass affluent’ and yes, I may be one of the masses but I also like personalised service and offers, ok?

Now you know the sort of account I’m talking about, let’s look at three examples where people, process and technology breakdown.

The first is an issue in process and technology that made the people providing the service box-ticking monkeys rather than intelligent humans. The error was made by a mixture of factors beginning with my account manager changing a flag on my account. The change was a short-term measure to allow an increased overdraft limit, due to some major fund transfers I had to process during a busy investment month. The problem was that the flag was set in place for a month and when it reset – a pure binary ‘1’ and ‘0’ part of the programming on the bank’s database – instead of reverting to its original overdraft amount, it flipped over to zero, ie no overdraft facility at all.

Now I pay quite a lot for that overdraft facility, as it allows me never to have to think about my current bank balance when paying for things, and ensures that I am not penalised at all for going into credit. The facility is a standard product that this particular bank offers to their best clients. Therefore, when that flag reverted back to a zero credit limit, as in no overdraft facility, it did cause me an issue.

It happened at 17:45 on a Friday night during a bank holiday weekend, the worst possible time as, apparently, it could not be fixed until Tuesday.

At 17:45 on that fateful Friday, I happened to ask for ‘cashback’ in the local supermarket and the request was refused, as was my payment with my bank debit card. Lots of people behind me going ‘tut, tut’. Thank the stars for credit cards.

Leaving the supermarket I was immediately on the phone to the bank call centre. The conversation went something like this:

"Hello", said the ‘trying-to-be-helpful-but-has-not-got-a-chance’ Customer Service Representative (CSR).

"Hi, I’ve just had my debit card refused in the local supermarket. Can you tell me why?" says the ‘very-angry-but-slightly-restrained-from-complete-meltdown’ Chris Skinner.

CSR: "Yes, you’re overdrawn. Please make a payment into your account."

Me: "But being overdrawn doesn’t matter because I pay for a large overdraft facility."

CSR: "Ah. I see what’s happened. Your facility has been withdrawn by your account manager."

Me (now red-faced): "WHAT?? Set it back again then."

CSR: "Oh no, I can’t do that. You have to talk to your account manager."

Me (purple-faced): "WHAT???? But it’s a bank holiday weekend and he’s not back in until Tuesday. What am I supposed to do till then?"

CSR (sheepishly): "Urmm … use your credit cards?"

Anyway, the conversation went on for a while longer, with two supervisors and a team manager involved. Conclusion: the database had reset my account to zero after my account manager had temporarily increased my overdraft limits (system and process error) and the call centre folks could not do anything about it because it could only be dealt with at branch level (process error).

Result: one very angry customer who was left cashless during a bank holiday. Note that is when the banks take holidays, as does the rest of the British nation, and hence you are completely stymied if your bank messes up on the Friday night.

So I am now aware that my bank’s call centre and branch systems are separated. I also know that the system does not work with the branch processes, or possibly vice versa, as it had not reminded the branch staff to reset the overdraft flag back to the previous level after a temporary change.

Well, that was a temporary setback I could live with but once bitten, twice shy. And the second incident was slightly more inconvenient.

This problem involved one of the featured ‘benefits’ of my all-in-one account, travel insurance. I have had this account for about ten years and never felt the need to use the travel insurance, but always felt reassured that it was there. Therefore, when I lost an iPod, camera and about $300 in cash in a Las Vegas hotel, I thought “aha, time to use that travel insurance” so I rang the bank from the USA at a cost of about $2 a minute. Why would I ring whilst in the USA? Because you should always register an insurance claim when it occurs shouldn’t you?.

The call centre number is ringing and, after about five rings, an automated voice comes on the line: "Sorry, all of our operators are busy at the moment but we have placed you in a queue and your call will be answered shortly."

OK, that’s fine, I can wait a minute or two.

After another ten rings, the message comes on again: "Sorry, all of our operators are busy at the moment but we have placed you in a queue and your call will be answered shortly."

OK, keep it up.

Ten rings, "Sorry...." Ten rings, "Sorry...."

Ten minutes and $20 later: "Sorry, we are all still really busy but we really want your call, you are important to us, and we do promise to be with you any second now, so please stay on the line."

Mmmmm … I really should hang up, but if you think I’m important and I’m in a queue and I’ve been on ten minutes, then I must be near the front of the queue by now, so OK, I’ll hold a little longer.

Ten rings, "Sorry...." Ten rings, "Sorry...."

You eventually reach a point where you think: "I’ve held on for so long now that if I hang up now it may just be at the point where I would have had an answer." So you stay on the line, waiting.

Forty dollars and twenty minutes later we’re still getting ten rings and "sorry", but the message is at least a little bit more entertaining: "Sorry, we may all still be busy but we wondered if you would like to play a game of i-Spy whilst you wait for us to get around to talking with you. You go first."

By this point, I’m sorry Mr. Keep-Me-on-Hold Bank, but I put the phone down..

So I land in the UK and finally get to report the loss, and the bank sends me various forms to fill in. Duly completed with all documentation, the forms are returned.

Now, as mentioned, I have spent ten years believing that because I pay for my bank account with the free travel insurance then I will be covered by that policy. I was always confident that, should I come down with some sickness whilst overseas, the bank’s insurance would pay for the hospital fees; or that, should I be abroad and some reprobate stole my wallet, the bank’s insurance would pay. That’s what travel insurance means to me. But no. It turns out my bank defines travel insurance as holiday insurance.

The claim was rejected because it was not a package holiday. Now, you might tell me that there’s more to this than meets the eye, but the claim was rejected because I bought the flights with American Express. Apparently, the bank’s insurance would only pay if a complete package of flights and hotels were booked and paid for using the bank’s cards.

The reason for citing this second example is that it highlights two issues – a process issue and a product issue.

The process issue is that the travel insurance call centre never received or processed a call unless it was the third Thursday in the month with a ‘y’ in it.

The product issue is more fundamental, in that the bank’s promotional materials for the deposit account have all these bells and whistles but, in reality, customers either do not want them or do not use them. I had not thought about using the travel insurance feature for the ten years I had the account although the fact that I knew it was there meant that it provided a reassurance. In reality, what that feature achieved is a product cannibalisation whereby this add-on to the account, when triggered for use, actually proved to be worthless and, worse than this, brought into question my whole relationship with the bank and whether to keep my account with them.

Therefore, the most telling message from this story is that the tiny things the marketing department see as product features may actually be product weakeners if they do not support the relationship. Beware account cannibalisers and focus upon account stabilisers.

On to the third and final example, which occurred just last month, August 2006.

I happened to move house in August 2006, the sort of mad thing you do when everyone else is away on holiday. Just to make life easy, I printed off a standard letter to all my service providers with details of the old and new address, and then wrote onto the letter the account numbers and so on, signed and posted the letters off to all my bank, insurance and related firms.

Everyone changed my details without question....except my bank.

They sent a letter back with a form attached.

The reason for the form, as became clear, is that the bank had implemented new procedures related to fraud and identity theft. As a result, the old way of allowing customers to send a letter with a signature saying ‘I’ve moved’ is no longer good enough. You have to fill out much more information on a standard bank form.

However, this was not what the bank’s cover letter said. In fact, I have no idea who dreamt up this letter but it was very poorly stated and read something along the lines of the following: "Thank you for informing us of your change of address but we no longer accept those pithy little letters. Instead you have to fill in the form we enclose and, if you do not, we will continue to write to your old address until you do so."

Now, if they had said, "Due to new procedures to protect you from identity theft, we would like you to complete the attached form. After all, any old Tom, Dick or Harry could have sent us a letter with a signature", I might have filled in the form. Instead, I felt a little bit angry that my address change letter was not good enough. Luckily, the bank’s letter finished with "if you would rather talk to us then call our special house moving hotline number".

Back to the trusty old telephone and house moving hotline.

Engaged.

Try again, engaged.

Try again, engaged.

After ten minutes of redialling to an engaged hotline, a sudden realisation hits, "I know, ring the bank’s usual number for customer service" so I rang that number and got straight through to the automated menu system.

After entering my account number, sort code and password, I then pressed ‘0’ for a customer service representative (CSR).

CSR: "Name."

Me (already getting irritated): "Yes and hello to you too. My name is Chris Skinner."

CSR: "Account Number."

Me (getting red-faced): "12345678 and why you need that when I entered it in the first place to get through to you, I don’t know."

CSR: "Sort Code."

Me (very red): “123456, you robot."

CSR: "No need to be rude Mr. Skinner. Now, before I can deal with your question, I need to ask you a couple of security questions. When were you born?"

Me: "Before your time son. 1st May 1970." (note, not my real birth date but I’m not going to reveal what a dinosaur I am now, am I?)

CSR: "Mother’s maiden name."

Me: "Jones, and at least mine was married."

CSR: "Sarcasm will get you nowhere sir. Now, what seems to be the issue?"

Me: "Well, I’ve just moved house and sent the bank a letter with the new address. I then received a letter this morning saying that was not good enough so I have to fill in a long and complex form. Rather than doing that I rang the ‘moving house hotline’ number to register my new address there, but the number has been engaged for the last ten minutes so I thought, instead, I would let you know my new address, as I don’t really want to fill in the form as I’ve got enough to do, what with the move and everything.”

CSR: "Sorry Mr. Skinner, I cannot do that, as you do not have the right security levels on your account to do that through our service. Now, is there anything else I can do for you today?"

Nuclear explosion at other end of phone.

This last example shows, yet again, fundamental process errors in the bank’s internal operations. In particular, the lack of thought as to how all of the pieces fit together. In this case, there are a number of pieces:

• an address change form;
• how to write a covering letter that explains to customers exactly why the form is relevant;
• an address change call centre that is inoperational due to the fact that it is permanently engaged with people who do not like filling in forms; and
• a main call centre that is stripped of any empowerment to make anything happen for anyone, in particular address changes.

The bottom-line is that these three examples which all occurred in the last year, demonstrate a catalogue of cracks in the processes of my bank. The cracks between the branch systems and the head office systems. The cracks between the account manager’s processes and the customer service representative’s processes. The cracks between the address change departments procedures and the head office procedures.

You may now be asking yourself: "Why the hell does Chris stay with a bank that treats him this way?" I can give you two reasons why.

First, I do not believe the cracks in my banks processes are unique or even unusual. Every bank has these issues and has had them for decades. The issues today are exacerbated by pressure on cost-income ratios, shareholder returns and reward, bonus and incentive structures, which mean that banks’ staff and management focus upon those areas where they get the most rewarded and banks’ processes and procedures are implemented at the lowest cost possible. Hence, the cracks appear as management and staff focus upon cross-sell and acquisition and processes and procedures are stretched by marketing and regulatory burdens.

Second, and more importantly, my bank has a secret weapon. His name is Oz and Oz is my account manager. The difference with Oz is that he knows my voice, my attitude, my demands and my demeanour. Therefore, if I ever have a problem, I just call Oz. Oh yes, and by the way, Oz is a human who actually behaves the way that bank manager’s used to behave, as in talking to customers as customers, not just numbers.

So this month’s column has been a little bit personal, but should be timely in re-igniting the debate about BPR.

That debate goes back to the essence of the lessons we learned a decade ago which focused upon 'Don’t Automate, Obliterate'. That was title of Michael Hammer’s seminal 1990’s Harvard Business Review article that created the BPR business. The paper said that before you automate, completely rethink the process in light of the automation.

BPR had a few simple steps:

• look at the process;
• question everything about it;
• rethink how it works; and
• focus upon optimisation of every customer interaction.

Only after completion of these simple steps should technology be considered.

Then implement the right technology to make the whole thing work seamlessly, in an integrated fashion, which supports the human involvement in the process.

These simple steps are the lessons that banks seem to have forgotten in the last ten years. Instead of implementing technology to create improved processes, banks are implementing technology and not thinking through the processes. The three incidents outlined above illustrate this point well.

BPR mandates a few other cornerstones also, such as trusting customer-facing employees with empowerment to solve the customer’s issues as those issues arise; such as talking with customers as humans who have needs to be served. After all, banking should be about humans dealing with humans – the nature of service – not machines dealing with humans – the nature of self-service.

This is the other misnomer about banking.

Banking is a service and service is provided between people. People are the factor that makes the difference, not technology. People who are supported by good processes and systems will always outperform people who are not.

My bank would have lost my business long ago if I had to rely on their people, process and systems. I am lucky enough to have an Oz, but my bank should not need an Oz if things worked properly in the first place.

Here’s to the human bank where people are at the fore, supported by good processes and good technologies.

Chris Skinner is a director of TowerGroup and founder of Balatro.
Web links: www.towergroup.com and www.balatroltd.com
Author's email: Chris Skinner