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Lucky to be a customer? Not at Metro bank

I met yesterday with the inimitable Vernon Hill, founder of Metro Bank, and with Metro's Chairman and co-founder, Anthony Thomson. It is interesting to hear Hill's view of why Metro is able to dominate in respect to the 'customer service' space in the UK branch market.

Hill postulates that despite many banks rhetoric around being customer centered and improving customer service in the branch, the reality is that there is serious organizational, infrastructural and philosophical barriers to really producing better customer service. Until these issues are resolved, real improvements in customer experience through pretty much any channel is just wishful thinking.

The Barriers

The key barriers to real improvement in customer service are as follows:

1. Poor metrics
Most channels are measured solely on financial performance these days, so no one in the branch is actually paid or incentivized to work on great 'moments of truth' in the branch. Thus, it gets relegated to a nice to have, but not significant to my personal performance.

2. Data and system silos
Legacy IT systems internally within the bank create data silos where it is very difficult, if not impossible, to get a consolidated view of the customer that leads to strong recommendations on products. Essentially, there are no tools available within the branch to actually generate improvements in the overall product portfolio - cross-sell and up-sell opportunities are hit and miss and there is no channel cross-over. For example, if a customer has a problem with his credit card and walks into a branch, does the bank officer serving him know that there is a pre-existing issue and does he have a bunch of possible solutions to the customer's problem presented on his screen? Very unlikely... Metro started from scratch with no legacy IT infrastructure so has solved this issue simply up front with great infrastructure. They've in fact, plugged into a Temenos solution with a pay as you go scalability option here, which is very smart operationally.

3. Poor Training
Staff in-branch these days have to be all things to all people, but mostly they are trained to handle transactional activity. There are specialists in the branch who are 'financial planners' or relationship managers, but the focus mostly is on efficiency as a cost driver because of factor 1 - metrics. Metro tackles this by a different hiring culture and through 'Metrocizing' every staff member. I went through the account opening process at Metro and there is an upside culturally here - that is there is a concerted effort at each step of the process to ensure you are happy. From the moment you walk in, to the moment you leave with your debit card in hand. While other banks might aspire to this sort of process, the problem is that they approach it from a 'process' perspective and not generally a culture. The problem with process is that it doesn't create moments of brilliance because the priority is box ticking, not thinking out of the box.

4. You're lucky to be our customer
The long-held culture within the larger banks, even today is - come to the bank, jump through our hoops and "if you're lucky, we'll make you our customer". How many times have you received a dear John letter from the bank when you've tried to apply for a personal loan, credit card, or similar lending facility. I remember the ridiculous situation of entering Emirates Bank in the UAE where I held a small business account which was doing around US$200-300k a month in business, and asking for an overdraft facility for US$30k, only to be told that I need to provide security. Ok, I said, what do you need...

"You need to provide $30,000 cash as security for the overdraft facility...", the Emirates bank officer told me.

Yeah, right...We have to start with an understanding that today the bank is getting luckier and luckier if we are happy to be their customer. In the UK, one of the favorite quotes of bankers is that the average consumer is "more likely to get a divorce than move banks". This produces horrendous complacency. The reality is, customers don't close down accounts. They just open a new account at Metro and use their old account less and less. This is not a great strategy for customer retention. The fact that banks see 'credit' and lending products, combined with low cost operations as the core profitability of a customer relationship doesn't help with this either.

5. Tell us how we're doing
The key to rebuilding trust in the banking sector is showing customers you are willing to listen to their feedback and incorporate this into improvements in the way the bank works. The problem is that most banks aren't even listening to customers, let alone encouraging feedback, let alone working on mechanisms to crowdsource real improvements in the way they work. To illustrate, most banks today don't even bother to respond to customers who voice their dissatisfaction on a medium like Twitter or Facebook. They rarely ask you after a visit to a branch how they did and what they could do better. It is as if they don't want to know because of the risk that it might require action.

Walk the talk

To illustrate this, I want to share a story from my father visiting a branch yesterday for ANZ bank in Melbourne Australia. If you've been watching this space you've probably seen the Ad featuring "Barbara" the typical branch manager and ANZ's branding around providing better service for customers. If you haven't check out one of their recent Ads.

So this brings me to my father's story. Here it is in his own words...

I was in ANZ Collins Street this morning 10 minutes wait with 10 in line and 50 bank staff in sight but only one serving. I ran out of patience and called out loudly - is Barbara here and if so can she help?

Not a word from the staff but 20 seconds later three more tellers were at their stations, there was no clapping but great thank you's from the 9 others in line - Dad 2.0

If you are going to put the service stake in the ground as ANZ has, then like Metro you better be prepared to actually change the way you are organized to make sure you can deliver. Otherwise, you'll be lucky to have me as your customer! 

By this measure, I suspect that Metro is going to have marked success against their local UK competitors.

 

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Comments: (3)

Elizabeth Lumley
Elizabeth Lumley - Girl, Disrupted - Crayford 10 December, 2010, 16:48Be the first to give this comment the thumbs up 0 likes

"2. Data and system silos" 

I would make this number 1. The single biggest issue affecting all parts of the bank, whether it be retail, investment, transaction, merchant etc...- and it been this way for decades. 

It took 9/11 for the US Govenment to corrdinate its data stores (which in turn made it easier for Wikileaks to obtain the data...)

What crisis does the banking industry need to create true enterprise-wide data stores? Oh, yea....

 

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 13 December, 2010, 13:44Be the first to give this comment the thumbs up 0 likes

You've rightly pointed out that, when the average consumer if unhappy with a bank, they don't close down accounts but open a new account at another bank and use their old account(s) less and less. I can vouch for such a behavior from my own personal experience. In the earlier world of hefty fees for automatic overdrafts, this was neither a great strategy for customer retention nor for revenues.

But, in the post Regulation E world where banks are banned from levying overdraft protection fees except for consumers who opt-in for it, I am not so sure how eager banks really are to hold on to existing customers for checking accounts, and, therefore, whether they're likely to change much - Metro notwithstanding. 

 

Brett King
Brett King - Moven - New York 13 December, 2010, 13:56Be the first to give this comment the thumbs up 0 likes

Liz - it wasn't meant to be a ranking/priority, but agree. Data management and data silos are absolutely essential to resolving for future success.

Ketharaman - I think banks are going to have to start measuring success of the relationship very differently moving forward. Where is the real value?