Insight Associates provide outsourced accounting and Finance Director services to ambitious and growing businesses. We work as your only resource or with existing staff to give you complete financial support including monthly management accounts, high level financial advice, robust controls and financial systems, funding and business planning, payroll & compliance, VAT returns and statutory compliance.

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Friday, August 24, 2012

Have the banks forgotten their customers?


An essential part of the work we do at Insight Associates is to build and maintain strong relationships with all the banks and other lenders.  These relationships add huge value to both our clients and also to the banks as we can help deliver what they need to support their customers. We enjoy many strong personal relationships, and they in turn understand the value that brings.

However, something has changed. Not just in one or two banks, but it seems across all of them in differing ways. Somewhere it seems from our direct experience (almost every day now) the banks have forgotten the value in these relationships, the value in the relationship they need to have with their customers, and the very thing that can differentiate them. Business in general is about personal relationships; destroy that and what is left?

Bank of England governor Sir Mervyn King recently called for a change in the banking culture, accusing the banks of shoddy treatment of their customers. UK Prime Minister, David Cameron, supported this by saying: "British people are crying out for a return to good old-fashioned banking”.  They are both so right.

The UK banks have seen a lot of change and reorganisation in the past couple of years following the recent scandals, and with more coming out all the time I fear this is all far from over. Unfortunately those at the top seem to have forgotten in this the critical importance of the relationships their front-line managers enjoy with their customers. One major UK bank we understand has changed nationally over 60% of all customer facing relationships in the past year. Whilst there may be sound business and structural reasons for the changes, how can anyone in their right mind believe that is in anyone’s interests? Particularly their customers!

We have struggled in recent months to manage the banking relationships for most of our clients, and have had to commit a huge amount of time to dealing with the issues that have arisen. We have not seen in most cases the same level of commitment coming the other way from the banks. We have been faced with numerous changes in personnel; nonsense procedures that are changed when challenged; and a massive inconsistency between the banks on security issues and other procedures. We are currently looking at re-banking some of our stronger clients to try and get some sort of relationship back.

The banks have lost touch with the very people who are the most important to them, their customers. Sir Mervyn King is right “…we need a real change in the culture of the industry”. As the Institute of Directors have said that will probably mean “(that) … there should be a clear-out of leadership in many of the banks and "new blood" brought in”.

Let us know what you think?  Post a comment below.

2 comments:

  1. Spot on, the winners will be new banks like Metro, Aldermore and Co-op (not so new) and of course the crowd funders. All false monopolies fail eventually and the banks are exactly the same. One thing I will say in the bank's defence, in many ways I feel sorry for the front line managers who normally are decent, hard working well trained people. It just seems they are fundamentally badly managed themselves.

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  2. I agree with the main article and Keith's comment. I think banks will find that businesses will not wait for the banks to stir themselves and take the initiative. Alternative approaches such as crowd funding mentioned above and angel funding may take an increasing slice of what banks seem to consider theirs by right.

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