Customers Living in Fear that their Bank may go Bust
On my way in to the office this morning I happened to pick up a copy of The Metro free sheet, and read an interesting article based on a recent survey.
(Harris Interactive/Metro survey of 1,081 people aged 16 and over in Great Britain
The survey revealed that most adult Brits are worried that their bank or building society could go bust during the course of the coming year. Not surprising in the aftermath of the Credit Crunch, the infamous multi-billion banking bail-outs in the UK and USA
According to the poll, 6 out of 10 of those surveyed admitted that they are concerned that their bank could collapse. Now this is quite a staggering statistic, and it got me thinking about just how much public perceptions of our financial institutions have changed in recent years.
Looking back to when I first opened a bank account, back in the 70s, things were very different. Banking was a highly respected enterprise; the old-fashioned Bank Manager (Like Captain Mainwaring in Dad’s Army) was a formidable figure and a pillar of the community. No telephone or online banking back then, and even cash dispensing machines were a new-fangled novelty. * See foot note.
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| At the mouth of hell! |
If you wanted to conduct a simple financial transaction such making a cash withdrawal, you went to your local branch in person. For a cash-strapped student, such as I was, back then, entering a bank was a daunting prospect, rather akin to going to church for confession, being summoned to the Head Master’s office to be reprimanded for some minor misdemeanour, or like going to the mouth of Hell. Suitably awed by the magnificent splendour of my surroundings, I was just grateful to be granted access to the funds in my current account, and, if (Heaven Forbid) I was so bold as to over-draw my account, or request a loan, I was meekly repentant, and content to cough up whatever penalties and charges my bank saw fit to impose.
These days, things are very different. I actually can’t remember the last time I entered the hallowed sanctum of my local bank branch, because 99% of my personal banking transactions can be taken care of via the internet or an ATM.
With the rise of customer awareness and power, largely fuelled by the popularity and influence of consumer champions and comparison websites like MoneySupermarket and MoneySavingExpert, we are more likely to shop around for the best financial deal, and to question and challenge any unexpected or unreasonable charges from our banks.
The Vickers Report of September 2011 acknowledged these consumer concerns and recognised the need to bolster the credibility and trustworthiness of the banks by ring-fencing customer current accounts off from any high-risk investment activity.
Lloyds TSB has just announced the sell-off of 632 of its high-street branches to the Co-op Bank, a condition enforced by the European Commission in return for the government bail-out of the group. Whilst some of the estimated 4.8 million Lloyds customers affected by the sale are annoyed about having their accounts transferred willy-nilly to another bank, many are pleased at the prospect of becoming customers of the Co-op with its ‘ethical banking’ ethos.
Faced with this unprecedented level of criticism and scrutiny by consumers and the media, as well as by financial regulators, banks would do well to prioritise regaining the trust of their customers and burying the hatchet with the media. Achieving Basel III compliance will be an important part of regaining that trust and respect. At Arcturus we believe that the banks must accept the need for change and not only comply with the new regulations, but be seen to embrace them. It is vital to plan ahead and ensure that the right personnel are recruited to ensure a trouble-free compliance project: as dead-lines approach competition for the best resources is set to become fierce.
If ever there was an opportunity to justify investment in holistic risk management, data control and improved management reporting systems, it is now!
For further information on the benefits to implementing Basel III contact Arcturus for a free consultation.
* Footnote: if you are interested in the early days of banking, why not take a look at this posting from MWOP from 2 years ago?
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