Banks and the sales culture

Today’s bank managers are very different from those of two or three decades ago. Our bankers are now expected to be prime salesmen. They talk about the ‘share of wallet’ they want to grab from their customers’ pockets. They invest in building massive customer databases which they then use to cross-sell – dumping products and services that their customers may not really need.

Customer-friendly strategies can only start by determining what customers want- John Cassar White

Those who follow the local and foreign business media do not need reminding of where this aggressive sales culture has left many customers who were naive enough to trust their banks. International banks like Barclays, HSBC and Lloyds have been found guilty by US and UK regulators of mis-selling products that were useless to their customers, or that harmed their prosperity. Some local financial services providers, which often like to project themselves as champions of consumers rights, behaved in an equally shameful way, even if our regulators were much more lenient in their condemnation.

No wonder most people today use the sarcastic neologism ‘banksters’ to describe the leaders of what was once a much respected profession.

Martin Wheatley, managing director of the UK’s Financial Services Authority, in a speech last September, said: “Financial institutions changed their view of consumers from people to serve, to people to sell to”.

The reasons behind this stage was a strategic blunder committed by most banks when they introduced performance-related pay schemes that were based on the achievement of short term sales targets not linked to protecting the interests of customers. Branch staff is often given sales targets that are not only unreasonably high, but linked to high-risk products that guarantee their bank immediate profits but often destroy the value for customers’ portfolios.

Banks acted as if they were casinos: some customers were encouraged to gamble. Other less well-informed customers were misled into believing that high rewards could be reaped if they relied on the alchemy that only bankers could practice in their own mysterious ways.

The Financial Times recently carried features that show that the sales culture is now slowly but surely being reviewed by banks in the UK. “Bankers have realised it is time to change. Barclays said it would stop rewarding staff for the volume of products sold. HSBC and Royal Bank of Scotland are also reviewing the links between pay and product sales and have made some changes. Lloyds Banking Group is testing a programme of rewarding staff for customer service rather than sales.”

Rewarding staff for providing good customer service is not really a new strategy. But it will be unrealistic to expect that banks will revert to the serene style of doing business that prevailed a few decades ago. While most banks still rely on a ‘clicks and bricks’ strategy to deliver their services, few customers today have time to spend talking to their bank manager.

Increasingly, the modern customer wants information online. Customers want to compare and contrast the terms of different banks offering the same type of service, be it a mortgage, an insurance policy, a personal loan or an investment product. Today’s customers have learned at their expense that it is risky to rely on the advice of bankers who have a vested interest in selling certain types of products that earn them a higher commission.

They prefer to seek independent advice that is easily available on the internet, even if one has to be able to sift through the overload of information and identify the real good advisers from the charlatans.

The biggest challenge facing bank leaders today is to find suitable performance-related pay schemes that are based on achievement indicators that promote customer care while guaranteeing the bank a fair return. They need to work with their staff to refocus attention on the customer.

The whole organisation must show an unflinching commitment to total quality management where every employee strives to continuously improve the quality of service to the customer.

Leadership from the very top levels of banks should make quality management a strategic issue. The definition of customer-friendly strategies can only start by determining what customers want rather than what is profitable for the banks to sell. The trust of customers in banks is probably at an all-time low.

Only a focus on satisfying customers’ requirements through a quality service, rather that public relations waffle, can restore some faith in the banking profession.

johncassarwhite@yahoo.com