by Mark Johnston
Most people in the banking industry refer to banking as a ‘utility’, something that just there like gas and electricity, basically use it or don’t know one cares.
Customers do not switch banks either simply because they too see it as a utility or because they can not be bothered as they believe “they are all as bad as on another” and the banks know this so they rarely try to compete on customer service as they make money regardless.
It does not take much market research to work out that the UK consumer has fallen ‘out of love’ with the financial service sector.
However new research has shown that customer service is one of the most important ways to keep customers coming back for more products, in this economic climate it is more important than ever to keep customers what ever the nature of the business.
According to a recent survey conducted by moneywise.co.uk, consumers are now more likely to switch banks due to bad customer service than for ‘gimmicky’ rewards and incentitives.
In today’s particular financial climate retail banks have to shift from lending to gathering deposits and therefore they now have to renew their focus on the relationship they have with their customers.
Good customer service includes responding to customer’s questions and complaints in a through and timely manner and interacting with customers through face to face meetings, telephone, mail and email.
Most if not all bank employees should be involved in some aspect of customer service.
Hector Sants, the Financial Service Authority’s (FSA) chief executive has recently suggested that banks should reform their relationships with customers and in a controversial statement he suggested that banks should “link staff pay to customer service”. He also added that “there is a commercial opportunity for financial firms to improve their treatment of customers”.
Many financial experts believe that work needs to be done with in the industry to give more thought to how customer’s treatment is reflected in the current compensation culture.
Banks are now facing challenges in searching for profit against a backdrop of compressed margins, competition and the euro zone crisis pushing up wholesale costs. However, things such as early repayment charges on mortgages and the previous mis-selling of products such as payment protection insurance are clear examples of where profits were more important than what was actually right for the customers.
Chief executive of the Financial Conduct Authority (FCA), Martin Wheatley said that the Financial Service Authority (FCA) will be focusing on ensuring that banks now put customer’s interests ahead of profits under the new regulatory structure.
Wheatley added that “returns for shareholders should be driven by good profits rather than profits at any costs”.
The Financial Conduct Authority (FCA) will now therefore be looking to construct business models in which fair treatment of customers is central.
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