David Stoughton of ValueKinetics writes:
Give a dog a bone! I can't stop worrying away at this one. The antics of the bankers won't let me. So, to the matter in hand.
Yesterday RBS announced it was laying off another 9,000 staff, most of them in 'back office and support' roles. Meanwhile the Bankers Association has been flagging the probable end of free personal banking. Now I'm aware banks have a desperate need to cut costs and start to repay some of those stupendous loans we've been co-opted into making to them. I'm all in favour of them giving the dosh back, and as soon as possible, but is this really the best way to go about it?
I've harped on about trust here, but there turns out to be more to say. Trust is easy to lose, a private south sea bubble just between bankers turns out to be an excellent model. It is very hard to earn. It can only be won on the front line, in the day-to-day transactions that are the stuff of customers' experience.
Child psychologists point out that the process of bonding with a parent is the model for all human trust relationships, and depends heavily on emotional responsiveness and consistency. Absence of response, or inconsistent behaviour, on the part of the parent creates a variety of dysfunctional behaviours in the child, many of which persist into adult life. Such failures of parenting are recognised forms of abuse.
There is a lesson here for retail bankers, and consumer businesses in general. Extensive marketing and expansive promises, accompanied by long waits and indifferent, and often literally non-human, responses to the enquiries that follow, is inconsistent. Credit scoring in place of the evident exercise of personal judgement is a failure of human response. In sum the lesson is this: 'It's the experience, stupid!'. Only a service that matches the brand promise, consistent handling of day-to-day interactions, and evident, human, consideration for special requests, is likely to rebuild a shattered relationship. As with an abused child, it will take a long time to restore. Meanwhile, asking people to pay up for a broken process may mean it never happens.
Willing adoptive, or foster, parents come forward to rescue children from dysfunctional families. Just so, the established retail banks should remember that the supermarkets, amongst others, have existing or planned services that will quickly spirit away their most valuable customers if they don't get on with mending their core relationships.
To return to RBS and its staff reductions. Back office and support workers may be just the ones needed if banks are to successfully improve the experience. They may have little day-to-day contact, but their work can free up front-line staff to focus on the customer. The only rational way to cut in a crisis is to focus hard on retaining, and if you're in the condition banks are, improving your customer-facing services first - whatever that takes. Then, and only then, should you let go of non-core staff. Given the state of retail banking services, I find it hard to believe that such consideration has been given. I do believe the consequences of a failure to do so will be little short of disasterous - and RBS still has my money.