Banks want to be friends

First Published In: B&T Magazine Date: March 31, 2005 Author: Felicia Williams Comment by: Karl Treacher

A concerted effort by major Australian banks to focus on customer service appears to be paying off, with the latest Nielsen Research survey showing 85% of bank customers were either "quite satisfied or very satisfied" with their bank-up from 78.2% last year.

This focus on customer service has extended to marketing campaigns too. St.George is running with 'Good with people, good with money', the National is televising a series of ads explaining how its banking services have changed in response to customer demands, and ANZ is identifying its service changes under its 'Now' slogan.

The Australian Consumers Association's senior finance policy officer, Catherine Wolthuizen, says it's not surprising the banks have improved their customer service "given how woeful they were some years ago" and says the Nielsen results are mirrored in the ACA's own surveys.

"Banks like ANZ are seeing a pay-off from their efforts to re-engage with their customers. We've been supportive of the measures the ANZ have introduced such as streamlined and cheaper every-day accounts," Wolthuizen says.

"We should also bear in mind that we have seen the introduction of the revised Code of Banking Practice, which raised standards across the banking industry." The Nielsen survey saw ANZ for the first time knock St.George off its number one ranking as the most customer-focused bank. ANZ spokesman, Paul Edwards, says the ranking change reflects initiatives made within the bank, including a new customer service charter. The organisation has also made important cultural changes "by giving our frontline staff a greater sense of ownership, providing more autonomy at the local level and removing bureaucracy so that they are better able to serve customers".

ANZ has also stopped branch closures, is opening new branches in growth corridors and, according to Edwards, is re-engaging with the community at a local level. "It is quite surprising how strongly this resonates with customers, including bank accounts for low-income earners, fee-free transaction banking for over-60s and matched charity donations for customers.The real target is to now get up to the levels of the regional banks," Edwards says.

Karl Treacher, founder of Brand Behaviour, part of Adcomm Worldgroup, says St.George "must be reeling about losing the top spot to ANZ".

"For many years, customer satisfaction has been [St.George's] strength. As the more tech-savvy generation increases their need for bank interaction, they will seek the organisation that can meet their needs in the most efficient way. The ANZ internet banking service is renowned as being the best available and I suspect this may have had a hand in the latest research findings."

But St.George says Roy Morgan research puts it ahead of ANZ, as do internal surveys. "We are very much running our own race," St.George spokesman, Jeremy Griffith, says. "The industry as a whole has been a lot more focused on customer service since the late 90s and this is now being reflected in customer satisfaction surveys across the board.

"From St.George's perspective, customer satisfaction has always been a key focus. Our ratings have been consistently strong and we have seen moderate improvements, off an already reasonably high base, in the past 12 months."

However, Treacher says the banks have not improved their customer service. It's more a case of people's expectations being much lower.

"I think people have largely just come to expect they're going to receive poor treatment from the bank. I think the banks are kidding themselves if they think they're making a difference right now-it's way too early," he says.

"Younger people have only ever known banks to be frustrating and annoying. I don't think the banks care about the baby boomers or younger generation. There's no room for public voice, not a lot of options to deliver genuine feedback. People have been beaten into submission somewhat. It'll be a long time before banks can make statements that the tides are turning."

Treacher's also doubtful that the ad campaigns citing improved customer service can be supported by in-branch activity.

"I think they've all done their own research to show they'll gain competitive advantage by appealing to human nature, but none of them really know how to do it. All we're seeing is good, sexy marketing and good PR," he says.

"In my opinion the marketing of St.George has got it wrong with their 'Good with people, good with money'campaign. I'd like to know what sort of behavioural training they've given their people to back that up. I can tell you, they haven't done any."

Wolthuizen says the banks have a big task ahead of them. "All major banks still engage in practices that are enormously unpopular with their customers, such as exorbitant fees for minor infractions," she says.

"When banks embarked on branch closures and fee hikes, it was done in an arrogant and high-handed fashion that alienated a lot of the community. They have learnt from the backlash that ensued.

"In driving customers out of branches, they lost a valuable face-to-face relationship that gave more opportunities to cross-sell products. The latest efforts have been an attempt to claw back some of thatrelationship. They want to sell mortgages but also wealth-management products to consumers, and that pre-existing relationship is an extremely important and valuable way of establishing the foundation to introduce new products and services," Wolthuizen says.

Treacher says only tougher times will tell whether the banks' commitment to customer service is genuine.

"The last three years have been dominated by low interest rates and the banks lending generously. In a society governed by consumerism, this will always keep conflict to a minimum," he says.

"Let's see what happens as interest rates continue to rise and the banks come across customers that start having difficulty. If the banks really have made sweeping changes to their customer service levels, this will be their opportunity to demonstrate that."

Wolthuizen says that competition has spurred some banks to improved customer service, but others will have to see their customers switching banks before they make this improvement.

"For basic everyday transaction accounts it's still very patchy and that's in part why some banks not concerned with improving their offering. That's why last year we encouraged customers to switch banks if they were dissatisfied, because that's what changes behaviour in the banking sector," she says.