Banking on a better deal for customers
Ulster Bank’s Mike Bamber explains the thinking behind the introduction of its customer commitments
Your bank manager is hardly going to be your best friend — but the credit crunch, the near collapse of the banks and their costly rescue by the taxpayer has made banks public enemy number one, two and three for many disillusioned members of the public.
Mike Bamber, the Ulster Bank’s chief executive of retail markets, said the rock-bottom esteem in which banks are held is the main reason why it has made a series of new ‘commitments’ to its customers in Ireland.
Among the renewed vows is a commitment to branch banking — vowing to keep all its branches in Ireland open, and promising not |to keep customers queuing in those banks for more than five minutes. More branches will also open on a Saturday.
The bank, which suffered losses of £314m for the first half of the year, will send a warning text to customers who are about to go overdrawn and the bank has also promised all its staff will be “helpful and knowledgeable”.
Mr Bamber — who has worked in Ulster Bank and its banking parent Royal Bank of Scotland (RBS) for 33 years — said it wasn’t specific complaints about Ulster Bank which led to its embrace of customer-friendly commitments, but a more general anti-banker ennui.
“People are fed up with the banks and feel banks have let them down and deserted them when they needed them the most,” he said.
“Then they realise that banks are important to them and that they need them to run their finances and their families’ finances and are an important part of their lives and they are disappointed with their performance.
“We need to get back to talking |to customers and what they |want most.”
The bank commissioned research into the attitudes of 3,000 customers north and south — both of Ulster Bank and other banks — to see what might incentivise non-believers to come over to Ulster.
“Having been through what |they listed, they wanted a bank that was easier to deal with and that was strong and local.”
But what provoked the bank into such an undertaking? Was there a tipping point of particularly damning complaints?
“There wasn't a tipping point |as such, but a feeling that we have got to get back to putting the |customer at the heart of what we do,” he continued.
“We did a number of interviews and commissioned the biggest piece of research by a bank ever.
“It's very clear that what customers want, we want and its within our power to give, ranging from Saturday opening to texting |customers if they are going to go overdrawn.”
Bank charges were top of the moans. “Bank charges get lots |of complaints. What customers |are telling us is that what would |be helpful will be having some |forewarning of when they go |overdrawn.”
He acknowledges that not every customer who receives a warning text will have the means to plug a gap — hence charges will be levied of between £5 and £15.
“Our research does show that customers do expect to incur charges when they go overdrawn or over their limit. There are costs involved for the bank and they have to recoup some of that cost. And these are charges that have gone down considerably at Ulster Bank.”
Mr Bamber claimed the bank has always been strong on customer service — though he said the Ulster Bank wants to do better. “Banks have let down customers. That's very clear. And they are fed up,” he added.
“We have to get back to basics. These customer commitments |are a signal of intent — these are |the things that matter most to |customers.”
He said the commitments are not finite in time, and auditors Deloitte will keep a close eye on how the bank measures up.
“It's not time-limited. All the customer commitments will be measured, with the first measuring period January to June next year. They will be reporting each half year at the end of each six month period to say how well we did. It’s very visible and very objective.”
He said the bank was secure in giving an infinite vow not to close branches. It has 90 in Northern Ireland. “We see no reason to close any of our branches and I'm not sure all the other banks can say that,” he continued.
“We give that commitment because we truly believe in branch banking. I have been in retail banking for 33 years and I have always been a supporter of branches.
“When customers are feeling less confident they want to feel they can rely on branches...I see no prospect of them going. There's |no gain in closing branches. You |are left with an empty property and you have left a community. So to me it's about branches serving the community.”
Surely being kept waiting 10 minutes isn't the worst thing a customer will say about their bank?
“You say that, but in our research the queuing and waiting time |came out quite high. As part of that and part of Saturday opening I recruited another 80 staff north and south.”
His ideal outcome is for content Ulster Bank customers to become roving ambassadors who will |convert others.
Cash incentives — the bank used to give £250 to feather new current accounts — have had their day. Probably. “Never say never. We haven't a plan to do it at the moment. We think it has had its time. We are opening on a weekly basis 3,000 new accounts north and south...at the moment it doesn't feel like something we need but when we did it, it worked well.
“I think customers have moved on. They want banks to be more helpful.”
The bank has reinforced a commitment to responsible lending —though Mr Bamber said this isn’t intended to make it even tougher for borrowers. He said its mortgage lending isn’t dependent on a large deposit, with many carrying a 90% loan-to-value. But he said there was a climate of fear among existing customers.
“What is clearly worrying customers is fear of unemployment, loss of earnings or reduction of earnings. If they are sure they are going to be unable to pay the whole of a monthly repayment, we undertake to help them reduce |mortgage repayments, but that's something we are doing more so |in the south.”
He said it went through a “transparent” process with customers made aware that a holiday from full repayments does not go on forever.
“In many households they have suffered loss of income through no fault of their own.
“A mortgage they could afford some time ago is no longer affordable.
“We look to see how we can reduce their commitments and perhaps reduce their monthly outgoings in some other way...and we might advise them to make savings elsewhere, hence our commitment to responsible lending.”
Mr Bamber said 5% of Irish mortgage customers were in mortgage arrears of 90 days or more and an additional 4% have come to the bank for advice.
RBS made headlines for making 3,500 job cuts around other parts of the UK. Mr Bamber said: “I am obviously saddened by any job losses and I'm saddened by the demise of RBS over the years.
“However, I'm a believer that good comes out of bad times, and I have confidence in RBS chief executive Stephen Hester, and the new executives.
“I'm tremendously impressed and upbeat about their leadership. And that's not flannel.”
RBS is now almost entirely public owned — and Mr Bamber knows the debt will have to be repaid. “The UK customer is not going |to end up out of pocket here.
“I think the UK taxpayer can have a lot of confidence.
“But that’s not really the reason for what we are doing now — although we are always reminded and aware of the fact the UK taxpayer is the reason why we are still in existence.”