When it pays a bank to be unbank-like
Since those cheeky bankers caused the financial crisis back in 2007, bankers have not been top of most people’s Christmas card list. Bankers even had a new tax named after them to try and get at some of the millions of pounds handed out in bonuses every year. Rather than chumming up to bank managers (who are often no longer around in any case), consumers have been turning to alternative ways of banking, including peer to peer lending to avoid dealing with bankers.
But what about a bank that doesn’t act like a bank? A bank who doesn’t pay bonuses is reporting impressive growth by focussing on the customer, rather than on the bottom line.
Swedish bank Handelsbanken has decided that customer service, rather than cash, is King and does not pay any of its 12,500 staff* bonuses, including the UK board and CEO, nor does it set sales targets for products. This means that employees are free to actually talk to customers and find out what they want, rather than constantly trying to persuade customers to take out the bank’s products.
And this approach seems to be working. Business lending increased 13 per cent in 2013 to £8.68bn, while lending to personal banking customers rose 29 per cent to £3.58bn. UK customer deposits increased 60 per cent over the year to £4.95bn. Handelsbanken now has 171 branches in the UK.
“We don’t have any call centres as it’s all relationship banking,” said Head of the North, John Parker. “All our branches are in small locations staffed by local bankers who know their customers. There are no centralised call centres.”
“We’re growing and word of mouth is very important. Our good customers recommend other good customers,” he finished.
But could this approach catch on with the traditional high street banks? It seems to be working for Handelsbanken who have been rated top for satisfaction and loyalty in the UK over the last five years, according to the latest ESPI independent annual survey of British banks’ personal and business customers. The bank was also recently judged by Bloomberg to be the strongest bank throughout Europe.
So is relationship banking due to make a comeback? Perhaps you’d better not hold your breath on that one just yet…
*apart from a “handful” of employees working in capital markets outside the UK. You didn’t expect a banker to be 100% straight up did you?