When it pays a bank to be unbank-like

BankSince 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?


  • Marking M.
    What about a feral trolley that's become all domesticated?
  • Carlos
    Just wondering if you mean the American banking collapse. The American banking collapse was caused by a law passed by the Clinton administration that required several major banks to give millions of real estate loans to high risk ,under qualified clients. These bad real estate loans were then bundled together and sold as some form of desperate discount investment to other banks in an effort to mitigate losses. The bundled loans investments continued to fail even at the discounted prices. Skittish bank investors then made a run for their money which broke the banks backs. The banks could not repay their debts to investors in cash having invested it in what became known as "toxic assets" ie bundles of bad real estate loans that became even worse and eventually worthless. The overall effect of all this caused the global banking crisis. Regardless, this kind risky trading isn't worth giving bonuses for. I can understand the banks dilemma the government put them in by passing a law designed to help people with bad credit buy homes. This situation reminds me of the popular folk saying, "The road to hell is paved with good intentions". Still, I reiterate this kind risky trading isn't worth giving bonuses for. Here's my idea. How about a bank that uses a computer algorithm to mimic the practices of the best investment traders in real time to generate a reasonable return on investment consistently over time. Then divvy up the money that would have been spent giving bonuses to traders between the investors instead. I bet an algorithm could easily be programmed that delivers 8 percent roi or higher consistently year to year.

What do you think?

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