Customer service banking! HSBC the best!

By Patrick Mayoh

I am so proud to say I made up this title (well I hope I am right). Alright most people have heard of investment banking, retail banking or consumer banking. But then looking at the UK banking industry coming up with such a term as customer service banking is not so strange. On the contrary I would say it is trendy. Hitherto it was common practice and it might be still the case to offer the best products or services to customers. Competition according to Michael Porter (1979) cost, leadership, differentiation and focus are usually the main strategic options deployed by organizations depending on the size of the market, the importance of the industry and the market shares by an organization. so let us say up to now the big banks have played on leadership; something like " we want to be the best in terms of the way we manage customers'accounts as well how fast and how well we can make cash available to customers when they need to get a mortgage and etc..." But then today differentiation seems to be the order of the day. Alright let us say HSBC might be one of the best financial establishment around (just hypothetically) but then it does not just want to offer products or benefits Natwest, Barclays, Santander and the rest already offer. HSBC might also want to be known for the way it treats its customers which is the main point made by this article. Where leadership in terms of offering the best services to customers used to be the main strategic options, today differentiation in customer care appears to be the new strategic option.

Take for example the article published by love money.com last week about the worst banks for customer service and then think of this new customer charter released by RBS and Natwest just a couple of months ago or even take for example the Halifax reward scheme which stipulates that the bank rewards one of its most loyal customer on a monthly basis with £5 and you have a pretty big overview of what is happening today within the industry.

Lovemoney. com actually reveals that the Bank of scotland just has an overall score of 43% in terms of customer service, well more than half of the customers are unhappy, very bad.

And then interestingly Halifax part of the Lloyds group got an overall 53% in terms of customer satisfaction.

So time for the winner, in third position the Co-Op emphasis on fairness and integrity coupled with a strong sense of ethics seems to be quite appealing to Britons; so let us go to the runner up One Account funded by Virgin and acquired by RBS with an overall 81% of customer satisfaction. And to the winner...........HSBC (what else?) with an overall 82% in terms of customer satisfaction. The figures in themselves are eloquent about the strong competition within the UK industry so I believe a couple of lessons can be drawn from all those figures. I will boil them down to three.

The first lesson is those banks that have from the beginning engineered and implemented customer care will more likely succeed and compete better in the market place than those banks who do not. In fact it does not come as a surprise that over the year HSBC --with its a very smiling and helpful customer reps--has collected numerous awards for its strong banking performance and customer care.

Secondly those banks that rapidly take measures to correct their images in the eyes of both customers and the public at large stand a good chance of catching up and possibly claiming a top position among the elites. In this sense I think RBS and Natwest's customer charter is very instructive and illustrative of my point. It might just be a couple of statements designed to project an excessive emphasis on the bank's renewed determination to win customers' support and approval but it will eventually go a long way if properly executed and reviewed and iterated towards changing the bank image.

Thirdly UK banks should be wary of globalisation as it becomes increasingly easier for foreign banking institutions to move operations in the city of London. Santander might not yet occupy a good position in terms of a top banks as it does in Spain but provided the right strategic change and focus it might a big player to reckon with in the future. Easier entry into the banking industry in the UK will just weaken competitors and therefore innovative means to attract and retain customers will be crucial as the same products and services will become available throughout all agencies.

Conclusively Kim and Mauborgne (1997) in their book value innovation came up with the concept of blue ocean strategy which is simply put the action which consists for an organization within a particular industry to make the competitions or competitors irrelevant through innovation. Customer service banking might probably be in the future the subject of much more research and innovation in the banking industry.

See you next week hopefully