Whichever channel banks choose to concentrate on, they must not lose sight of their customers’ needs and preferences. That is why service levels must be maintained, whether in-branch or at offshore call centres, says Parveen Bansal.
The way that customers interact with their banks has changed vastly in the past few years: as more customers take up online or telephone banking, fewer are visiting the branches. Until recently, banks wanted to move customers away from their costly branch networks to less expensive channels, such as the internet or call centres. However, many are now realising the problem of lost sales opportunities as a result of reduced customer contact. Nevertheless, banks’ response to how to handle the customer service centres and the costly branch networks has been mixed.
Keeping in mind the varying attitudes to banking and the value of the different customer segments, banks need to be able to provide the appropriate experience for the different segments. Some customers still prefer to use the branch as their main contact point with the bank; a large number prefer to interact with the bank via the internet or call centre. Banks need to manage these expectations and balance them against the cost of servicing the different customer segments.
Approach to branches varies
In the UK alone, the varied approach of banks is evident. Alliance & Leicester, the eighth largest bank in the UK, last month announced the closure of 46 branches, leaving it with 254 branches across the UK. Richard Pym, group chief executive, attributes the closure to customers’ increased use of the internet and other direct banking channels.
“Eighty percent of our customers’ transactions do not require any contact directly with our staff,” says Mr Pym. These transactions are completed directly through the internet, over the phone or via a cash machine. “The decision to close some of the branches reflects this changing customer behaviour,” he says. However, he also notes: “A strong branch network remains important to us and we will continue spending to improve our network.”
In contrast, HSBC bank in the UK is creating 1000 new customer service positions to deal with customers in its 1600 branches. This reflects what Barclays Bank and Royal Bank of Scotland are doing in the UK.
In the case of HSBC, though, the creation of 1000 front-office jobs is offset against the loss of 3500 jobs in the UK, many of which are being transferred to HSBC’s service centres in India, Malaysia and the Philippines. HSBC’s new head of UK banking, Michael Geoghegan, is reported as putting this down to the rising cost of UK-based service centres and staff.
Negative feedback
The logic of such decisions may be arguable, especially as customers and employees are known to respond negatively to them. Research conducted on behalf of Alliance & Leicester shows that people in the UK want their banking and other financial services needs looked after by call centres based in the UK. In the independent study of more than 2000 adults, 87% said they would not be happy to have their bank account or other financial products serviced by staff in an overseas call centre.
Mr Pym says: “That’s why we are keeping our call centres in Britain. Our relationship with customers is too important to us to put at risk by following the current fashion for offshoring.”
In defence of offshore service
HSBC defends its offshoring decision with the argument that it is effectively only redeploying its staff across its global network (present in 69 countries). “It is really about using our worldwide resources as best as we can,” says a spokesperson for the bank.
However, the spokesperson is keen to impress that it does not mean a compromise on the level of customer service. The number of errors per million of items processed is eight compared with 50-60 in the UK service centres, he says. The number of service level complaints about call centres in the UK is about one per 1000 calls and is broadly the same for offshore call centres.
Customer expectations
There is no straightforward answer to the customer service quandary. The decision to grow or reduce the branch network, and whether to have offshore customer service centres, is dependent on customers’ expectations and the cost differentials of alternatives. The successful bank will be the one that gets the right balance.
When making such decisions, which directly affect customers, it is essential to ensure and maintain a consistently good level of service. Customer loyalty should not be taken for granted. A customer’s experience is an important element of their relationship with their bank and perhaps the only aspect on which banks can differentiate themselves today, given the highly commoditised banking market.
