The high street banks face increased competition from companies not
traditionally associated with the financial sector. They must now show
customers that they do offer a good service
Last Thursday’s business news headlines: ‘Bass hopes for 7,000 new jobs;
Car companies Rover and Honda announce UK expansion’ could be taken as a
sign that the good times are back.
But what’s this? ‘Uncaring banks under fire; NatWest to shed 10,000 new
jobs’. On the same day as NatWest announced further downsizing, the
retail banks were criticised by a senior economist for unnecessarily
adding half a million to the nation’s dole queues through their
‘draconian’ lending policies in the 1980s.
As the banks were once again slammed by the national media, PR Week
reported continuing shake ups in senior PR personnel. Barclays’ head of
corporate affairs, Kate Bowes, announced that she would leave in the new
year and NatWest confirmed the appointment of Lowe Bell Financial
supremo Terrence Collis as its head of corporate affairs.
What then are the PR challenges facing these banking movers and shakers?
‘They are the same as those facing the industry as a whole,’ says Ivor
Godfrey-Davis, head of external affairs at NatWest UK.
Like most banking PR people, he sees the developments as falling into
two areas. The first is necessary operational upheavals. Today’s
customer demands a simplified, faster service with the ability to bank
out of hours. This demand is driven by new technologies that enable
faster processing of transactions and the opportunity to bank from home
via the telephone or the Internet.
‘Retail banking is going through a revolution,’ says head of PR for
Barclays UK banking services Nick Cobban. ‘There are new ways of
delivering customer service, the role of the branch is changing and
eventually all staff will be customer service personnel.’
The business challenge for the banking monoliths is to cut down on
overheads and locations, while retaining service levels and valued
customers. The PR issue is whether these fundamental changes are
perceived as initiatives to make the customer’s life easier or simply
cost cutting measures. Last week’s headlines suggest the stronger
perception is still the latter.
The second, and closely related, area is the growing number of new
operations. Over the past two years, more and more building societies
have offered competitive banking facilities, while US credit card
companies have recently begun to muscle in on the UK market.
To add further heat to the kitchen a raft of companies from other
sectors - Virgin, Marks and Spencer, Tesco -have diversified into the
more lucrative financial services sector.
While the established banks may hold decades of experience in financial
matters, these household names bring substantial marketing and PR
prowess.
So, how worried are the banks?
‘We’re not complacent, but recent research showed that people are more
likely to change their spouse than their bank account,’ says Godfrey-
Davis.
He adds: ‘Our challengers have is the advantage of being the new boys
and people may give them a try. Our advantage is that in general banks
are well established and trusted.’
Virgin’s director of corporate affairs Will Whitehorn disagrees with the
second assumption: ‘People don’t like banks. They have got used to
receiving bad service. The brands may be strong but they have a lot of
negative associations.’
Virgin’s foray into financial services has certainly proved to be a
success to date. Its PEP had gained 100,000 customers just 18 months
after its launch.
Whitehorn puts this down to bypassing outmoded structures and developing
products from scratch. He also claims a PR edge. ‘We have a brand name
that people trust. As a transport company, we’re used to apologising for
our mistakes. The banks haven’t been good at coping with the downside of
their business.’
Chris Wermann, Abbey National’s group PR manager holds a similar view:
‘The word ‘bank’ is synonymous with bad customer service, small business
lending and third world debts,’ he says.
For this reason Abbey National, now a bank itself, has made efforts to
retain its branding as a personal financial services company.
And Wermann believes the banks must take a fundamental look at their own
brand identity: ‘The big PR challenge is for them to decide what their
business is. Barclays and NatWest, in particular, are seen as City
organisations, generating income rather than focusing on customer care.’
He sees it as essential to tailor messages to two important, yet very
different, audiences - investors and customers.
Paul Nuki, consumer affairs correspondent for the Sunday Times
recognises that banks face a difficult PR task: ‘Money lenders are never
popular and they’re dealing with issues at the heart of people’s lives
overdrafts, repossessions. Having said that, their service has been
appalling. They must get this right before PR.’
Nuki also agrees with Whitehorn that banks should own up to their
mistakes: ‘They compensate without admitting liability which causes
resentment.’
He cites First Direct as a model of good communication: ‘It communicates
the two important issues. That it’s easy to deal with and more
competitive. It also sorts out problems and apologises for errors.’
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Revolution in the High Street
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July 1989
Abbey National becomes first building society to convert to official
bank status
October 1989
First Direct, a 24-hour telephone bank is launched
March 1995
Virgin forms Virgin Direct and launches its own PEP product
June 1996
Tesco launches Clubcard Pls - a deposit account offering five per cent
interest
October 1996
Sainsbury’s announces it is to launch a bank next year
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