Thursday, September 4, 2008

Bank customer service – some follow up

Felix Salmon has made the correct observation about bank customer service and private banks. His analysis:

Big retail banks tend to look at their high net worth clients and see lots of profits. So they try to pamper those clients as much as they can, with personalized service and dedicated phone numbers and, very often, lots of salespeople pushing some kind of equity derivative or other.

But their org chart, their IT system, their DNA -- it's still Big Retail Bank. If a private-banking client phones up and asks for something they can call up on their computer, then no problem. But ask for something which might be slightly different -- and you run into a brick wall.

In a real private bank, one which is built upwards from a rich client base rather than being built by skimming off the richest clients of a much broader client base, such things are much less likely to happen. In a real private bank, the client has a private banker -- a human being with first-hand knowledge of his client and the ability and authority to make things happen.

Well eventually National Australia Bank has promised precisely what Felix Salmon suggested should have happened in the first place. I wonder a little if being the writer of a well read financial blog had something to do with it. But if people have found NAB private bank helpful please mention it in the comments and I will publish. A good turn is a good turn and should be acknowledged.

More generally I have received a bit of email about bad bank customer service. Several pieces were about Royal Bank of Scotland. RBOS has done well over 100 acquisitions – and getting customer service right throughout that is difficult. However Fred Goodwin (who I think is a truly dreadful CEO) has one genuine claim-to-fame – which is that he meets his post-acquisition cost targets. He might do this at the expense of customer service – but at least he does it.

I got a general comment that regional banks (especially small town banks) are better than big city banks. They are just helpful. However its friendly but not that much fun when a staff member at a regional branch of Chase spends 15 minutes trying to solve a problem on an internal phone centre number. I guess it works – and keeps the customer happy – but it is not great customer service.

I have one email about good customer service at Fifth Third. That meets my preconceptions. I have blogged about Fifth Third here and here. However there was a comment contrary to this on Seeking Alpha when I wrote about Fifth Third there.

Finally I received a few emails about banks with financial problems solving them by cutting back on staff and hence annoying customers. I have no corroboration so I will not publish names. Mostly you could guess - and if you want to email me I am very happy.

John Hempton

PS. I also received one negative comment about Danske's merger with Sampo in Finland. That surprises me. I have held out Danske as a bank that does this particularly well. Annecdotes contrary to my thinking are much appreciated.

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The content contained in this blog represents the opinions of Mr. Hempton. Mr. Hempton may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Hempton's recommendations. The commentary in this blog in no way constitutes a solicitation of business or investment advice. In fact, it should not be relied upon in making investment decisions, ever. It is intended solely for the entertainment of the reader, and the author.  In particular this blog is not directed for investment purposes at US Persons.