Breaking up is hard to do – Part 1
They say we’re more likely to get divorced than change our bank but I’m planning to do just that.
This month my bank, which shall remain nameless, confirmed they will be downgrading my account from “premier” status to a more humdrum service unless I meet various criteria including saving substantial sums with the bank, paying a regular income into my account, taking out a large mortgage or buying products through their “financial advisory service”. As an aged, self-employed person who no longer needs a mortgage or any financial advice and who is not yet sufficiently witless to save money with an institution which offers risible rates of interest, I will not be meeting these criteria. Instead, I will be bringing to an end a hitherto quite satisfactory relationship of some 50 years and switching banks.
As an industry professional, I must admit to a sneaking admiration for this bank’s unsentimental approach. It is well known that most banks actually lose money on many if not most of their retail accounts and as a consultant I have always advised my clients to identify these loss-making customers and get rid of them. But in my case I cannot believe that I am an unprofitable customer, or if I am, then this is a reflection of serious incompetence in the way my banking relationship is managed. I can say this with some confidence since in addition to my personal account I also have a business banking relationship with the bank which charges extravagant fees for my custom. Sadly, the bank seems unable to make a connection between me as an individual and me as a company.
As an individual I am of course deeply disenchanted. This bank has clearly abandoned any pretence of building customer loyalty or lifetime relationships and my immediate emotional response is one of betrayal. The crux for me came with the realisation that even if I were to meet their “premier” criteria today, I would be increasingly unlikely to in the future as I become older and poorer. So both my head and my heart say it’s time to leave.
This prompts some interesting questions. Is a business model which involves making money from relatively affluent customers during their working life then dumping them in their old age sustainable? How long would it take for such a model to become apparent to the customer base and how damaging would this be? And will we see the emergence of banks which specialise in older customer segments? After all, those of us like myself who are close to retirement are a huge and rapidly growing market and I would have thought that with a little imagination and better relationship management we could be highly profitable for a bank.
On the bright side, I will soon be able to test out the new account switching service which the Payments Council has been developing, to be launched this September. And it will be interesting to find out if it is still possible to find a financial institution with a business model based on more than just greed which is prepared to look after me in my dotage. I’ll be reporting back later in the year.
Nick Collin, Banking Automation Bulletin Opinion Article, June 2013