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| Today, TSB's 'local bank for local people' claims are looking like a sham. Photo credit: Gnesener1900 |
...especially if you are a bank.
A crisis is the one thing which is guaranteed to expose the reality of a brand versus the contrived and manicured fantasy which is used to promote it.
By Neil Patrick
TSB’s chief executive, Paul Pester admitted this week, ‘we are on our knees’, following a failed server migration of 1.3 billion customer records. This has gone disastrously wrong leaving hundreds of thousands of customers unable to pay their bills. Worse, some customers have been able to log into other customer's accounts, see their data and even make payments with other people's money.
The bank's employees have been working day and night to try and help customers solve the resulting problems like paying for their rent and utilities. But as the week came to a close, and despite a team of IBM 'experts' being parachuted in as an elite shock force to assist, the problems were still not completely solved.
Business customers have faced consequential losses such as non-payment of suppliers and non-delivery of goods. TSB staff have been so stressed and frustrated in their efforts to help customers that some have collapsed in tears, saying it's the worst experience of their working lives.
This situation is more than embarrassing and stressful for everyone involved. It demolishes the carefully constructed brand that TSB has been investing in, positioning the bank as one which places people at heart of everything it believes in:
TSB's regulator, the FCA, is now investigating the issue and the Information Commissioner says she wants to know more about potential data breaches. The Government has asked for assurances and wants answers to its questions to TSB. Even when the IT problems are solved, the pain will not be over for TSB.
This sorry tale will eventually become a footnote I am sure, but today, right now, it is fraying nerves and spreading havoc in TSB's customers’ lives. And it seems inevitable that many customers will leave the bank at their first opportunity after this crisis is resolved. For TSB, this disaster looks likely to cost them much more than the £100m of savings the migration originally promised.
Meanwhile in China, the world’s first robot-only bank branch has just opened. This is heralded as an exciting step towards a modern, tech enabled future; a homo-sapien free environment, cleansed of the inconsistencies and inefficiencies which are allegedly the hallmark of humans.
The irony here is that it is the people at TSB branches that are keeping the bank from sinking when faulty technology has dragged the whole edifice almost into ruin.
Banking and IT have an old and awkward relationship. Banking IT systems are not like apps where glitches can be smoothed out over time. They demand 100% reliability and complete accuracy from the get go 100% of the time. Anything less is a big problem. Building or significantly changing any banking platform is a high risk and demanding challenge.
As we've seen with TSB, government and regulators are today emboldened, swift and merciless when it comes to punishing banks for errors and misdemeanors. After years of a light-touch attitude, post 2008, the climate has changed and banks are today probably the most closely regulated and scrutinized business sector in the UK.
Thirty years ago, banks were early adopters of what we now call data harvesting. This was decades before Facebook managed to finally wake the world to the importance of data security and privacy. Sure, we had Data Protection legislation and regulators. And banks were generally compliant with their data protection obligations. Regulatory enforcements were few and the public’s greatest annoyances were telephone sales calls and junk mail.
But this customer irritation at some of the earliest (ab)uses of technology by banks ought to have provided early warning that a very human-based relationship demanding and rewarding trust was unlikely to be entirely substitutable by anonymous automation. In fact, I’d argue that trust is the number one most essential requirement for a customer’s relationship with their bank.
Yet, this fundamental truth seems to have been ignored in the relentless drive for ever lower costs. The endless push for greater speed, and cheaper services seems to have trumped every other aspect. Especially trust.
In areas such as marketing and loan application processing, banks were some of the first businesses in the world to decide that IT could make faster, more accurate, more consistent and cheaper decisions than their human employees. This led to the steady removal of middle managers and the downgrading of staff until a bank branch was staffed by people who had little more skill than supermarket checkout operators (and similar pay and conditions too).
Now these last remaining humans in bank branches are facing imminent extinction as they too are replaced by robots which don’t go on holiday or demand pay increases (or any pay at all for that matter).
Meanwhile, banks (always some of the most unpopular and complained about businesses), are shutting branches, removing staff, and turning everything digital. This cost cutting is justified in the name of customer convenience and modernisation. And to cement the argument, every senior bank spokesperson will tell us that this is what most of their customers want.
But most is not all. And the duality where banks are simultaneously some of the least-loved businesses while moving ever closer to completely people-free service, is not a recipe to build any sort of customer love and affection.
There is and has been for decades, a space in the market for a bank which recognises that customer service delivered by people to people is an untapped and growing market. TSB recognised this and decided this was their opportunity to command a unique market position. Unfortunately, they forgot that occupying this position demands not just that you proclaim it, but also that you live by it.
Most people require relatively little from their bank. Strong security. Error free payment processing. Good and caring advice. Easy access. Fast and painless resolution of problems. It is hard to see how a combination of branch closures, increased automation and demoralised, low paid staff help deliver these things.
And 'adding value' (sic) by dubious marketing adds insult to injury. Hardly anyone really cares about an extra 0.1% of interest, or free travel insurance, or fancy TV advertising. They do care about being well looked after.
Banking for most people is service they cannot live without. And whilst I don’t think banks can or should be backwards looking, there is a stronger argument than ever for a bank which truly understands they are in a people business. And that investing in people might just be a safer bet than investing in their replacement by machines.
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