Banks losing customer focus

Australian Banking & Finance, Jan 31, 2006 by Peter Ryan

The financial services industry needs to become more attuned to the demands of the community if it wants to win over new generations of customers.

That's the view of some key financial leaders who attended Australian Banking & Finance magazine's Adaptive & Innovative Banks Conference in Sydney.

Rohan Gamble, managing director of Virgin Money, said true customer focus, simpler products and clearly defined brand values were sadly lacking in the Australian industry.

"A lot of people say they're customer focused, but frankly I think that's a load of rubbish in the majority of cases," Gamble said.

"Customer focus is not raising your prices to see what you can get away with. It's not about what you can do to keep a customer and it's not about looking at the rest of the industry assuming they know what the customer wants and doing the same thing.

"Customer focus must be about finding out exactly what the customer wants and then--only then--working out how you deliver it."

Gamble urged the industry to become more aware of changing demographics and the aspirations of "twentysomethings", pointing to the recent British elections where the viewers of the hit television series "Survivor" outnumbered votes cast in polling booths.

"It means that these people are looking for new communities, a new place to belong. Maybe we should have a 'Survivor' credit card if that's the brand people are relating to."

Rob Hunt, managing director of Bendigo Bank, agreed that innovative banking and customer focus doesn't mean turning the clock back to the 1940s and 1950s.

The architect of the community banking model which capitalised on the major banks' abandonment of regional Australia in the 1990s, Hunt said Bendigo's success comes from building a "prosperous village" based on community needs and values.

"Our success is inextricably linked to the success of customers we wanted to serve as we expanded so we needed to be more relevant than a bunch of products," Hunt said.

Bendigo's community bank journey began more than seven years ago in the small Victorian towns of Rupanyup and Minyip. Today, Bendigo has expanded its community investment to 175 branches, which have generated $7 billion of banking business.

"In everyone's assessment, it was an impossible model. Some of those early sites are now not only making community dividends, but they are now providing investment into those communities that they wouldn't have seen for 100 years."

Tom Gentile, Australian/New Zealand president & CEO of GE Money, believes customers are attracted by world-class technology, simple products and innovative loyalty plans. "As the banks have pulled back on the value of their loyalty programs, we've actually increased the value of ours and we've leveraged retailer partnerships with Coles Myer and Harvey Norman to introduce innovative loyalty products," Gentile said.

Chris Whitehead, chief executive of the retail division at the HBOS-owned BankWest, said banks that ignore customer commitment do so at their peril.

"That really means delivering relevance, delivering what's important to customers--not what's important to us," Whitehead said.

"Banks have too often been accused of delivering what's convenient for the bank, of creating complexity and all kinds of complications for their own purposes and to their own ends.

"That's not customer commitment," said Whitehead.

PETER RYAN IS THE ABC'S NATIONAL BUSINESS EDITOR