Retail banks would like to live in the

• past
• future

anything but the present

The 90/00’s marketing gimmicks of creating a relationship with your bank are long gone in people’s minds. The problem for the banks is they now for the first time mean it, but have lost a lot of credibility and the confidence of the public.

A breach of trust ‘Sub Prime’

There are several reasons why ‘Sub Prime’ was so important for the banks and I think they need to be stated to understand why the banks need their customers more than ever. Before ‘Sub Prime’ the banks had an attitude of expansion, ever increasing targets and scared executives doing anything they could to reach their targets. The problem we all know is there is a limited number of people, across a lot of banks.

Regulation was a serious problem limiting investment options, however Chancellor Gordon Brown removed regulations to support competitiveness in British banking he opened the door to new more risky opportunities. The stage now set and an opportunity arises ‘Sub Prime’ I often wonder if someone had said “that means less than best, I don’t think so” things might have been hugely different today. ‘Sub Prime’ in effect was an opportunity for a number of US institutions to offset their huge risk across the world. To British bankers a way to quickly meet the huge growth targets they were expected to reach. And yes, a lot of people made a lot of money but then again they already were so this is nothing new.

The problem with all this goes to confidence, it has been said that the Wall Street crash (1920’s) was caused by the New York Times questioning the strength of the economy because they could not fill their advertising quota. If you question an investment loud enough it scares people and scared people run for safety, in investments that’s low risk, low yield like Gold, Silver (except if everyone jumps in) and Government backed bonds. People follow a crowd, mentality if the see people running in a direction instinctively they follow, it’s completely normal. It was very embarrassing to hear people talk about “a house not being an investment anymore” but “just a place to live” again some people have made huge sums of money from property investment (good on them) but for most people a house is a home.

Retail banks need their customers

The background set retail banks now have to take on board basic marketing concepts of cross selling and up-selling into a market that trusts them less than ever before. I suppose I have the same question as other customers “what’s in it for me?” I get that the banks think they have a captive market, but they don’t. It would be a hassle to change banks, but if I get less un-targeted marketing materials it might be worth it. I understand the call to action and take advantage of the user experience lifecycle but it may take quite a few years for that to apply to customers. Maybe what banks need to focus on at this point is servicing existing customers with what they already have to a level of satisfaction before assuming they can cross sell and up-sell.