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It’s all very well trying to entice consumers with attractive new current accounts, but if the service behind them remains below par, it won’t be long before customers move on again, warns Egremont Group’s Natalie McLellan

Steps by the UK’s Financial Conduct Authority (FCA) to make it easier for customers to switch banks have placed the onus on FS providers to prove their worth. Recently a number of players in the UK have responded by introducing new-style current accounts which, at face value, seem quite alluring. But without a stand-out service behind them, their impact may only be short-lived.

So it’s interesting that FS providers are no nearer to improving their customer-friendliness. Mystery Shopper research conducted recently by Egremont Group among leading Retail Banks, found that the vast majority gave a frontline service that was woefully inadequate.

THE CUSTOMER CENTRICITY CONUNDRUM 4Source: Egremont Group, 2014: Customer Experience Mystery Shopping Review

The most acute and widespread shortfalls were found to be in providers’ ability to get to know customers as individuals and build up a fuller understanding of their needs. In one of the worst cases, 85% of mystery shoppers approaching a high-street bank found the staff they engaged with made no effort to build up a picture of their personal situation. Although challenger brands were found to provide a higher level of service generally, their depth of product/service knowledge and interest in the customer’s individual circumstances was found to be significantly lacking – 55% of undercover shoppers rating efforts to be poor or extremely poor.

Focusing in the wrong places

The findings suggest that increasingly stringent controls over sales tactics have rendered customer-facing staff mute – or at least terrified of diverging from the script. FCA compliance has become a box-ticking exercise, so that in the worst instances customer conversations have become a 10-15-minute monologue as the sales person covers all bases.

Another customer phenomenon FS providers have failed to adapt to is the way channel use has changed. Consumers are generally a lot more savvy now, happy to do their own research online, and seeing what others are saying about the brands they’re considering. Once they’ve found an offer they like, they might start and even complete the application process online.

For the FS provider winning the business this is great news, but for the others that would have liked to influence that decision process, an opportunity has been lost; they have not had a chance to start a conversation. This isn’t just happening in retail banking, either. As life and pensions providers adopt direct-to-consumer channels, they too must learn how to engage with a broadening spectrum of digitally-literate customers who aren’t afraid to shop online.

Making every channel count

As customers’ routes to financial services change, FS providers need to review what value they are adding through their various channels. If service isn’t consistent across the different customer touch points, the overall customer experience will suffer – and disenchanted customers will take their feedback online, chipping away at public brand perception.

In Egremont’s research, significant diversity was found in perceptions of brands’ channel performance. Metro Bank and M&S scored highly on the branch experience, while First Direct got high marks for its contact centre. But it’s how the various channels diverge and follow the customer journey that dictates a good end-to-end experience. This means each channel needs to play to its strengths.

Working backwards from customer needs

Natalie Mclellan

Natalie Mclellan

So how can FS providers strike the right balance between meeting the fuller needs of the customer, achieving legitimate commercial goals, and delivering for the regulator compliance-wise?

If the bank is focused on the needs of the customer, it is already halfway there to keeping regulators happy – and attracting good levels of profitable business. By developing new models to engage with customers, being proactive in understanding the customer more holistically and listening to the customer instead of talking at them, front-line colleagues will become attuned to additional needs they might have missed otherwise – as they learn about the individual’s stage in their career and family life. So instead of the standard “have you currently got mortgage protection?”, a cross-selling conversation might develop organically as part of a more holistic discussion – a conversation which results in mutually beneficial outcomes for both the customer and the bank.

Encouragingly, it appears that frontline staff may be receptive to new direction. Eighty-eight per cent of Egremont’s Mystery Shoppers rated ‘staff attitude’ to be above average – suggesting there is latent potential to more proactively engage customers, behaviour that could be teased out with the right coaching.

Addressing internal disconnects

Silos are still typically to blame for poor execution. Vertically, the organisation might have a great vision and strategy but lack the mechanism to get this through to the frontline. Horizontally, there may be too much logistical separation between functions, channels or the organisation and third parties. And, culturally, leadership and performance management structure may not be conducive to doing things differently. As the adage goes, if you keep doing the same things you shouldn’t be surprised if you keep getting the same results. So all of these components need to be looked at.

The vision must begin with the customer. To a large degree, organisations need to go back to basics, using techniques that were built into customer relationship management 10 years ago – involving segmenting and developing a deeper understanding of customers, and more holistically, so that products can be developed that better meet their requirements.

Referring to retail

FS providers can learn a lot about what to do by looking at the retail sector, where customer engagement is much more advanced.

A common approach to accelerated change here is to use hot-housing techniques – where a handful of branches/stores are ring-fenced for customer experience improvement initiatives. Such projects, which develop into rapid ‘test and learn’ pilots, look at everything holistically across the operation – at the people, the processes and the supporting systems – but arrive at change quickly and effectively. Crucially, any suggestions for change start with the customer and the staff who serve them every day.

Something else retailers do well is reward loyalty. In the FS industry, this would require matching new-customer incentives with end-to-end service improvements, rather than subsidising attractive front-end offers with higher overdraft charges.

It’s a learning curve of course but, with competition intensifying, time isn’t on providers’ side.


Natalie McLellan is the Head of Egremont’s Financial Services practice. She is an experienced customer strategy and business transformation specialist with a proven record of delivery within the financial services industry.

Egremont Group is a management consultancy which specialises in bringing retail best practice to the financial service industry. It has worked with all of the UK’s top 20 retailers and a growing number of high street retail banks, building societies and leading life & pensions providers.


ECB stays put but warns about surge in infections



ECB stays put but warns about surge in infections 5

By Balazs Koranyi and Francesco Canepa

FRANKFURT (Reuters) – The European Central Bank warned on Thursday that a new surge in COVID-19 infections poses risks to the euro zone’s recovery and reaffirmed its pledge to keep borrowing costs low to help the economy through the pandemic.

Having extended stimulus well into next year with a massive support package in December, ECB policymakers kept policy unchanged on Thursday, keen to let governments take over the task of keeping the euro zone economy afloat until normal business activity can resume.

But they warned about a new rise in infections and the ensuing restrictions to economic activity, saying they were prepared to provide even more support to the economy if needed.

“The renewed surge in coronavirus (COVID-19) infections and the restrictive and prolonged containment measures imposed in many euro area countries are disrupting economic activity,” ECB President Christine Lagarde said in her opening statement.

Fresh lockdowns, a slow start to vaccinations across the 19 countries that use the euro, and the currency’s strength will increase headwinds for exporters, challenging the ECB’s forecasts of a robust recovery starting in the second quarter.

Lagarde saluted the start of vaccinations as “an important milestone” despite “some difficulty” and said the latest data was still in line with the ECB’s forecasts.

She conceded that the strong euro, which hit a 2-1/2 year high against the dollar earlier this month, was putting a dampener on inflation and reaffirmed that the ECB would continue to monitor the exchange rate.

The euro has dropped 1% on a trade-weighted basis since the start of the year, but is up nearly 7% over the last 12 months. Against the U.S. dollar, that number rises to over 10%.


Opening the door for more stimulus if needed, Lagarde confirmed the ECB would continue buying bonds until “it judges that the coronavirus crisis phase is over”.

Lagarde also kept a closely watched reference to “downside” risks facing the euro zone economy, which has been a reliable indicator that the ECB saw policy easing as more likely than tightening.

But she signalled those risks were less acute, in part thanks to the recent Brexit deal.

“The news about the prospects for the global economy, the agreement on future EU-UK relations and the start of vaccination campaigns is encouraging,” Lagarde said. “But the ongoing pandemic and its implications for economic and financial conditions continue to be sources of downside risk.”

Lagarde conceded that the immediate future was challenging but argued that should not impact the longer term.

“Once the impact of the pandemic fades, a recovery in demand, supported by accommodative fiscal and monetary policies, will put upward pressure on inflation over the medium term,” Lagarde said.

Benign market indicators support Lagarde’s argument. Stocks are rising, interest rates are steady and government borrowing costs are trending lower, despite some political drama in Italy.

There is also around 1 trillion euros of untapped funds in the Pandemic Emergency Purchase Programme (PEPP) to back up her pledge to keep borrowing costs at record lows.

The ECB has indicated it may not even need it to use it all.

“If favourable financing conditions can be maintained with asset purchase flows that do not exhaust the envelope over the net purchase horizon of the PEPP, the envelope need not be used in full,” Lagarde said.

Recent economic history also favours the ECB. When most of the economy reopened last summer, activity rebounded more quickly than expected, indicating that firms were more resilient than had been feared.

Uncomfortably low inflation is set to remain a thorn in the ECB’s side for years to come, however, even if surging oil demand helps put upward pressure on prices in 2021.

With Thursday’s decision, the ECB’s benchmark deposit rate remained at minus 0.5% while the overall quota for bond purchases under PEPP was maintained at 1.85 trillion euros.

(Editing by Catherine Evans)

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Bank of Japan lifts next year’s growth forecast, saves ammunition as virus risks linger



Bank of Japan lifts next year's growth forecast, saves ammunition as virus risks linger 6

By Leika Kihara and Tetsushi Kajimoto

TOKYO (Reuters) – The Bank of Japan kept monetary policy steady on Thursday and upgraded its economic forecast for next fiscal year, but warned of escalating risks to the outlook as new coronavirus emergency measures threatened to derail a fragile recovery.

BOJ Governor Haruhiko Kuroda said the board also discussed the bank’s review of its policy tools due in March, though dropped few hints on what the outcome could be.

“Our review won’t focus just on addressing the side-effects of our policy. We need to make it more effective and agile,” Kuroda told a news conference.

As widely expected, the BOJ maintained its targets under yield curve control (YCC) at -0.1% for short-term interest rates and around 0% for 10-year bond yields.

In fresh quarterly projections, the BOJ upgraded next fiscal year’s growth forecast to a 3.9% expansion from a 3.6% gain seen three months ago based on hopes the government’s huge spending package will soften the blow from the pandemic.

But it offered a bleaker view on consumption, warning that services spending will remain under “strong downward pressure” due to fresh state of emergency measures taken this month.

“Japan’s economy is picking up as a trend,” the BOJ said in the report, offering a slightly more nuanced view than last month when it said growth was “picking up.”

While Kuroda reiterated the BOJ’s readiness to ramp up stimulus further, he voiced hope robust exports and expected roll-outs of vaccines will brighten prospects for a recovery.

“I don’t think the risk of Japan sliding back into deflation is high,” he said, signalling the BOJ has offered sufficient stimulus for now to ease the blow from COVID-19.


Many analysts had expected the BOJ to hold fire ahead of a policy review in March, which aims to make its tools sustainable as Japan braces for a prolonged battle with COVID-19.

Sources have told Reuters the BOJ will discuss ways to scale back its massive purchases of exchange-traded funds (ETF) and loosen its grip on YCC to breathe life back into markets numbed by years of heavy-handed intervention.

Kuroda said the BOJ may look at such options at the review, but stressed a decision will depend on the findings of its scrutiny into the effects and costs of YCC.

He also made clear any steps the BOJ would take will not lead to a withdrawal of stimulus.

“It’s too early to exit from our massive monetary easing programme at this point,” Kuroda said. “Western economies have been deploying monetary easing steps for a decade, and none of them are mulling an exit now.”

(Reporting by Leika Kihara and Tetsushi Kajimoto; additional reporting by Kaori Kaneko; Editing by Simon Cameron-Moore & Shri Navaratnam)

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World Bank, IMF agree to hold April meetings online due to COVID-19 risks



World Bank, IMF agree to hold April meetings online due to COVID-19 risks 7

WASHINGTON (Reuters) – The International Monetary Fund and the World Bank have agreed to hold their spring meetings, planned for April 5-11, online instead of in person due to continued concerns about the coronavirus pandemic, they said in joint statement.

The meetings usually bring some 10,000 government officials, journalists, business people and civil society representatives from across the world to a tightly-packed two-block area of Washington that houses their headquarters.

This will be the third of the institutions’ semiannual meetings to be held virtually due to the pandemic.

(Reporting by Andrea Shalal; Editing by Chris Rees

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