The banking crisis has rocked the relationship between banks and their clients, writes CONOR POPE
WHEN A CHILD applies for a passport in this country the application form has to be signed by a Garda. If a member of the force is unavailable, however, the needful can be done by other upstanding, responsible and respected members of the community. Or you can ask a clergyman or bank manager to sign the form instead.
It is hard to imagine two roles that have had a greater fall from grace than those who were charged with looking after people’s souls and savings, and things appear to be getting worse for both.
A senior AIB official, speaking to Pricewatch on the condition of anonymity, says that staff at the bank are still reeling from the collapse of the sector. They are also getting flack from consumers angry at the mess the banks have made of our futures through their reckless lending, greed and failure to predict what was, in hindsight, the bursting of an inevitable property bubble.
“Customers are rightly angry,” he says, “but staff are also furious because they are having to bear the brunt of customer anger in spite of the fact that the problems have nothing to do with them. They have to refuse credit to small local businesses, that they know are solid, because credit rules have changed.”
He is not entirely without hope however. “If banks can do what their customers want them to do then I think, in time, trust will return.”
One thing the banks should not bother with, he says, is “relationship management”. Banks boought into this because they believed that if they were friendly with their customers they would make money by selling more and more profitable products to customers.
“I think we have found that more and more people don’t want a relationship with us. They are treating us much more like a utility company than was the case in the past. They want the system to work and they don’t want us to be calling them to wish them a happy birthday. All they want is for that bank draft to be cashed on time and with no fuss.”
It is a simple truth that cost him nothing to arrive at. Ulster Bank, on the other hand, has spent a lot of time, effort and money reaching a not dissimilar point.
Recognising that its relationship with its customers was in danger of being fractured beyond repair in the wake of the banking crisis, it carried out an extensive survey of its customers last year. It wanted to find out what made them tick and what ticked them off.
After the results came back to head office on Dublin’s George’s Quay, it published a list of 15 commitments: changes it promised to implement in order to improve the experience its customers had.
Among the big 15 were undertakings to make banking more convenient and faster. It also said it would be more helpful, both in-branch and on the phone, and would make its complaint resolution process easier.
Today it publishes a report, assured by Deloitte LLP, into the progress it has made on its commitments. Unsurprisingly, it scores highly on many of its pledges: it would hardly be releasing the report if it had failed spectacularly. It says 190,000 customers have now taken advantage of its new Saturday opening hours while 67,000 have registered for mobile phone banking. It has sent 814,000 texts aimed at helping people to avoid unnecessary charges on their current accounts.
There is one area where it has not done so well however. It set itself a target of handling complaints within two days and while 86 per cent of complaints were handled in this time, about a third of customers were unsatisfied with how their complaint was handled. There’s not much point in handling a complaint if you handle it badly.
While the bank is keen to accentuate the positives, most people would have harder questions to ask about the recklessness of the bank – and all banks – during the good times. People may want to know its stance on debt forgiveness, how it proposes to deal with the growing number of customers who are falling into mortgage arrears and if Ulster Bank thinks we will ever trust it again.
Richard Donnan, chief executive of Ulster Bank’s retail markets, said: “These are obviously unprecedented times in banking,” pointing to dramatic changes for consumers over a very short time.
There has, he continues, “been damage done to bankers’ reputations over the last two years” and he says that damage will not be undone overnight.
“It will take years. Trust needs to be earned over a long period and it is earned by performance and not words.”
One of the words most commonly uttered in connection with banks these days is “arrears”. Mortgage holders are paying the highest price for the bad practices of the banks. While Ulster Bank was by no means the worst offender and is not the largest mortgage provider in the country, it does have 16 per cent of the market.
But is it actually in the market? Is it giving mortgages and, if so, how many new mortgages is it approving each week? Donnan won’t say. He insists the bank is “open for business” but even when pressed he will not reveal what that means other than to say: “We are looking to do business on a sustainable basis, going forward.” Right.
What about its existing mortgage holders? How are they holding up? Not well. Around 10 per cent of them are in arrears but if they are hoping for some degree of debt forgiveness, they’ll be waiting. “We don’t have a policy for debt forgiveness. I think the whole area needs careful consideration and consultation. There are unintended consequences of going down the debt forgiveness route,” he says.
He believes the whole area of personal debt needs “review and reform” which will have to be a “consultation involving all stakeholders”.
How long does he think the crisis will last? “There are so many external factors that still need to crystallise. If you asked me that two years ago I would have said a year. There are some signs – not green shoots – but some signs of positivity. It is going to be 18 months to two years before we can really say we are moving out of this.”
Asking him who is to blame for the mess we’re in is like revisiting a crib sheet from the Fianna Fáil election campaign and he stops just short of saying we are where we are.
“All parties will look back and ask, would we have done some of the things we did and made some of the decisions we made? The important thing is where we are at and how best we can play our role in rebuilding the economy.”
While he may talk about rebuilding the economy, it is the banking sector that did so much to wreck it. When he is asked if the bank lent recklessly during the boom years he pauses before saying he is “not going to comment” and would prefer to “look to the future than to the past”.
Hmm. Wouldn’t we all?
Do you trust your bank? Comments on Twitter
Absolutely not, no, nein, nada. Why would they leave my savings wallow in a 0.5 per cent account yet not make me aware of better accounts?
Seán O'Cathain
If it was at local level definitely, unfortunately it's all done by computer at head office.
Marie Sheridan
Nope! That's why I do 99 per cent of my banking online. David O'Leary
No, they have made several mistakes in the past, like removing €300 instead of €30 to pay my bin collection! I always check statements.
Karen Dunne
Never had a reason not to. However use online banking to watch my account. Vincent O'Connor Yes, but not at a national level. Patricia Ferry
No. I took local bank advice and ended up with my account in the credit control dept for two years. Stress city. Still paying for it. Ciaran Martin
Guess I do trust my bank, but check via the internet every fortnight or so to make sure all looks ok. Tom Tierney
Ha, ha, ha. Is it April 1st? Declan Harmon
Yes and I'd say most people would say the same! Although u'll always have peeps that stash cash under the mattress. Bronagh McCardle
I suspect my (any) local bank doesn't manage my bank account at all. There's no branch authority to do anything. Ciara H
At a local level, yes. My branch of BOI has been nothing but helpful and informative in all the time I've been with them. Joanna Schaff
In a word no. Looking at ways to move my money out of bank as have genuine fear about Irish default/euro and its effects. Stephen Twomey Nope! Lost my Laser card a few months ago and BOI had to reissue six times before it was right. Nightmare! Kerrie O'Callaghan
I wouldn't trust them with my piggy bank. William Carroll
