The banking sector has been pushing to improve customer service in its attempt to overcome negative consumer perceptions. The desire by high street banks to position themselves as providers of high quality service providers came after many years of criticism that they were failing to care for their customers.

Many banks attempted to improve their image. One of the actions by Midland, now part of the HSBC group, was to revive its ‘Listening Bank’ slogan and launch a campaign highlighting its customer service to change perceptions. In the mid 1990s, the bank released TV commercials featuring an employee in the role of a superhero solving customers’ problems. This theme was quickly mimicked by competitors.

In their attempts to shake off their poor public image of the late 1980s and early 1990s, many banks initiated programmes of internal marketing, training and customer service. The success of these programmes led the banks to claim improvements in customer service. Despite the claims, however, the evidence is not entirely clear-cut, since there are some studies that suggest the persistence of high levels of consumer discontent. For example, in a 1997 survey conducted by NOP, it was revealed that 31 per cent believed their banking service had improved, compared with 54 per cent who felt it had stayed largely the same, while 14 per cent felt it was worse than ever. According to senior researcher for the Consumers’ Association Neil Walkling, there seems to have been little change in the situation. ‘The service you get is still a bit of a lottery. It is very difficult for banks to maintain uniform service when they have so many branches, but an increased use of telephone banking should improve the situation.’

Despite this, Midland believes that as a result of its initiatives its customer service has evolved and improved over the years. Andy Stephens, head of customer service at Midland, highlighted that customer care has become a strategic imperative for the company. ‘Banks have never been the most popular beasts, but 3 or 4 years ago we were getting some very bad press so we decided to become more customer focused. We said if we are going to compete in this market with all these new competitors coming in, like Virgin, then we are going to have to get better.’

In response to the competitive challenges from new operators like Virgin, Tesco and Sainsbury's, and the growing expectations of customers, Midland introduced numerous new services and made improvements to existing ones, examples of which are:

   rapid expansion of cash points, placing them at third party sites such as stations and supermarkets;

   introduction of telephone and PC banking;

   reducing queues in branches by updating the bank's computer systems;

   cutting back on the number of charges customers are liable for.

The backcloth to these changes has been the heavy emphasis on employee development. Midland's 40 000 members of staff all underwent a 1-day customer service training course, which each individual had to pass. Midland also began to use mystery shoppers to check and improve employee skills in dealing with customers. Following this, Midland claimed that the number of complaints it received fell 36 per cent year-on-year in 1996, while customer satisfaction rose from 82 per cent in 1995 to 90 per cent in 1996. Other high street banks such as Barclays, NatWest and Lloyds TSB followed suit and introduced similar changes, and all claimed improvements in performance.

One driving force for internal change has been First Direct, which Midland launched in 1989. In many ways, First Direct revolutionized the financial sector and its innovative approach rightly received high praise for service quality.

First Direct

Midland's offshoot First Direct adopted an approach of natural communications in its internal marketing programme. Sue Pollitt, internal marketing manager at First Direct, believes the key to successful internal marketing is to ensure that it doesn't become too stage-managed: ‘What we do is make sure people feel they can speak out and have a dialogue with anyone in the business. We have done focus groups with our staff about how packaged we want our internal marketing to be and they don't want it. They prefer the rawness of the communications we have at the moment.’ The closest First Direct gets to a ‘pre-packed’ programme is ensuring everyone has an informed understanding of the company's plans and priorities, and they have a chance to question senior management on a face-to-face basis in an entirely open way. According to Pollitt, ‘It's also about hiring the right people: we do believe that if we actually see our people as representing the brand and influencing our customers’ regard of First Direct we are naturally going to make sure we recruit the right people, who might not have the skills and knowledge required, but have a natural empathy.’

First Direct is as imaginative with its own staff as it tries to be in reaching and building relationships with its external customers. When creating its external customer programmes, the company always tries to look for what Pollitt calls the ‘icing on the cake’ for staff. First Direct attempts to be creative in trying to fulfil the needs of employees. For instance, it took advantage of the fact that its meeting rooms are empty in the evenings to hold classes in all sorts of subjects (for example, Spanish and guitar lessons were the most popular) and it was not that costly to set up because the company was easily able to use its purchasing power to negotiate good rates. First Direct knows that these innovations are not enough to keep people continually on board, because just like external markets the needs of the staff keep evolving. Employee needs change as they get used to what is on offer. Politt makes the point simply: ‘We are trying to achieve a bit of a wow factor with our internal audience, just as we would like our people to achieve this with our external audience.’

Sources: Barrett, P. (1997). Banks lend an ear to service. Marketing, 16 January, p. 16. Mazur, L. (1999). Unleashing employees’ true value: employees can be your company's most valuable marketing asset. Marketing, April, pp. 22–4.