Improving the negative perception of banks is one of the most thankless briefs in marketing. But, as Paul Whitfield reports, new technology and online entrants are driving a substantial rethink in customer service and branding in the finance sector
The modern high street bank has something of an image problem. Technological innovation has driven service provision and product development faster in the financial sector than in almost any other, but customer expectations - and levels of satisfaction - have failed to keep up.
Fears and prejudices inherent in the bank/customer relationships are headline news again with Barclays' proposed [pounds]1 surcharge for cash machine withdrawals by other banks' customers.
Last week's 11th hour decision to delay the charge, under threat of legal action by Nationwide, is unlikely to have salved public feelings that the banks are playing games, which pay scant respect to the consumer.
Adding to people's frustration about their banks has been the fact that moving your account has long been almost impossible. Banks made it difficult, because every direct debit or standing order would have to be switched. The cliche is that you're statistically more likely to get divorced than to move your bank account.
But this week all that changes when a government initiative will make it easier for unhappy customers to take their business and money elsewhere.
A directive from the recently established government commission Bacs, means the central system which operates direct debit and standing order payments, will require a test group of banks to allow details of such payments to be transferred between themselves automatically.
This will dramatically simplify the process of changing accounts and should worry the banks, which know current accounts remain the foundation of their customer base.
The government and consumer groups believe this move will force the banks into a fundamental rethink of how they do business and approach their customers. Critics claim that banks are exploiting the inherent inertia of customers to leverage profit by selling uncompetitive products.
A Consumer Association report this month, 'One-Stop Flop', described buying financial products from the established high street banks as a misguided loyalty. "Instead of repaying your loyalty by offering you preferential rates, your bank is more likely to take advantage of it by selling you poor-value products," it adds.
At the same time banks are also facing up to the challenge of providing more online and automated services while attempting to preserve a 'human face' to show to customers.
Not that bank/customer relations have ever been easy. "Bank baiting is something of a national pastime. You are called greedy and stupid when you lose money, and greedy and evil when you make money," says Adrian Russell, spokesman for HSBC, formerly Midland Bank.
Tony Allen, managing director of Interbrand Newell and Sorrell, has some sympathy with this: "Consumers are much more forgiving of other industries," he says.
"Banking is a pretty complex, unbelievably boring category. People are willing to put up with a lot more nonsense from industries that have a higher glamour content."
Some of the disappointment with banks, says Allen, comes from a nostalgia of days when you knew the name of your bank manager and service was more personalised.
"Many people, looking through rose-tinted specs, still see the happy days of a bank and its manager as a status figure of respectability," says Allen. Banking brands over the past 30 years have struggled to find brand positions, with which both they, and their customers, were happy.
Uppermost among the forces that drove these changes was a fundamental realignment of bank marketing throughout the 70s and 80s.