The message is simple: Trust has been lost and the digital world
is here. Successful relationships with customers in the
digital world are high-trust relationships. It is time for
bankers to rebuild trust at the same time as developing all
the communications and analytical advantages of digital technology.
There is no other way. The highly digitalised, non-bank competitors
are already taking the best parts of banking. Time is short.
Is Apple about to join the fray? Is Amazon? Is Facebook?
What happened to trust?
It is difficult to conceive of a trusted relationship
built on a single monumental falsehood: "the current
account is free".
When Girobank introduced free banking for personal customers in
the 1970s, it brought a new tension to the relationship between
banks and customers. With high base rates in the 70s, 80s and 90s,
zero interest current accounts more than covered their costs. As
interest rates fell, the emperor's new clothes were revealed at
least to bankers.
Faced with rising losses on personal current accounts and
no political space to reintroduce fees, the response was for more
aggressive cross selling, punitive charges for accounts that fell
out of agreed lending limits, successive programmes to reduce
costs (branch closure programmes, centralisation, staff reduction)
and the introduction of complex fee-bearing bundled products.
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