Enough with the Brexcuses - we've got quite enough to worry about

Profile picture for user slauchlan By Stuart Lauchlan July 28, 2016
Summary:
Lloyds is axing 3000 jobs and shutting 200 branches because of Brexit....except it isn't. We're going to hear enough Brexcuses in the coming months without false claims being made now.

Brexit
When the UK decided to vote for Brexit from the European Union last month, one of the observations I made was that we should brace ourselves for months to come of the vote result being cited as a catch-all excuse for all sorts of shortcomings by businesses.

To date, we’ve seen commendably little of this from tech vendors. In fact, the prevailing message so far as been ‘steady as she goes’. All that could change of course, it’s still early days.

But there was a textbook example of what’s become known as Brexcuse yesterday, when Lloyds Banking Group turned in its latest numbers and announced it would be closing a further 200 branches and axing a further 3000 jobs.

This, according to a series of hysterical headlines in the mainstream media, was down to Brexit.

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Except of course it wasn’t. The new closures and cuts are an extension of the previously announced digital transformation and simplication programme that the bank has been engaged upon since 2014 and which we've written a great deal about.

I was all set to get on my high horse about Lloyds blaming Brexit for the side-effects of its own digital program, until I looked a bit closer and realised that the bank had done no such thing. Now, I’m no fan for Lloyds, far from it. But these Brexit-to-blame headlines are completely unfair to the bank, as it pointed out on Twitter:

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What’s actually happened here is that the digital transformation and simplification push has hit its milestones earlier than planned and as such the bank’s moving on to the next phase. Whether you approve of this or not is another matter, but it’s nothing to do with what happened on 23 June.

What Lloyds actually said

What CEO Antonio Horta-Osorio actually had to say on the subject of Brexit was:

Following the vote to leave the European Union, the outlook for the UK economy is uncertain. While the precise impact is dependent on a number of political and economic factors, a deceleration of growth is anticipated. Given the sustainable recovery in recent years, the UK enters this period of uncertainty from a position of strength.

As a simple UK-focused bank, we have also benefited from this recovery and from the simplification of our business in the past five years. This, along with our prudent approach to risk and the lowest cost structure of the major UK banks, position us well to continue to serve our customers and to deliver strong returns to shareholders. Our strategy therefore remains unchanged.

That strategy involves the continued digital programme, he confirmed:

We continue to invest to ensure we meet the evolving preferences of our customers through our multichannel approach.

We operate the UK's largest digital Bank with a 21% market share, with over 12 million online users and more than 7 million mobile users accessing our top-rated mobile banking app, we now meet 60% of our customer needs digitally.

This progress is reflected in the Group's customer satisfaction metrics. Our net promoter score is over 50% higher than at the end of 2011 and has improved across all brands and channels. Also, our Group reportable banking complaints remain significantly lower than our major peer group average.

But as for the impact of Brexit uncertainty:

We're only five weeks after the vote. It's very uncertain what will happen. It's very important to see the government's economic plan, the government's social plan, apart from the negotiation with the EU. It's very important to see how other banks will react. And therefore it's quite uncertain, we don't know.

Our simple UK-focused business model remains the right one. Our cost discipline and low-risk approach continues to provide competitive advantage. Whilst the outlook for the UK economy is uncertain and the deceleration of growth is expected, the UK is well positioned to face it. Regarding Lloyds, the successful transformation simplification of the business, together with our low-risk appetite, also position us well to weather this deceleration and continue to deliver for our customers and our shareholders.

My take

We’ll see enough of this Blame Brexit meme in the months to come and it’s only a matter of time before a tech vendor latches onto it as a way to excuse its own problems. We’ll deal with that when we get to it.

For now, click-bait headlines like those of yesterday do no-one any favors. There are serious questions to be answered about Brexit in the months to come. It would be good to conduct those in a calm and rational manner, not against a backdrop of over-excited attempts to find a Brexit angle on everything.