Lloyds Bank - customer centric when it comes to cash-making customers at least

Stuart Lauchlan Profile picture for user slauchlan August 3, 2015
Lloyds Banking Group is committed to customer centricity, but only if they can make some money out of those customers at the same time?

A sign for the Lloyds Banking Group who will signal thousands more job cuts-742698
For a bank that’s proclaimed it’s out to revolutionise the customer experience, Lloyds Banking Group had a bit of bad PR last week, when a leaked internal email found its way into the hands of the Daily Mail newspaper.

The email, from a senior manager, instructs staff at the bank to cancel appointments with customers who only want advice and to focus on those who will actually be spending and making money for the bank.

According to the Mail’s report, the unnamed line manager reminds staff:

The commerciality of your appointments is crucial to our success as a team and individually’.

Please review your forward diary for the rest of the week – and pre-qualify all appointments to ensure we are seeing customers who need and want our help for their largest financial commitment.

Please look to replace any appointments where we can with customers who could benefit from our excellent rates and offers.

Nice touch, but maybe not that unexpected.

Lloyds aggressive sales culture earned it a £28 million fine from the Financial Conduct Authority. It’s more recently had to put aside £175 million as a contingency related to a mis-selling scandal.

The firm this week also announced that it has had to put aside £1.4 billion of additional provisions for claims relating to the mis-selling of PPI insurance, taking its total budget here to £13.4 billion.

Digital transformation

But when last we looked at Lloyds, there was a commitment to becoming “the best bank” with customer centricity as the prime focus to drive a £1 billion digital transformation exercise.

Antonio Horta-Osorio - Group Chief Executive insisted this week that the bank is cleaning up its act:

Last October, we outlined three strategic priorities to take us through to the end of 2017, creating the best customer experience, becoming simpler and more efficient, and delivering sustainable growth, which I will cover in the next couple of slides.

Starting with creating the best customer experience. During the first six months of the year, we have made a strong start to the next phase of this strategic journey to become the best bank for customers and shareholders. Our multi-brand, multichannel approach allows us to meet customer needs more effectively, allowing them to choose how and when they wish to interact with us.

We are adapting to the digital revolution and today, we have more than 11 million online users and nearly 6 million mobile users, numbers which have increased by around 0.5 million each since yearend.

This provides significant opportunities for serving our customers in new and more efficient ways. A recent example of this was the launch of our Halifax motor finance offer. This is the market's first digital direct to consumer secured car finance proposition.

In addition, we continue to streamline our processes and have reduced the average intermediary mortgage application to offer time from around 25 to 14 days with further improvements targeted.

This is all paying off, he argued:

Our progress in creating the best customer experience has been reflected in our net promoter scores, which have increased by an additional three points in the first six months of the year and by 60% cumulatively since 2010. Despite these scores, we are not complacent and recognize that we, together with the industry, have more to do in order to rebuild customer trust.

And on becoming simpler and more efficient, we have continued to increase our investment in IT in the first half, resulting in simpler, more efficient processes, more resilient systems, and better digital experiences for our customers, as well as cost reductions for the Group. The first six months of the year, we have delivered run-rate savings of £225 million against our target of £1 billion of savings from the new Simplification program by the end of 2017.

Nonetheless, the bank turned in first half profits of only £717 million, scuppered by a £745 million loss on the sale of TSB and £435 million of other misconduct charges.

My take

Digital transformation is a long road to travel.

Horta-Osorio abolished traditional sales targets last year, but changing a culture inside a huge organization like Lloyds takes a long time and a lot of effort.

I dropped my Lloyds business bank account on the basis of complete lack of interest from the customer account people when they realised that I had some very simple needs and wasn't an upsell candidate.

Don't regret walking away.



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