Shareholders above Customers - Official (Abbey National)

Name: timdouglas

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Product:	Abbey National
Date:	28/04/01 (476 review reads)
Rating:

Advantages: Reducing every day

Disadvantages: Slow automated bill payments, removing till positons and reducing services

My mother opened my first account at Abbey National more years ago than I care to remember - let's just admit it was over 30!

I've seen them innovate new services to take business away from their competitors and grow. They were the first to give survey reports to mortgage applicants. The first to pay interest on current accounts. The first building society to have cash machines, linked to a network that included other financial institutions. They increased capacity by adding new branches, adding extra tills at existing branches, opening longer hours, taking admin functions out of the High Street and introducing queuing systems to streamline service, and so on. They recruited more part time staff, and even banned staff taking lunch breaks at lunch time, so they could have more tills open when customers needed them. The strategy behind these moves was simple - make your service available to more customers without them having to queue up, and you'll attract more customers.

In the 1980's they were very successful. You can thank Abbey National for forcing all mortgage lenders to give a copy of the survey report to borrowers. You can thank Abbey National for forcing all banks to pay interest on current accounts. You can thank Abbey National for all banks opening on a Saturday. These are things we have come to take for granted, thanks to Abbey National. The strategy worked, culminating in them being the first - and still the most successful - building society to float on the stock exchange.

There were many doubters and dissenters to this flotation amongst employees, customers and other building societies. In the main, their concerns were the fear that the need to generate wealth for shareholders would take priority over the value and quality provided to customers. But the Board recommended the change claiming it would release the company from the restrictions of the Building Societies legislation, in particular allowi
ng them to raise capital more flexibly and provide a wider range of improved services for customers. They argued that this strategy would attract more customers, giving them higher earnings which they could pass on to shareholders, whilst remaining competitive in quality and value to customers.

Shortly after the launch on the stock exchange, employees were miffed to be told that shareholders' interests had to come before employees, so pay rises were being reduced. Well, of course shareholders are more important, aren't they? After all, they own the company - the company's whole purpose in life now is to generate profits to pay dividends and create growth in share values. Hmmmm, ok, I'll buy that for now, but .....

The development of new services continued. Most notably, Abbey National introduced telephone and internet banking, and extended the range of services available through their ATM's. These were great - I wouldn't have to join a queue at the branch to transfer money to my children's accounts when their meagre student grants ran out. I telephoned - "Sorry sir, you can only transfer money between your own accounts on the telephone. You can set up a regular payment, and the money will be deposited in the recipient's account 4 working days later." What??? If I queue up at the branch, they'll have access to the money from any cash machine in the world just 5 nano-seconds later, but if I use telephone banking it'll take 4 days? The same is true of their internet banking.

OK, can I just transfer money from my savings account to my current account then? "Yes sir, it'll be deposited in your current account tomorrow morning." What??? If I queue up at a branch to make the transfer I can draw on it immediately, but if I use telephone, internet or ATM banking it has to be done overnight!

OK, can I set up this bill payment to BT Cellnet please? "Yes sir,
we have all the details provided to us by BT Cellnet, we just need your mobile phone number as the reference." Great, and can you make a payment straight away, please - they need the money to pay my account by the end of the week. "Certainly sir, the payment will take four working days." At least there are advantages in these new services then! Hmmm, except at the end of the following week my mobile phone was cut off. BT Cellnet said they hadn't received the payment from Abbey National. It turns out there are several different mobile service companies under the BT Cellnet umbrella - you have to make sure Abbey National ignores the information sent to it by BT Cellnet, and sets up the correct details for YOUR service provider.

OK, now the details are set up correctly, I can make next months payment automatically. I'll do it on the internet, so I'm not even paying for the phone call. I send the payment over a week before it's due, but my mobile phone is cut off two weeks later. It turns out, according to BT Cellnet, that Abbey National's telephone, internet and ATM bill paying service REGULARLY takes two weeks or more to get to them, even though they say four working days. "Well sir, we quote 4 or 5 working days, but it's best to allow longer." Hang on though, when does the money leave my account? "The day you give us the instruction, sir." So who's got the money in the two weeks or more before it gets to the recipient? "er .... we do, sir."

OK, my kids are always short of money so I often need to get cash into their accounts quickly. If I receive a cheque, I know it'll take four working days to clear when I pay it into my current account - and one day longer to clear it in my savings account. (er ... please explain that one to me - surely, it takes the same time to go through the clearing system whatever kind of account I'm paying it into? I digress....
) So I take advantage of their 'special presentation' service. This is a service where they put the cheque into an envelope and send it directly to the branch of the bank it's drawn on. They then telephone that bank the following day to be told whether the cheque is going to clear and, if it's ok, they'll credit 'cleared funds' into your account. They charged £15 for this service - not cheap, but you have to consider everything is done manually and, although they'll give you access to the cleared funds, Abbey National still don't physically receive the benefit of the funds until the cheque goes through the clearing system, so fair enough.

This service used to be provided at the counter, so you had to queue for it. Then Abbey National decided it took up time and held up the queue, so they moved it off to their 'Customer Service Advisors'. Now, there is no queuing system to see Customer Service Advisors. At my local branch, there are often more people milling around the Reception desk waiting to see one than there are waiting in the organised queues at the tills! So it took a while and cost a bit, but at least we had the cash quicker.

I was delighted a couple of weeks ago when I went in with a cheque for special presentation, to be told they no longer charged for this service - great, a genuine improvement in service and value for customers. I found the quid pro quo the following evening, when the cash wasn't in my account. The next day was Saturday, so I went in and asked to see the manager, who said they don't automatically make the phone calls to the other bank now, unless I ring in to ask whether the clearance has been approved! OK, I wish I'd known.

Last week I went in with another cheque. There was the usual huddle around Reception and absolutely nobody at the tills, so I asked the Cashier if she could arrange a special presentation. I was gob-smacked to be told they
don't do them any more for less than £1,000. What, not even for a fee? "No, we'll still do them free if they're over £1,000, but we don't do them at all under that amount." She couldn't explain it, and seemed embarassed by the complete lack of logic. She said, "They've just told us that shareholders are more important than customers, and they were cutting out services that didn't add significantly to profits."


So, the improvements in service are illusory. I have the opportunity to pay bills automatically, without queuing up or paying for a phone bill, or getting wet at an ATM, or putting a stamp on an envelope. But my suppliers are right miffed with me for being a late payer and Abbey National is benefitting from up to two week's extra use of my money! Still, with all these extra automated services, I suppose the best way to achieve what I want is to take advantage of the lower queues at branches, right? Wrong! At many branches, the investments made in the 80's in extra till positions have been reversed. At my local branch, crude cardboard advertising hoardings have been put up to BLOCK OFF two till positions. What are they advertising? The little telephone booth in the corner of the branch, where I can do my telephone banking from! Even when I queue up, I can't get the services I want even at a reasonable cost, because they've cut out unprofitable services in the name of shareholder value.

Beware, Abbey National. The interests of shareholders, customers and employees are inextricably linked. You cannot put shareholders above employees, because employees will not give their best performance to customers. You can't put shareholders above customers, because they'll find somewhere else to do their business. In either event, your shareholders will lose out eventually.

If you can't put together a joined-up strategy that benefits all stakeholders i
n your business, it's safest to put employees first by default. If you put employees first, they'll be motivated to provide better service to customers. If customers receive better service, you'll attract more of them who will stay with you longer and trust you with a wider range of their financial needs. And they won't mind you taking a margin between savings and borrowings, or charging reasonable fees for value added services, allowing you to pay dividends to shareholders.

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