What went wrong with UK retail banking?

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As I approach my 40th year in retail banking and having worked for a number of retail banks both big and small it is perhaps understandable that my son in law who also works in banking asks me why it is that all the banks that I have worked for have faced considerable difficulties in recent years and in the case of both HBOS and the Cooperative Bank near fatal demise.

Is there a common factor here other than the fact that I worked in all of them!!

It would be easy to say that bankers got greedy and lost sight of the customer but of course that would be a gross simplification – however, there is no doubt that many senior bankers were preoccupied with their bonuses and the chance of making a large amount of money in the short term rather than building a life time career and business.

Having been personally involved in the HBOS flotation, although there was considerable research and debate whether flotation was the right course of action, my most vivid memory of that time is when one of my executive colleagues said to me – of course you know what the flotation means – having said I was not absolutely sure he replied “ well of course it means we can all retire when we are 55”.

Hardly a day seems to go by now without a negative story in the press concerning our retail banks – if it is not the mis-selling of products like PPI it is the IT problems that result in payment difficulties and cash not being available at ATMs that sadly might become a more regular phenomenon.

Many of the problems all retail banks are facing is become of under investment in their infrastructure and the lack of customer focus and obsession.

The sad fact and reality is that there were fundamental flaws in a number of UK retail bank strategies which even now the full lessons are not being learnt from. A good business does not become a bad one overnight – it can take several CDO’s to ruin it.

Retail banking across Europe is now facing a level and speed of change unprecedented even compared with the changes we have already seen.

The combined impact of significant changes in customer behaviour and a drive to increase operational efficiency by using digitisation to significantly reduce headcount and process costs will inevitably have a major impact across all UK banks and Yorkshire may suffer worst than most.

In both Yorkshire Bank and Halifax, which are based and headquartered in Yorkshire, significant further downsizing in branch networks and overall staffing levels seem inevitable. Many consultants are anticipating cost reductions of 30 to 40 per cent to result from digitisation across all retail banks in the next five years and the impact on UK banks are likely to be a similar percentage reduction in staffing levels with the main impact being at retail high street branch level but also in central HQ’s.

It seems highly likely that HSBC will move its main UK retail banking HQ to Birmingham before potentially selling off its total retail operation in the UK so the prospects for HSBC Yorkshire-based staff currently located in either Sheffield or at First Direct in Leeds are understandably a little uncertain at the current time.

I wish I could offer words of comfort to staff working in retail banking in Yorkshire but as a former CEO of one of the banks I worked for in my career sadly said to me some time ago “we have had the good times John – its time to take our money and run for the hills”.

I just hope there is enough money left in the pension funds for bank staff to be able to do that.

John Kirkbright describes himself as a passionate Yorkshireman who is the CEO of K-Strat International, a Yorkshire based worldwide financial services consulting firm that has run major events and worked with major banks and banking associations in many different countries.

During his 40 year career he has worked for five different banks both in the UK and Internationally with Citibank, Grindlays Bank, HSBC, Cooperative Bank and Halifax Building Society and PLC. He worked with Halifax for 13 years helping them in the transformation from building society to Plc before leaving to set up his own business in 2000.