Blackfriar: Interest grows in a bonus-free bank of happy customers

In the light of numerous British bank scandals and growing disenchantment among customers about bankers’ bonuses, Swedish bank Handelsbanken reported a 17 per cent rise in lending to British customers in the fourth quarter of last year.

Handelsbanken places strong emphasis on customer service and does not pay its staff bonuses, nor does it set sales targets, which means its employees are not incentivised to persuade customers to take out the bank’s products. Its only target is a higher return on equity than its peers, which it claims to have achieved for 40 years.

Handelsbanken’s head of the North, John Parker, said that only a “handful” of employees working in capital markets receive a bonus. This is out of a total of 12,500 staff across the group.

That means that no one else, from the chief executive to branch staff, receives a bonus and no bonuses are paid to any staff in the UK. “We don’t have any call centres as it’s all relationship banking,” said Mr Parker.

“All our branches are in small locations staffed by local bankers who know their customers. There are no centralised call centres.”

Handelsbanken’s local, customer-led approach means it has been rated top for satisfaction and loyalty in the UK over the last five years, according to the latest ESPI independent annual survey of British banks’ personal and business customers.

“We’re growing and word of mouth is very important,” said Mr Parker.

“Our good customers recommend other good customers.”

Blackfriar received this email from a reader, which helps to explain just why the Swedish bank is doing so well in the UK.

“For over 50 years my father and I conducted our business account with District Bank and then NatWest.

“When I retired from my company, which has a turnover of over £1m, I continued with my private banking in their premium account.

“I put up with numerous changes, but finally lost patience when they appeared to lose my account and blamed me for it. When I wrote to tell them I was closing my account they didn’t respond!

“Last year I read an article on Handelsbanken, who have a branch in Halifax where I live. It was like a breathe of fresh air.

“They set up my account, changing standing orders and direct debits without a problem, came to our apartment to set up the online account and then returned when it needed fine tuning.

“We do not operate our account with an overdraft and never have more than a few hundred pounds in it.

“When I asked them why they thought I was worth having as a customer they replied that they may not make much money from my account, but if they give me good service I will tell other people.

“I have told quite a number of people! They have given me the type of service I enjoyed 50 years ago. Long may it last. Please give them some publicity. They deserve it.”

Perhaps it is a sign of just how much we’ve come to accept poor banking that it seems astonishing that Handelsbanken would put so much effort into helping a customer that it makes so little profit from.

Yet every day we hear stories about retailers, from small high street independents to major supermarkets, going out of their way to help customers, whether they are big spenders or not.

It is seen as part of the culture of the communities they operate in. At a time when banks are closing branches, these community concerns seem to be fading from the banking conscience.

The banks argue that the rise of the internet has made local banking less important, yet how come the supermarkets don’t use that excuse? They too are seeing a huge migration towards online shopping, but that doesn’t mean they are ignoring their local communities.

Blackfriar was tickled to hear the story of one senior Yorkshire supermarket executive who warned colleagues that they should never let infatuation with the internet become more important than the core estate.

The executive likened online shopping to the leggy bird at the disco, but he said they should never forget the wife back at home.

It’s a lesson the banks would do well to learn.

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