There is a classic saying "Facts are nothing - the only thing that count is perception" And the irony is that banks does not realize this. Clients are 10 times more inclined to share a bad experience than a good one.
Clients in any business can be classified into categories - for example : Those that are happy with the service they received from a service provider and those that are not. Financial institutions have a few different types of clients of which the main groups are Depositors and Lenders or Debtors. Whatever you do with a bank you either owe them money or they owe you money - all other services are incidental.
There are all sorts of laws regulating the relationship with these clients of which the most important ones are the NCA and FICA. The first one tells the bank what the rights of lenders are and within what parameters they must deal with lending clients. The second one is popularly known as the"know your client" act.
Permutations are vast if the relationship between banks and clients, service levels expectations and deliverance and the various acts dominating the scene are taken into account. The opportunity for conflict is so serious that it is understandable that if the concept of 'CLIENT SERVICE" is not understood and managed perceptions of "Banks are only focused on making money" and a few other negatives will abound.
The last thing I want to put the spotlight on is that communication between a bank and its client is probably the biggest challenge that is lacking in execution. Two recent examples need to be looked at :
1. The Absa fail. Abs failed to communicate timeously with their clients when they took money from the client's money market fund. ( The African bank debacle) This showed clients the banks lack of interest in their clients and their own inwardly focused thinking.
2. The Standard bank Systems fail. Standard bank's systems failed dramatically this week. The website did not carry any explanations of what was going on. No sms's went out whilst this is the easiest of communication mediums that the bank use.
Without going into much detail one of the biggest challenges banks face is recovering the money that they lend out yet their processes are so old and outdated that one cannot imagine how they survive. They do not know their clients and I have a vast array of personal experiences that any bank can use and study to create a new world in this area.
I am going to explain my suggestions of where a serious re-thought is required.
A good client suddenly starts missing payments on his loan account. The bank has no system to read a tendency. It is like a scene from Starwars. Robots are activated to do certain things: Phone the client a day after non payment is noted. Irritate the hell out of him. Make sure he makes promises - whether he can keep it is of no concern as the system wants a new date for follow up. Client pays up to date and for 2 months he pays on time. He misses again. Same robot, same actions. The bank has no cooking clue why this "good client" has now changed into a "Problem" They are not interested at all.
The client stops paying his loan - Robot is activated. art 129 notice is dispatched - Client does not pay. Account is transferred to legal - still the bank does not know why this client is not paying and as they have no system to check the next step is summons and judgment.
This is an over simplification of banks attitude towards clients - Once this has happened he is not longer a client but a problem to be solved. They still do not know why the client is in the position he is in
You see the problem is one of my pet hates : Call centers and call center agents -
The system of summons and judgment is so automatic that the bank does not have a clue whether they are going to be able to collect on the loan - By the time the bank writes the loan off (for various reasons) costs have accumulated to such an extend that a whole new economy can be financed with it.
Who is making money from these mishaps of clients ? The lawyers - and they know it. Like leeches they suck the blood from anything they can attach their suckers to. One lawyer recently told me "in confidence" when asked why accounts are moved around from lawyer to lawyer is because they have lawyers specializing in collecting as much as possible from clients after first legal action are finished and that they have the mandate to offer clients special discounts for settling. These lawyers are paid a percentage of money collected in this way and the faster they can collect the more money they are paid - which again is a % of the money collected and again a whole new economy has been established.
All this is because the banks do not adhere to the two basic laws that govern their actions. They are recklessly lending to clients in defiance of the NCA and they do not know their clients in terms of FICA.
Their perception of FICA is a copy of an ID and a confirmation of home address. Now they "know" their client.
The biggest problem here is " They do not know 90% of their clients in any personal way - and they are not interested in getting to know them as "problem solving" is not in their job descriptions.
See my next post :"Why clients default on their commitments to banks"
Clients in any business can be classified into categories - for example : Those that are happy with the service they received from a service provider and those that are not. Financial institutions have a few different types of clients of which the main groups are Depositors and Lenders or Debtors. Whatever you do with a bank you either owe them money or they owe you money - all other services are incidental.
There are all sorts of laws regulating the relationship with these clients of which the most important ones are the NCA and FICA. The first one tells the bank what the rights of lenders are and within what parameters they must deal with lending clients. The second one is popularly known as the"know your client" act.
Permutations are vast if the relationship between banks and clients, service levels expectations and deliverance and the various acts dominating the scene are taken into account. The opportunity for conflict is so serious that it is understandable that if the concept of 'CLIENT SERVICE" is not understood and managed perceptions of "Banks are only focused on making money" and a few other negatives will abound.
The last thing I want to put the spotlight on is that communication between a bank and its client is probably the biggest challenge that is lacking in execution. Two recent examples need to be looked at :
1. The Absa fail. Abs failed to communicate timeously with their clients when they took money from the client's money market fund. ( The African bank debacle) This showed clients the banks lack of interest in their clients and their own inwardly focused thinking.
2. The Standard bank Systems fail. Standard bank's systems failed dramatically this week. The website did not carry any explanations of what was going on. No sms's went out whilst this is the easiest of communication mediums that the bank use.
Without going into much detail one of the biggest challenges banks face is recovering the money that they lend out yet their processes are so old and outdated that one cannot imagine how they survive. They do not know their clients and I have a vast array of personal experiences that any bank can use and study to create a new world in this area.
I am going to explain my suggestions of where a serious re-thought is required.
A good client suddenly starts missing payments on his loan account. The bank has no system to read a tendency. It is like a scene from Starwars. Robots are activated to do certain things: Phone the client a day after non payment is noted. Irritate the hell out of him. Make sure he makes promises - whether he can keep it is of no concern as the system wants a new date for follow up. Client pays up to date and for 2 months he pays on time. He misses again. Same robot, same actions. The bank has no cooking clue why this "good client" has now changed into a "Problem" They are not interested at all.
The client stops paying his loan - Robot is activated. art 129 notice is dispatched - Client does not pay. Account is transferred to legal - still the bank does not know why this client is not paying and as they have no system to check the next step is summons and judgment.
This is an over simplification of banks attitude towards clients - Once this has happened he is not longer a client but a problem to be solved. They still do not know why the client is in the position he is in
You see the problem is one of my pet hates : Call centers and call center agents -
The system of summons and judgment is so automatic that the bank does not have a clue whether they are going to be able to collect on the loan - By the time the bank writes the loan off (for various reasons) costs have accumulated to such an extend that a whole new economy can be financed with it.
Who is making money from these mishaps of clients ? The lawyers - and they know it. Like leeches they suck the blood from anything they can attach their suckers to. One lawyer recently told me "in confidence" when asked why accounts are moved around from lawyer to lawyer is because they have lawyers specializing in collecting as much as possible from clients after first legal action are finished and that they have the mandate to offer clients special discounts for settling. These lawyers are paid a percentage of money collected in this way and the faster they can collect the more money they are paid - which again is a % of the money collected and again a whole new economy has been established.
All this is because the banks do not adhere to the two basic laws that govern their actions. They are recklessly lending to clients in defiance of the NCA and they do not know their clients in terms of FICA.
Their perception of FICA is a copy of an ID and a confirmation of home address. Now they "know" their client.
The biggest problem here is " They do not know 90% of their clients in any personal way - and they are not interested in getting to know them as "problem solving" is not in their job descriptions.
See my next post :"Why clients default on their commitments to banks"
