Curse of the call centres

THEY were meant to make our lives simpler. They were meant to make banking quick, efficient and cheap. The call centre was paraded by the banks as the antidote to the High Street queue, for businesses as well as individual savers. And most of all - though it was rarely pointed out to customers - call centres saved banks money. Jobs went. Costs fell. Profits rose.

But the rumbles of complaint about the breakdown of the traditional relationship between customer and bank branch are now rising to a crescendo. In the old days - whenever they were - customers knew that their branch was their branch. They knew that simple problems would be sorted out by someone at that branch. They often knew the person doing the sorting.

But now? Critics say call centres have made the High Street bank faceless and impersonal. Customers have to fight hard to speak to a banker who knows them, let alone one who knows their financial concerns.

During the Nineties, all the Big Four banks bought into the call centre idea with a vengeance. The terminology varied between banks. Some talked about the clustering of branches. Others talked about giving customers the chance to talk to someone with appropriate specialist knowledge. But the essential idea was the same: the branch-customer relationship was gradually eroded. Even people paying annual fees for their accounts to be taken care of would phone what they thought to be their branch, only to be asked which branch their account was with.

All the big banks have moved in the same direction. But none has shown quite the zeal of Lloyds TSB in its pursuit of the notion that there is little that cannot be done by call centres.

Last year, Lloyds TSB made £2.5bn in profits. It has 16m retail customers plus more than half am small businesses on its books. In the past 12 months, Lloyds TSB has faced anger from its customers on several fronts - from putting pressure on personal account holders to convert their overdrafts into loans, to introducing confusing management fees for small business accounts.

But overwhelmingly, it is the push towards the call centre approach that has provoked greatest complaint. A survey in the Consumers Association magazine Which? late last year showed that less than one-third of customers with Lloyds TSB and NatWest, now part of Royal Bank of Scotland, said they were very happy with the service they received.

In public, Lloyds TSB chief executive Sir Peter Ellwood shows little contrition about the upset caused by the severing of the old branch-customer relationship. Indeed, evidence suggests that where customers sign up for a bank that explicitly offers only a phone or internet service, such as First Direct or Smile, customer satisfaction can be sky-high - as long as the systems put in place to handle customers' inquiries really do work.

But last November, Ellwood brought in Eric Daniels from Citigroup and installed him as the new head of retail banking with the brief to improve customer service. Ellwood said this month: 'We have set ourselves a goal of raising customer service to record levels by the end of 2002, partly by increasing the number of customer-facing staff, and to be demonstrably better than our major competitors by the end of 2003.'

But Lloyds TSB shows no sign of abandoning its strategy of moving towards the call centre approach. The bank predicts that this year, it will save £155m in salaries by cutting 4% of its workforce. Already, it is virtually impossible for an account holder to get through to the manager of his or her branch. And by the middle of next year, Lloyds TSB account holders will not be able to phone their branch or write to their branch manager directly. Instead, correspondence will be routed through remote so-called 'specialist service centres'.

This is all part of Lloyds TSB's ' efficiency programme', which it says is aimed at improving customer service. In the process, the bank will have got rid of 3,000 of its 81,500 staff by the end of the year.

Rivals say their research suggests that they are winning market share as Lloyds TSB upsets customers with its policy of severing the links between customer and branch.

Yes, from the bank's point of view, it is an approach that saves staff and money. But even Lloyds TSB has been forced to admit that on occasion, it has gone too far. Late last year, the bank conceded that it had been forced to train an extra 135 call centre workers after staff at its small business banking service had been submerged by the deluge of inquiries.

So how does the bank respond to its critics? Lloyds TSB says the use of call centres frees staff in its branches to talk face-to-face with customers and that it has trained even more call centre staff. 'We're doing an awful lot,' a spokeswoman said. 'We've had a major training programme for our staff. We've increased the number of staff in call centres and we've added staff in peak times. We are seeing improvements.'

But rivals argue that far more important than the call centre is the 'relationship manager', someone who is on hand to deal specifically with inquiries.

An executive at one of the other Big Four banks said: 'As far as business banking goes, our customers value the relationship manager almost above all else. We like to give them a named person they can talk to.'

HSBC tried several years ago to run all of its operations from call centres, but abandoned the idea because 'it just didn't work'. Ironically, HSBC is the parent of First Direct, the bank that has successfully taken the call centre approach to its extreme with a stand-alone phone-only bank.

Another banking source said: 'I'm not saying there is no place for the call centre, for the more straightforward actions such as transferring money from one account to another, but when you are trying to replace the relationship service with the call centre, then you are making a mistake.'

Lloyds TSB says its service 'was not as good as we would like it to be', but claims it has made substantial efforts in recent months to introduce improvements. Tiered management fees for small business accounts, which range between £10 and £50 a month, mean 'the customer can choose' between different levels of service, Lloyds adds.

The bank says it does provide managers dedicated to individual business customers, but they have to pay the management fee to get to them. Of the bank's 550,000 existing small businesses, 30%, or 165,000, have chosen to take a 'relationship manager' and pay the fee, according to the bank. Its full relationship manager service costs customers £50 a month.

The bank is adamant that it has made serious strides in improving its customer service, but admits it still has some way to go. Many would agree.