Banks bone up on customer service

But at least three of the institutions surveyed by Investment Executive for its third annual Bankers’ Report Card — Toronto-Dominion Bank, Laurentian Bank of Canada and Canada Trust — say customer service is a critical aspect of business and what separates them from their competitors.

Beefing up service, however, is on everyone’s mind. The banks are moving to provide wealth-management services, shunning the old approach of providing the best in-house product in favour of providing the client with the best product, from wherever it comes.

The race is also on for professional designations. Bankers are flocking to get their Personal Financial Planner and Certified Financial Planner designations. Data from the report card indicates 116, or 36% of 320 surveyed, already have their PFPs or CFPs. Another 20% are working on them.

“You’re driven to do the CFP and they’re paying,” says a Canadian Imperial Bank of Commerce employee from British Columbia. Making bankers into financial advisors is one way banks can provide better service and keep clients.

Technology can also improve service by allowing people to make transactions by phone from home or remote locations, when it is convenient for them. But as visits to a local branch become unnecessary, branches are disappearing or becoming little more than an ATM.

Is there such a thing as too much progress? Some people think so.

“Toronto-Dominion Bank, here in London, opened up a couple of cashless branches,” says a Laurentian banker in London, Ont. “This year, they have moved them all back to tellers and cash, and they’re extending teller hours again, so I think as an industry we sort of went too far. Yes, it’s nice to have these machines for withdrawals, but there are some things people want to talk to people about.”

Finance Minister Paul Martin’s proposed financial services legislation, released last month, also has incentives for banks to provide better service. The bill outlines the creation of a new consumer advocacy agency called the Financial Consumer Agency of Canada, as well as an ombudsman to field customer complaints. Banks will face fines of up to $100,000 for failing to protect customers, while individuals bankers could face fines of up to $50,000.

Duff Conacher, chairman of the Canadian Community Reinvestment Coalition, an Ottawa-based group that advocates bank accountability to customers, thinks Martin’s bill does not go far enough. “We have the government closing its eyes to the poor service banks provide to many customers,” he says.

New legislation on credit unions, foreign banks and retail companies will force Canada’s major banks to focus on customer service. Allowing credit unions to offer services on a national level makes Bill Knight, president of Credit Union Central of Canada, happy. “We become the first thought you have as an alternative [to the banks].”

Employees at the Big Five banks are optimistic about improving customer service in the near and long term. “It is too early to say what is going to come about [with the new legislation],” says a Royal Bank of Canada account manager in the Prairies, “but service has always played a major role in our business. Now we’ll just have to hunker down and do what we need to do.”

One strategy is to recruit employees from banks such as National Bank of Canada and Laurentian, which have better reputations for offering good service. The Laurentian banker in London says TD, in particular, is actively recruiting Laurentian employees, who have better service training. However, the banker says, in recent years Laurentian has been “selling” more than it used to. “Because we’re smaller we can’t afford to give the rates [the larger banks can] unless we’re getting something in return. I feel we’re doing a lot more negotiating, saying, ‘Here’s your GIC but can you take a Visa, too?'”

She recently stayed after hours to open a joint account for a couple who couldn’t come in until after 6 p.m. “They want to start saving for a house, so we talked about a mortgage, RRSPs and the account,” she says. “The man thanked me, saying his bank wouldn’t do that. It was one of the Big Five.”

The kind of service all banks provide is related to new ways people use their financial institutions. Technology has been the main catalyst, allowing customers to tap into their accounts over the phone or from a personal computer.

But this may be moving too quickly for some. Bank of Montreal subsidiary mbanx is probably the best example. The expensive experiment in electronic banking never got off the ground, primarily because no one knew what it was and because the public wasn’t ready for it. Mbanx has since been rolled back into the bank’s regular operating system.

But going back a step shouldn’t mean giving up. “It’s not about lack of service, but providing the kind of service youth are looking for,” says a BMO account manager.

The key, the manager says, is to find a middle ground between what young people are looking for in technology, and meeting the needs of older clients who want a relationship with their bank.