Whatever happened to the customer is always right?

If there is one thing financial services organisations should always do, it is to actively maintain their client relationships. It is a core function and can make or break a firm. However, in recent years, it has seemed as though many firms have been more concerned with profits and less about the needs of their clients. Any number of people can relate plenty of incidents over the years, where large banks have dictated to its customers what they will or won't get and of course charge the earth for the privilege. Whilst as costs rise in financial markets, so do the banks profits, without seemingly any cost savings, being passed onto the end investor, rather they appear to be wending their way into the bonus packets of the elite. This is a practice fraught with disaster for the banks, as with the aftermath of the financial crisis; bankers are now perceived as, villains of the piece.

The arguments about banker's bonuses are well known and not about to go away, so what are the banks doing to redress their position? Right now, not a lot! As they try to scramble out of the hole they dug themselves and wait fretting about possible political fallout.

If confidence is to be restored in financial markets, there must be a complete refocus back to traditional banking services and a rebuilding of relationships. As each year the growth of online access exceeds the last and with direct communication and online knowledge, comes an increased desire by the consumer and investor. It is the incremental expectation of the consumer/investor, which is putting more pressure on the securities markets and organisations can stand or fall on the loyalty of their customers, with a number of recent examples, such as Northern Rock, showing can happen when customers withdraw their support.

The MiFID review has been completed and we all wait patiently to hear the result and what new rules will be introduced. However, what is certain is that client relationships based on customer protection, will still be a major aspect, which banks will have to cope with. A friend of mine who works in a senior capacity at one of the leading Custodians, tells me that its client relationship systems have not been updated for years. They still rely heavily on the individual Account Manager to paper over any cracks with his client and a good deal of back covering ensues.

Banks have invested hugely in systems over the years, mainly because of regulatory pressures, but its now time that the back to basics approach should become prevalent and that clients (all types and size) are put at the top of the agenda for banks.  Whatever happened to the customer is always right?