Mar 21st 2009

Big banks and the classic bedbug letter

by Michael Johnson

Michael Johnson is a music critic with particular interest in piano. 

Johnson worked as a reporter and editor in New York, Moscow, Paris and London over his journalism career. He covered European technology for Business Week for five years, and served nine years as chief editor of International Management magazine and was chief editor of the French technology weekly 01 Informatique. He also spent four years as Moscow correspondent of The Associated Press. He is the author of five books.

Michael Johnson is based in Bordeaux. Besides English and French he is also fluent in Russian.

You can order Michael Johnson's most recent book, a bilingual book, French and English, with drawings by Johnson:

“Portraitures and caricatures:  Conductors, Pianist, Composers”

 here.

High-handed treatment of depositors by big banks has guaranteed them a disastrous showing in any popularity poll-down below dentists and journalists. The global financial crisis has done nothing to help their score.

A funny story sprang to mind during recent dealings with my bank, one of Britain's largest. A hotel guest wrote a nasty letter, the story goes, complaining about bedbugs in his room. The manager wrote back a long, unctuous, heart-felt apology but accidentally attached a cynical note to his secretary: "Send this guy the bedbug letter."

This story sprang to mind as I grapple with 11 "bedbug letters" I have received to date from my bank over a single complaint. My next step will be to change banks if I can find one that is not worse.

Britain has no monopoly on shoddy treatment of its customers. Technology has allowed all banks to take a step back and let the software run the business. ATMs have sprouted on every street corner and simple transactions have been made available on the internet without human intervention. The objective has been streamlining the flow of money by keeping the pesky customer at bay. Profits, in theory, would then roll in.

But many of Europe's banks have run themselves into the ground recently, to the dismay of their abused customers, exactly like U.S. banks - handing out unrealistic mortgage loans. The British tabloids are having more fun with this scandal than anyone. The Sun newspaper in London blasted disgraced former Royal Bank of Scotland boss Sir Fred Goodwin for accepting a golden parachute of about $1 million a year for life. Sir Fred went into hiding as the tabloids labeled him a "scumbag billionaire".

Admittedly, the banks have their hands full trying to get billions in new funds from their governments and Dubai to avoid going under, so perhaps Customer Relations departments are the least of their worries.

But there is worsening problem here -- the huge abyss separating the remaining customers from their bankers. Good relations is the key differentiator in a business that has become commoditized by technology, and "bedbug letters" just don't make up for a recognizable face.

An English friend tells me he left Lloyds Bank after it moved customer relations from his home town to a call center located God knows where. When he noticed an item on his statement that he did not recognize, he rang the call center. The faceless adviser said he would look into it but the inquiry would cost him 10 pounds ($15).

He immediately switched to a competitor.

I have seen similar offhand attitudes at Bank of America, where a teller once let slip that customers' calls to the bank are rarely answered because it is considered a poor use of the bank's time. Either the phone does not answer or the call goes directly to an answering machine.

My complaint with my bank dates back seven months when I made an internet currency transfer that was delayed four days, a period in which exchange rates for the pound were sliding. The bank's online service inexplicably postponed processing till the following Tuesday. It cost me a pretty penny and I am still attempting to win restitution.

The bank apologized but has not yet compensated me. Instead, I have been turned over to a letter-writing machine that generates prepared texts stored on its computers. Customer Relations people apparently select a form letter and make minor inserts, then press send. Machines do the rest. The flow of paper that ensues is something out of Kafka.

The letters include a promise to resolve the complaint within a month or provide an update on progress. The update then arrives, asking for another month of patience and promising yet another update, after which the rollover continues.

On the one occasion when I broke through the barrier to telephone calls, my adviser was busy making coffee and could not take my call. When I offered to hang on, a colleague said no, he was making coffee for the whole office and it would take a while. Later in the day when we spoke, the coffee-maker promised to send me a letter. He did, and it asked me to be patient for another month by which time an update would be provided. The update duly arrived, asking me to wait another month after which …. etc.

If the customer writes back to complain about delays, a new series of apologies and requests for patience is triggered, an investigation is launched with new references codes and new names on the letters of complaints about complaints.

Are banks too dependent on technology or simply so big that they can afford to lose a calculated proportion of customers without consequence? Perhaps the current shakeout in the industry will provide the answer.

Meanwhile, bedbug letters only make us itchy.


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