Trust in the UK banking industry has been destroyed by its complacency, inefficiency and a failure to focus on customer need. Antonio Horta-Osorio, CEO at Lloyds – one of the biggest retail banks in the UK, called for a radical change within the industry. The change must be implemented mainly in the sales culture, according to him. He highlighted that there was an essential must to break the culture of the past in order to restore the customers’ trust.
Changes have to be implemented
A series of scandals including rate rigging and the mis-selling of financial products have hit UK banks. Those scandals did not help banks restore trust of customers who had been blaming the UK banking industry for the 2008 financial crisis.
Antonio Horta-Osorio, the Portuguese CEO at Lloyds Banking Group, stated that, as a result of banks' wrongdoings a new banking model was need to be implemented. Antonio Horta-Osorio holds the opinion that the new banking model would need to make retail and commercial banks “simple and boring” but trustworthy at the same time.
As Antonio Horta-Osorio said at the CBI Scotland annual dinner in Glasgow, scandals were responsible for the loss of customers trust in UK banks. In addition, banks had forgotten about their core values which led them to be seen as untrustworthy and “fishy” as well. The new banking model is crucial to rebuild the loss of trust and faith of customers, according to Antonio Horta-Osorio.
Moreover Antonio Horta-Osorio noted that “in the run-up to the [financial] crisis several banks were complacent about risk, running unsustainable business models and extending credit to doubtful clients or countries without due though”. But UK banks also lost their focus on customers, not considering the impact of closure of small-town branches on the local community, as it was highlighted by the Lloyds CEO.
Another problem, which occurred, was that several banks became “bloated” and they were forced to chase revenues to outpace cost growth. This way many products, which were incomprehensible for customers, were introduced by UK banks. And UK banks did just focus on the financial short-term gains.
Recast banking model
Antonio Horta-Osorio strongly believes that the UK banking industry cannot continue operating from one crisis to another. As it has been highlighted by him, a fundamentally different approach should be introduced in UK banks. The approach should include changes to how banks serve their customers as well as pay their workers.
A recast banking model is needed, not to mention the crucial culture change in the UK banks that should come from the top. Sales target have an immediate impact on behavior, as it was noted by Lloyds CEO. And that is why the current banking model in UK is an unsustainable model.
Changes, which should be implemented in the UK banking industry, have to include more transparent products and processes. Antonio Horta-Osorio, said at the meeting, that he was convinced that all those changes would help the economic growth in the UK get back on track.