National Westminster Bank St James’s Square Branch David Woodgate and Nigel Slack Case date 1992 Set ina graceful old square just off London’s Pall Mali and just stone’s throw from Piccadilly, National Westminster Bank's St James's Square branch stil retained an air of gentility irom the time it was founded, 150 years ago. Yet beneath this elegant facade was the most profitable of all the Bank’s West End branches, one which supplied the full ange of modern business services to one of the most sophisticated Glemtele in the UK. ‘The branch had both private and business customers. The latter ranged from small sole trucer businesses through to some of the largest public limited companies in the UK and multinational conglomerates. Its private customer base came from a wide variety of backgrounds although there was a predominance of professional/managetial occupations. Partly because of the proximity to the ‘gentlemen's clubs of Pall Mall, there were also many accounts held by ‘high net worth’ individuals, including leading personalities in industry, commerce and government (at least one cabinet minister), well-known celebrities from the workd of entertainment and members of the aristocracy. In addition, there were many overseas customers, both British expatriates and foreign nationals. All in ail, the clientele were demanding and required to be treated with skill and sensitivity if their often highly individual requirements were to be met within what was still a mass service. The branch had in excess of 14000 customer accounts in total BRANCH ORGANISATION ‘The St James's Square branch had a typical organisation chart for a large braach. ‘(Figure 15.1 shows the organisation chart.) Ta brief, around 100 people worked at the branch, which was headed by s Senior Manager working closely with thuee ‘Advances’ (lending) Managers in looking after customer relationships, This involved tending money — for anything from a new car to a multimillion pound takeover bid *Some data have been disguisedSenior Manager T ending ‘Aaricistraion Managers Manager Fig.15.1 StJames’s Square branch organisationchart for another company. But also the branch was increasingly involved in the selling of ancillary financial services, such as mortgages for house purchase, insurance and pensions, savings and investment products, and the giving of general financial and business advice, © "The Senior Manager was also ultimately responsible for the support functions of the branch, for example managing standing orders and managing the cashiers. From an operational point of view, however, these aspects were overseen by an ‘Administration Manager who dealt with personnel and general organisation issues. Below the Administration Manager were ten assistant managers who headed the nine operational sections of the branch, with the tenth providing cover for sickness, holidays, special exercises, etc. The nine sections are as follows: 1 Advances.,"This section provided direct research and technical support to the Senior Manager and the Advances Managers. It also looked after many day-to- cay aspects of the relationship with customers where there was no need for a manager to be involved, For instance, the section would look after requests from small borrowers for such things as personal loans for consumer goods. 2 Securivies. This department also worked closely with the lending managers. It was responsible for taking collateral from customers when security was required for their borrowings. For instance, a manager might lend a customer £30 000 to inject into a new business venture. As security, the Bank could take a mortgage over a property owned by the customer. The Bank would then have the right to sell if“parr 2 » pasiox allatcempts for repayment failed. The Securities Section looked afterthenecessary legal formalitics to ensure that the Bank could rely on its security if customer defaulted on iis vs het borrovving, 3 Investments. Ths section dealt with investments and stock exchange transactions, for exaraple the buying and seling of stocks and shares for customers. 1 2lso 60 ordinated detailed portfolio advice from the Bank's specialist departments. These ‘were used to help customers make investment decisions. In addition the section provided safe custody services boxes to enable customers to score valustbes and documents at the Bank and was responsible for taking long ‘money marker? deposits on bechalf of the bigger customers. 4 Customer Seroices, This section dealtwith what were often called frontline’ services such as cashieting, a5 well as looking after the most basic services suck. as amendments to customer standing order records. Inevitzbly staff in this section. hada very high degtee of customer contact and deal with a very large number of customer enquiries, ‘Records. This section maintained the basic branch records, for example customer addresses, the opening ad closing ofaccounts,armendmentstocustomer instructions and so on, Agnia, a high but erratic degrce of customer contact was invelved. 6 Foreign. The foreign departnent dealt with highly specialised transactions relating to the financing of foreign trade. For example, the Bank would often process the documentation relating to both imports and exports for customers. It could provide information on business opportunities abroad, and send money around ‘the workd for customers. In addition, the section also staffed « forcign till which. provided currency, traveller's cheques and travel insurance. 7 The Machine Room. This was the paper processing part of the office. It looked after the basic accountancy procedures of the branch and was responsible for ‘ensuring that debits and credits were transacted accurately. Although it was now a kighly automated department, it nevertheless dealt with a substantial volume of paper every day. 8 Salez. This was the branch marketing fimction which provided input to all the ‘other sections to fteip them sell appropriate bank services. 9 Secretarial This was a seven-personsection which provided general administrative "support. QUALITY OF SERVICE Despite the highly demanding aature ofits clientele, the branch generally fei thet ithad « first-class repuration for quality of service. This was confirmed by regular customer feedback questionnaires and unsolicited letters of praise to the Bank’s ‘West Bind Regional Head Office. The branch regularly outperformed its West Endpeer group in terms of customer satisfaction and the Bank's central Operations and ‘Methods Department paid the brench the back-handed compliment of saying that i ‘provided a Courts style service . . . without charging Coutts style prices!”* However, one particular area of service did attract regular negative customer comment and, indeed, letters of complaint. This wes the process of opening new accounts, one of the responsibilities of the Records Section, ACCOUNT OPENING In general, the majority of new customers ‘cold called’ at the branch to open an account — that is, straight off the street without an appointment. Often they queued forservice at one of the cashier's positions, instead of at the enquiries counter, where they were intended to go. This was possibly because the enquiries counter was neither well positioned nor signposted, This meantthat, having waited their turn fora cashier ‘to become fiee, they were often redirected to the enquiries counter, Having arrived at the correct enquiry position, the prospective customer would be served initially by an enquiries officer (usually a relatively junior member of staff) who would request a member of the Records Section to see the customer and assist with the account opening procedures. THE RECORDS SECTION Like the other eight sections in the branch, the Records Section was supervised by an Assistant Manager, whose role was to provide advice and guidance to the four junior clerical staff who staffed the Section. The Assistant Manager was responsible forallaspects of thesmooth runaing of the Records Section which included overseeing the smooth running of the Bank’s account opening procedures. ‘The Section’s four clerical staff were all aged between 18 and 22 years of age \with two to four years’ experience of working for the Bank. All clerical staff generally passed through this Section as part of their career progression and the job was frequently the firstone in which they had to undertake detailed face-to-face interviews with customers. Prior to their spell in Records, their customer contiict experience ‘would usually have been jimited to telephone conversations and, possibly, relatively short transactional contact on the cashier positions. “The Records Section’s responsibilities included: ‘© Interviewing new customers to open their accounts. The Bank required that all customers be seen by a member of staff when they opened a new account to ensure that all information was properly recorded. "Coutts & Co.is the Bank's specialist upmarket banking subsidiary which provides «highly individual service to wealthy customers for which they pay 8 premium price for 8 level of attention which it would be impossible to provide cost effectively in a mass service outiet.PART 2 - DESIGN ‘© Complecing the internal formalities for opening and closing accounts. ‘© Maintenance of the basic customer records of the branch (for instance, recording. changes of name and address), © Responding to general queries on matters of banking procedure from the public. ¢ Opening accounts on behalf of other parts of the office. For instance, if the Lending Section agreed a new loan for 2 customer, the Records Section was responsible for all of the in-branch procedures which enabled the customer to \withdraw his or her money. ‘« In common with all the sections of the branch, there was 2 general requirement for the Reooeds Section to sell certain ancillary banking products once a customer need had been identified. Like other sections, Recotds had its own sales targets. ‘The Bank's view was thara new customer interview provides an ideal opportunity to Gind ways in which other bank products might help the nevr customer. ‘The Seotion’s Astistant Manager explained: ‘Nei am interesting section wo manage. The mix of casks means that the Section has a nigh degree of exposure to both exicrnal and internal customers with much of our works ‘requiring art instant response. et at any given time at least ona, and possibly to, of ‘ov staf willbe rew to the job and still probably racetxing on-tie-fb training? ACCOUNT OPENING PROCEDURES ‘One of the main reasons why customers were scen by a member of staff was to make sure that they chose the most appropriate account for their particular needs. “This was regarded as being particularly important since the Bank offered such ‘wide range of basic current account products, It was important, for example, that the Records Officer discovered waether the customer wished to earn interest on surplus money or whether they were more likely to need to borrow from time to time. This would indicste, ia part, which account was more appropriate for them. Some customers might even need a combination of both interest and borrowing. facilities and there were appropriately tailored products for them. Special account products wereavuilable for differentiated groups suc as students and young people. In addition, services such as credit and payment cards, cheque cards, ordinary and high interest accounts, ravel services, loans and overdrafts, and personal insurance could be discussed in broad terms with the customer (alshough any request for credit facilides would have to be referred to the Lending Section). Depending on the customer's needs, it might be necessary to bring in somebody from one of the other sections if the customer requited more specialist advice, on investments for example, ‘The account opening procedure also included thing and processing zelevant ‘customer information, or the formalities as they were known within the branchAppendix 15.1 shows a copy of the branch procedure checklist for opening a new ‘current plus? account — an interest bearing, current account with all the usual features of a normal current account. The information collected on this form was divided into three areas. First there was the checklist, which detailed the information required from the customer. The application contained personal details, name, address, craployer, salary, etc. together with other useful information. This helped the Bank to market other products tothe customer and also enabled ereditreferences on the new customer to be checked so that the Bank could be protected against possible defaulters. Other formalities included completion of specimen signature cards, mandates for joint accounts to determine who could sign cheques on the account, Inland Revenue declarations to enable interest 10 be received without tax being deducted if the customer was so entitled, and various declarations regarding tax forpersons residentoverseas. A suitable piece of identification, such as a passport or employer's identity card, nected to be checked by the Records Officer at this point, ‘The second part of the form showed the formalities which were undertaken in the branch. The third area was the record of achievement of the branch standards, for the transaction. These were seen as zn important means of monitoring branch, performance, and were reviewed regularly by the Administration Manager and periodically by the Senior Manager. The standards required an immediate interview and acceptable privacy, both aspects being regarded as central to ensuring customer satisfaction. The completion of internal formalities was shared by every member of the Section rather than allocated to one individual to see through from beginning toend. Timing ‘The Bank felt Chat it was important that the customer should be seen immediately. ‘The interview could last from 20 minutes to an hour depending on the complexity ofthe customer'sneeds, but typically would be 35 to 40 minutes. During cheinterview the customer was told that formalities would take up to 10 days because of the need. to print cheque books, prepare plastic cards, take up references, etc. This was, 10 some extent, an attempt to manage customer expectations because the Bank's standards generally required the cheque book (which represented the customer's ability to use the account) to be sent out in four days. The margin was built into the time to cope with unforeseen delays. It was felt that if the cheque book could be sentoutin four daysit would better customer expectations and improve the customer's perception of service quality. Each of the internal formalities explained in the second part of the form generally took only a matter of minutes to complete, but the elapsed time from start to finish was considerably longer because some of the steps were ut of the direct contro! of the branch. These steps were started first to minimise the total time the customer would have to wait.“ART 2 + DESIGN 1s, Loading ‘The branch would normally open benween 300 and 400 new accounts each moath, For example, in November 1989, 351 accounts were opened, with che following profile: current accounts, 147 deposit accounts 86 oan accounts, 37 personal loan accounts, 32, high interest accounts 40 iaernal accounts 9 ‘Neatly all of the 147 new current account holders would have been seen by one of the four Records Officers, but the formalities for most of the remaining accounts would be originated elsewhere in the branch. In these cases, the Records Section ansacted only the internal formalities and hed no direct customer contact. Customers called into the branch to open accounts in an uneven flow witich was impossible to predict accurately. However, peak demand generally occurred over the lunch-time period from about 11.45 a.m. to 2.15 p.m. This coincided with the period when Records Section staff were expected to cover for the cashier positions, in order to help with the lunich-time rush for cashier services. COMPETITION IN THE RETAIL BANKING INDUSTRY By the late 1980s competition iu the UK banking industry was generally considered to be tough, with a growing nember of players offering a broadly similar range of products. This meant that a customer could casily shop around if dissatisfied ‘with any of the Bank's services. Competition was particularly iniense in London's ‘West Ed, Within a few minutes’ wall of the St James's Squaze branch, disgruntied customers could take their business to any one of the English or Scortish clearing: bbanks,a branch of most of the major building societies, National Girobank/the Post Office and even branches of French, Trish and other overseas banks. Quality of secviee, it was feit, could deliver a strong differential advantage for the branch. The account opening process was one of the activities which was particularly importanc in creating an impression on the customer of a high quality of service. ‘One nvanager ac the branch observed: ‘If re can’t get it right at the staré of oer relationship, i is very dificult to fight your soxzy bac up in the customer’ ester. Account opening is crucial ie seeing te von of tharelationthip gives us the opportunity 0 aduitecustomerson which te of accounts care righ for chem and it makes sure that eo haven’s missed any sales opportunites It ako gives us our best chance of educating customers 10 what they can expect. In overall cerms the intention isto eeate a fecing nthe exstomer's miénd that he isnot eoinethrough a bureaucratic form filling process but rather that the Bank is trying to make things as easy as possible for him or her and that this is the start of an excellens new relationship? The general feeling among the staff at the branch was that customers probably expected a certain amount of bureaucracy, not least because they were conditioned by the traditional image of UK retail banking. But their requirements were probably quite simple. They were: 1 To be able to complete the basic formalities as quickly as possible at their own convenience (which meant seeing a member of staff ‘on demand’). © To have any formalities clearly explained and to receive general guidance. ‘© Tobeina position to operate the new accountas soon as possible, While customers accepted that taking up references, printing cheque books and preparing ‘plastic’ all took a little time, they expected it to take no more than a few days. © Perhaps most importantly, they expected the highest degree of accuracy. Nothing infuriated a customer more than a basic spelling mistake in their name and Ms Smith had a right not to be inconvenienced by receiving a cheque card embossed. with the name of Mr Smith. THE CUSTOMER SURVEY In late 1989 the branch decided to investigate customers’ views of their account opening procedures. The survey confirmed their anxieties. Phe results did not make comforting reading: © 36 per cent of respondents, all of whom had opened a new account over the period of the survey, felt that the opening forms/formalities were not properly explained to them. 76 per cent had not received the Bank’s standard account pack which provided useful advice and information directed at new customers. @ 31 per cent received their cheque book and card within nine days, and could thus make full use of their account, but 44 per cent waited 10 to 14 days, and 25 percent 15 days or more (an unacceptable delay in2ll butthe mostexceptional circumstances). © 19 per centhad personal details wrongly recorded on statements, cheque books, etc. © 71 percent of new customers were broadly happy but 13 per cent found the staff inefficient and 6 per cent found them uninterested in the customer's needs. Finally, 24 per cent would not recommend the branch to others and the same percentage found the whole account opening procedure unsatisfactory. This final point was felt to be quite crucial, word of mouth recommendation being an important factor in a customer's choice of branch,wee 1 asian RECORD SECTION STAFF VIEWS ‘The Assistant Manager of the Records Section was well aware of the problem, ‘One of my staff put it in a nutshell, he explained somewhat ruefully, ‘when they said it would bea great job if it wasn’t for the customers!" Phere was a general feeling that smooth work flow was continually being interrupted by custorners calling without an appointment and needing to be seen immediately, a factor which impacted fir less maskedly on other sections of the branch. This had led to a feeling that the Records Section was burdened with an unfair shareof the brench worRoad,a sentiment ‘made worse by the fact that they consistently worked overtime (which added to branch overheads) whereas other sections often finished their work early and were able to leave earlier than the official time. Because of this the Section’s morale and, motivation had begun to suffer, which in tum impacted on the level of service, "Dhe Assistant Manager summarised how he saw the problem by describing four ical’ staff attinides and the offect these could have on customers: ‘¢ ‘Tknow thet the customers deserve more of our time and attention, but we are just too overloaded, Result: the customer gets a poor impression of the Bank just ‘when they are at their most impressionable. ‘Acleast the standard form is helpful. If you strictly follow it you can get through ‘he interview without wasting too much time,’ Result: the customers feel thatthey: are ‘on 2 production Ene’, ‘© Tes all right for the other sections, they either have a queue of customers ip front cf them all the time or they keep to the back office, We have to do both types of ‘work. You no sconer sit down to get on with a job than you are dragged away to the enquiry desk to see to a customer’ Result’ the customer gers the feeling that they are an irritant to the staff. © “The pressure of work is not only high itis also exratic, so it's hot surprising that ‘we occasionally make mistakes.” Result: customer ane! other parts of the branch suffer from any errors which are introduced ight at the beginning of the process. THE IMPROVEMENT TASK Not surprisingly the Senior Manager was concerned at the level of customer dissatisfaction, The survey cesults contrasted sharply with the image the Bank wished to portray. In the Bank's own account opening literature it stated, ‘Opening a bank accountis an important step and should ideally lead alasting and helpfulzelationship between you and the bank’ He charged the Administration Manager with finding a solution, ‘The Administration Manager knew the consteaints under which he was working: “We can’t throw money at the problem. Branch establishment cost constraints mean thatoverall level of siaffin the branch. In any event, according to the Bank's sophisticated work measurement analysis the branch is properly staffed to meet the usual business roquirements and to provide adequate cover for sickness, holidays, peaks in demand, ete. It will have to be a case of working more effectively with the staff we have? TWELVE MONTHS LATER it has been a total success story, Far better than we could have hoped for. It just shows you that, if you tackle these types of problem in the right mannet, you can always find a better way to do things’ The Administration Manager was clearly delighted. Questions 1 Analyse the customer contact process during the account opening procedure. ‘What aspects of the branch’s operation impact on each stage? 2 How would you improve the proccss? A enn dealing sith the Jorma’ of account opening is sheen in Append 18.1.sien APPENDIX 15.1 ‘FORMALITIES’ OF ACCOUNT OPENING Procedure Checkdist seorncoe CLITITTT Set nae MO saoetsoreg otcmnenrgne user (—]~] [Service Standarde Seroren Sparc TD] |Meat sue] CD essegiceseetr | eee SS Galt encanta Ce] oo Gea] edge Sas ere tomate cm | Branch Records New Current Plus Account = Opening “eg Saye tecrcac csnatc t Acari actWaue rae cte Seg ree cesasomanes as ‘Se 000 oO Q (ne cto ped a (Omen tok arcing) One [] ter ant oO a Ty temcmteemsidntadonmns —— ae [Ey tert ca roe a oO cS Teorey Pemgpoemcones Fr one mat na go Facey tne Str gy Seinay er wowwetenee Ej ‘2 Rens captemummme ame LE] Ateneo Saas om] ages (7 | Service Standards Deco te am aocpate ow C_] San reser erant ei ue | | arene