Lloyds Bank plc is a British retail bank with branches across England and Wales. It has a history stretching back to 1765 when John Taylor and Sampson Lloyd started a private banking business in Birmingham. The bank operated from a single office in the town until the 1860s when the bank embarked on a period of rapid growth. In 1995 Lloyds merged with TSB and later began trading as Lloyds TSB. Following the start of the financial crisis in 2007, Lloyds TSB was bailed out by the UK government which purchase a 43% share in the bank. (BBC, 2013) As a condition imposed by the European Commission regarding state aid, the group later announced that it would create a new standalone retail banking business, made up of a number of Lloyds TSB branches and those of Cheltenham & Gloucester. (Lloyds Banking Group, 2009) The new bank was setup and named TSB and Lloyds TSB was renamed Lloyds Bank on 23 September 2013. This reduced the British Government share to a 32.7% stake in Lloyds Banking Group. (Marketing Week, 2013) Lloyds bank has had a history of using sales performance as a KPI which led to high profile cases of mis-selling, such as the mis-selling of Personal Protection Insurance (PPI). This has cost the bank both financially with billions of Pounds being paid in compensation, and by the loss of trust from the public. More recently the bank has been fined £28million by the Financial Conduct Authority (FCA) for pressurising staff to sell products or face being demoted or losing their jobs. (The Guardian, 2013) This added to being confronted by disruptive forces ranging from the lingering effects of the financial crisis and recession and expanded regulation, to changes in consumer spending, saving and borrowing behaviour, have led to the bank changing their focus from the traditional sales KPI to customer service KPI. In the UK retail banking personal current account market competition remains relatively low with new entry into the market low. Customers are also unlikely to switch accounts to other providers with only around 4% doing so per year (Office of Fair Trading, 2013). However there is high competition in most other markets served by the retail banking industry, such as credit cards, loan and mortgages. It is for this reason the industry Order Qualifiers are influenced by regulation and pressure from the Office of Fair Trading and the Financial Conduct Authority (previously the Financial Services Authority) and by customer expectations.
According to Neely (2008) and Skinner (1969) there are 5 main factors for company to be considered. COST
Running Cost: Customers have become accustomed to the option of a free bank account without a monthly charge and free access to their money via ATM. These services are offered by all major UK retails banks such as NatWest, HSBC and Barclays. These bank accounts are sometimes referred to as ‘free while in credit’ as there is no charge unless overdrawn (The Telegraph, 2012). Quality
Conformance: As regulated financial institutions, retail banks must comply with regulations on product offerings and rules apply to products like savings accounts where the interest advertised to be paid must be paid to the customer. Failure to do so would result in not only the possibility of lost custom but possible action from the financial regulator. Reliability: Customers must be able to access their product/money without fail. Recent computer glitches for NatWest and RBS saw their customers unable to access their money leading to customer dissatisfaction and compensation having to be paid to customers left out of pocket (Mail Online, 2013). Value for money: Not only do customers expect the option of a free bank account without a monthly charge but also expect extra value items to be included with premium accounts such as mobile phone insurance.
Mix: Most banks offer current accounts, credit cards, savings, insurances, mortgages,...
References: Barclays website (2014) available online at: http://www.barclays.co.uk/PersonalBanking/P1242557947640 (accessed 17-01-14)
BBC website (2013) available online at: http://www.bbc.co.uk/news/business-24122713 (accessed 12-01-14)
Mail Online website (2013) available online at: (http://www.dailymail.co.uk/news/article-2517106/NatWest-RBS-Cyber-Monday-meltdown-EMPTIES-customers-bank-accounts.html) (Accessed 11-01-14)
Mason, K., & Spring, M
Natwest website (2014) available online at: http://www.natwest.com/personal.ashx?extcam=N_ppc_BNG_XX_PurB_ZOM_natwest_Search (accessed 17-01-14)
Risk and Rewards website (2013) available online at: (http://www.risksandrewards.org.uk/background_banks_151.html) (accessed 15-01-14)
The Telegraph website (2012) available online at: http://www.telegraph.co.uk/finance/personalfinance/consumertips/banking/9423819/Free-banking-should-end-says-FSA-head-Lord-Turner.html (accessed 13-01-14)
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