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Can the new TSB save banking?

On 9 September, TSB branches will be back on the UK High Street after an absence of some sixteen years.

I confess to having a very personal interest in this development. I started my career at Lloyds TSB and one of my first roles was helping consolidate (or “co-locate”) the Lloyds and TSB branch network.

It is strange to see some of that work now being unpicked. After such a long a period of time I wonder what, if any, of the old TSB culture remains in the new entity. Back in the mid ‘90s TSB was regarded as being a smaller, nimbler bank with far better IT systems and a smarter approach to marketing. Much of those characteristics will have been consumed (or should I say integrated) into the more dominant, traditional Lloyds culture and watered down further by the shotgun marriage with HBOS at the peak of the financial crisis.

But there is definitely some power in the TSB brand heritage. The Trustee Savings Bank can trace its roots back to the Reverend Henry Duncan, a social reformer and a pioneer of the banking movement in the 19th century.  The good reverend helped establish the world’s first commercial savings bank back in 1810. This new type of bank was based on his belief that you could both help people improve their lot and make a profit doing it.

There is some reference to the legacy of Henry Duncan on the new, somewhat sparse, TSB website. He is described as creating a “bank for hard working local people and held firm to the belief that this would benefit not just each individual saver, but also have a wider positive impact on their community”.

These principles surely hold some resonance in an age where trust in banking – and indeed institutions more generally – has fallen to an all-time low. Many of the challenger banks are seeking to tap into a moral and ethical vacuum. They are building business models and marketing strategies around the concept of being community-centred.

In this battle to re-position banking, TSB arguably has the longest heritage to draw upon and yet none of the baggage from the financial crisis. That is certainly the view of Antonio Horta-Osario, CEO of Lloyds Banking Group, who described the bank as having “probably the highest capital ratio on a clean basis in the UK… it has the unique situation of no legacy issues, so no PPI, no interest rate swap (complaints), because all of those issues have been assumed by Lloyds. And second, it has no toxic assets from the acquisition of HBOS.”

And yet big questions remain. Can TSB really detach itself from the difficult legacy of being part of a bailed-out Lloyds Banking Group? Can they develop products and services that create a genuine point of difference? Can they find a more compelling answer to the existential question – Why has this new TSB come into being? Is it possible to speak to another more compelling reason other than that EU competition rules demanded that these 600 branches be hived off?

Clearly some time needs to be spent revisiting TSB’s higher purpose. Who will set the culture and values for this new (and yet old) organisation? Is there a new visionary leader who will step forward in the Henry Duncan mould? 

If so, surely that leader’s focus would be on finding ways of giving the TSB brand some meaning and relevance for customers.  Marketers and communicators will play their role in defining and articulating what the new TSB brand represents. However we would suggest that the employees of TSB – the people who set the customer service standards on daily basis in TSB branches and call centres – should play a more prominent role. Indeed, it would be refreshing for a bank to base the promises it makes to its customers on the actual values held by their employees, as opposed to the stated values expressed in their marketing communications. At the very least it would be nice to see a greater convergence between the two.

As I said at the start of this article, the launch of the new TSB has some personal resonance for me. It represents an opportunity for UK banking to reconnect with its roots; to begin to bridge the gap between everyday people and bankers. To return Banking to the principle of making profits based on mutual benefit, as opposed to the amoral greed that sat at the heart of this financial crisis.

That route back to trust must start at the nexus of the relationship between customers and employees.

At Lansons we are fortunate to work with clients across the financial sector ranging from established retail banks to challenger banks. We see the passion that employees within those banks have for their customers and also share their frustration that their sector remains so reviled.

In our view, there needs to be far more investment in rehabilitating the reputation of banking. More needs to be done to champion the positive role that banking plays within society. More PR and marketing initiatives can certainly help but it must surely start with that pivotal relationship between employee and customer.

Strengthening that relationship should be underpinned by a series of factors. Better approaches to reward and recognition; more emphasis on training and development; a greater commitment to improving customer service. And, when it goes wrong (and history tells us it will), a more serious approach to dealing with customer complaints and feedback. Increased focus on internal communications and employee engagement.

All of these factors should be underpinned by the community-based values that banking was first founded upon. That is the legacy that Henry Duncan would recognise as opposed to the seismic gap that currently exists between the banks and their customers.

If you would like to discuss any aspects of this article please do get in touch with Scott McKenzie, Director, Change and Employee Engagement on 0207 490 8828, or email scottm@lansons.com