Bill Jamieson: Rabbie Burns could teach the almighty Eurocrats a lesson

Published on Tuesday 3 November 2009 21:09

AUSTRIA-HUNGARY seemed a powerful and permanent fixture on the map of Europe – once. It vanished in a blink. Might RBS vanish the same way off the map of UK retail banking?

At a stroke of the pen of the European Competition Commissioner, some 318 RBS branches have been put on notice to move. The RBS logos over those branches in England will disappear. And with the NatWest brand having made a comeback, RBS will cease to be a pan-UK retail banking brand.

At Lloyds Banking Group, 185 branches of Lloyds TSB in Scotland will be disgorged under the brand name of "TSB Scotland", while HBOS branches will revert to the name "Bank of Scotland".

What price customer loyalty in this astonishing game of musical chairs? Until now, customer inertia has meant banks enjoy the greatest loyalty in the high street. You are more likely to get divorced than change your bank.

That may be about to change in the great switcharound – one in which, in the words of RBS chief executive Stephen Hester yesterday, customers "are innocent pawns in a bigger game".

The underlying aim is to secure a transfer both of the branches and their customers. That, of course, assumes that customers play ball and go with the new owners.

But here's an odd thing. Once the mortar round the brickwork is loosened, more than one brick falls from the wall.

Customers may not wish to have their banking business transferred over their heads to Tesco. They may not care for Virgin, or whichever overseas bank wants to make a bid.

They may feel safer with a hop to Barclays or the Clydesdale or to the Lloyds branches branded "Bank of Scotland".

If customers perceive they are safer with bigger banks with more hole-in-the-wall machines, branches nearer their home and work, an instantly recognised credit card – and crucially, competitive charges – that is where they will go, whatever EU commissioner Neelie Kroes or her successor tells them to do.

Not only has the EC dictated the new order but it will also be policing its execution. But it may discover in time that, even for Eurocrats, the wisdom of Rabbie Burns still applies: "The best laid plans o' mice and men gang aft agley."

Bank customers can be fanatically possessive about their money and which bank gets to look after it.

So ordering them about on some grand Napoleonic map of the financial universe and telling them who goes where could prove in reality like herding cats.

Brand names, designated market shares and parcelled-out segments mean little when set against customer desire for safe, convenient and responsive banking.

And it's the customers in the end who will choose – not the head office executives or Napoleonic regulators with a map of banking dictating who goes where.