Comment: Misplaced loyalty sends wrong message

LAST month the boss of Royal Bank of Scotland told customers what they already knew when he acknowledged that it had forgotten “what banking is about”.

In a vain attempt to begin repairing its battered reputation, Ross McEwan pledged that the needs of RBS customers would now be at its “core”. For as McEwan admitted, the bank had “valued least the people it should have valued most: its customers”.

But it all sounded familiar, echoing as it did the infamous customer charter of 2010. The charter was designed to rebuild trust in the brand and featured an ambitious pledge never to close a branch if it was the “last bank in town”.

Too ambitious, predictably. In fact it was only a year later that it was accused of breaking the promise when shutting down a NatWest branch in Yorkshire, a complaint later upheld by the Advertising Standards Authority.

And the branches continue to disappear. Another 60 were closed last year and several have fallen by the wayside already in 2014.

Now it has told customers of another 44 branches that those will be closing too, including several that are the last bank in the town.

In its justification for branch closures RBS points to the services offered through mobile branches and Post Offices. (It also noted that some of the condemned branches are only open for a few hours a week anyway, as if to remind customers that they should be grateful for anything they get).

Innovation in banking technology is delivering fantastic benefits for a growing number of people and take-up of mobile and online banking is rising rapidly. But it’s still not sufficient to justify wholesale branch closures and many people will be left entirely without access to banking services when the shutters go down on their local branch for the last time.

In fact a number of banks view branches as complementing their burgeoning digital services, not least as a branding tool. Rather than abandoning the high streets, they are adapting their branches to modern needs and, in some cases, opening more of them.

Yet RBS claims to be responding to what customers want. It also claimed that “the world had changed” since 2010, pointing to a significant fall in branch transactions (the use of the term “transactions” here is instructive).

Of course the world has changed. It was obvious when the original customer charter was published in 2010 that things would change in the banking market following the financial crisis.

If anything, they haven’t changed enough; if you’re not convinced, just cast your mind back to the February revelation that RBS paid out bonuses of £576 million last year despite posting a loss of £8.2 billion.

But perhaps it’s the fault of its customers that RBS apparently has a warped interpretation of its customers’ needs.

It was right to say that things have changed since 2010. Pertinently, that now includes choice in banking and greater ease of switching.

Yet despite repeated technology failures, numerous branch closures and endless revelations of appalling behaviour relatively few RBS customers have taken their business elsewhere. In that sense it’s no wonder that it continues to churn out empty promises and treat its customers with contempt.