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Thursday, 10 August, 2000, 10:42 GMT 11:42 UK
Are the UK's top banks putting profits before service?
Barclays, one of the UK's largest banks, has announced soaring profits - just months after controversy erupted over its branch closure programme.Disclaimer: The BBC will put up as many of your comments as possible but we cannot guarantee that all e-mails will be published. The BBC reserves the right to edit comments that are published.
Pre-tax profits have doubled to £1.84bn in the first half of the year.
Many other high street banks are closing their branches so they can compete with internet banks, which have much lower cost levels and can undercut them. However serious security problems with Barclays new online banking service might not convince everyone that online transactions are for them.
Sam Cullum, UK
There's nothing wrong with banks making money. The trouble is that ALL the banks seem preoccupied with making money by cutting the level of customer service. Recently I went to a bank on a Saturday morning where three staff were sitting around waiting to "give advice". But, if you wanted to cash a cheque or make a deposit, there was no counter service available.
With the importation of an ex-Canadian bank president, you will soon see just how distant and remote banks can get, with an accompanying increase in fees.
I am concerned at the way banks are swallowing up building societies, or building societies are converting to banks etc. As banks get bigger, their profits swell, but they cut back on services, staff and branches. Rural communities are hardest hit. We have been "persuaded" into using switch/ credit cards and electronic transactions more and more, so that banks can close branches to increase profits. We should vote with our feet, and if a bank doesn't provide the service we expect, then change banks!
David S, USA (Ex UK)
Online banking almost offers a better deal for those who have the money to buy and use the equipment which is needed in order to use even the free internet service providers. However, on those occasions when it is necessary for the bank to inspect actual documents, the fax machine is not always adequate, and only a fool plays Russian roulette by sending valuable and irreplaceable documents through the post. Consequently, it is very stupid, and quite childish, for Tom from the Netherlands to accuse non-online customers of being luddites!
In general the British public cannot appreciate the UK banking system fully as they do not live abroad. I can assure you that in Brazil "the banks" literally rob their clients in every way possible. To give you an example; overdraft 9% interest per month, credit cards 11.9% interest per month; and charges for every transaction you make. You see how lucky, Brits are?
Banks are responsible to their shareholders to make profit. If they don't they are taken over by someone who does. The only way of preventing the services of non-profit making branches being withdrawn is to introduce legislation to protect the interests of those people, which would be a cost that all banks would have to absorb. Unfortunately that is about as possible as a rural petrol tax relief
I have no problem with the banks making a profit - they are businesses not charities after all. What I object to is the way they stitch up the marketplace, so it is difficult and inconvenient to transfer, even between different types of account (my bank in the US can convert an account based on a telephone instruction) and they all charge the same and pay much the same. This isn't competition - this is a cartel!
Tom, Netherlands (orig. UK)
Haven't banks always put profit before service. Let's get real!
Let's face it, banks are only interested in shareholders and profits. They do not and have never given a care about their customers. A good example of this was the Halifax's decision to levy a £10 charge for counter cheques to its Cashcard customers. If the Government was serious about bringing the banks into line, they would legislate. But they do not care. I know, because I had a letter from a junior Treasury minister about it. They are too busy pandering to big business to really care about anyone else.
Steve Beeston, UK
I hate banks! The only way your going to make any money from them is to buy there stock. Here in Canada it is possible to do all your banking for free. I do all my banking over the internet its so simple and easy to use and its all free! Even the cash machines are free to use! Now I never step foot into a bank. Everybody should be using the internet to do there banking! Hopefully the UK can catch up to the way North Americans do there banking it is possible to offer the public free banking.
My wife and I only use the bank as a convenient hub for our debits and credits. I keep a very close control on the account, such that we are never O/D. The bank is never involved in any other of our money transactions. They therefore make very little profit from us. Follow?
Anyone ever made a SWIFT transfer through the banking system? Swift - Ha!
I am finding it takes consistently between 6 and 10 days for an international transfer to reach my account. In this age of instant electronic communication. And where is that money, while it is transiting cyber-space at the pace of a snail? Why, it is earning overnight money for the banks. They are thieves, all of them, and not just the British Banks.
I am an economics student working at a high street bank over the summer holiday, and the experience has been a real eye opener.
The bank's rates are much worse than all the building society or internet alternatives, but most customers accept their products simply for convenience. There is no dishonesty involved - the customers just accept it.
Me? I do most of my banking over the internet. I only use a high street bank for withdrawing cash. When the time comes to get a loan, mortgage, pension or insurance, I won't even consider the high street banks. How can a company be giving good value to customers when they are generating such vast profits?
What is wrong with making a profit. The biggest banks in this country are owned by institutional shareholders. Most of these are Pension Funds! Profit is what runs this country. If you are going to moan then why stop at banks, what about supermarkets, clothing stores etc.
Horia Paraschivescu, Romania
I thought banks were made to make money?
£8 billion profits between the UK clearing banks. Which is what, circa £1.60 profit for each person in the world; or £133 for each person in the UK ... excessive ... I think so.
It's simple. They always have and always will. Their biggest concern is how. Customer service has NEVER been a primary concern. The "pacification" of their customers is the prevailing attitude.
David, London, UK
Banks may be businesses for whom profits are paramount but most businesses survive by being customer-focused. It's the banks' loss in the long term if they don't look after their customers.
The big banks are quite simply an effective cartel. How else could you explain their increased profits with little difference between product and costs? These are the classic signs. In terms of non-business accounts, they would be happy to drop most of us without a second thought. After all, they make little money from current accounts. They only put up with us because, if they didn't, the government would go ballistic. As for changing banks, what is the point? The banking situation is typical of the way big businesses treat consumers - they do what they like and, if you don't like it, you can lump it or push off. Too much power, too much protection, not enough real competition.
I suppose we all think that if we complain loudly enough banks should do everything free. Wrong! Why don't the groaners keep their money, free of charge, under the mattress? As in all service industries if the required service is not good enough move on. What does the EU say about the position in the UK? Any sensible depositor should appreciate that if financial services companies make a good return on the services they offer, good management is involved.
Dave G, UK
The banks have far too much power. I'm sure I'm not alone in being paid direct to a bank account, with no options to be paid in cash, therefore if you work you need a bank account. You cannot survive without a bank, therefore they can treat you how they wish. Change you bank if you don't like it? It takes a good proportion of your life to try and tie up all loose ends and they know it, and play on it.
Matthew Clarke raises an interesting point. Banks expect us to trust them with all our money, and to invest, cream off the capital and charge us as they see fit.
Conversely, banks do not even trust us to use a pen without stealing it.
Banks here are competitive. I now have free checking with no minimum deposit-hours are great until 8 PM -but 4 PM on Saturdays and - YES - open on Sundays.
Tony Hague, England
I think the British banks are the same as all banks nowadays. No memories about the social, state and community economic task and responsibility that originally belonged to them and why they were not only businesses but regulated businesses. Regulated for common good. All that is but forgotten and only raw business remains.
Banks are profit making capitalist organisations who pay their first allegiance to rapacious shareholders like Mr Morgan Lucas. I used to bank with NatWest for 23 years but in the end when they refused me a £100 cheque card I went to Coop Bank, an ethical organisation who put customers before other considerations. I have never been dissatisfied with Coop who also run a first class free Internet Banking Service. If you don't like the fat cats, change to Coop Bank.
The banks always put profit first. PEOPLE NOT PROFIT!
Peter Nixon, UK
If you think the service at bank branches is poor/ incompetent then try switching to one of the internet-only banks. You'll be begging for your old branch back.
Kevin Hill, Canada
A bank is a business. Businesses have customers. If you don't like the way your bank does business you are free to move your account to different one. So why is everyone moaning?
The banks in the UK clearly act as a cartel with respect to the cash machine network, charges and the provision of services in general. People do not change their bank because there is little to differentiate between the major institutions.
It is the responsibility of the government to step in and create an environment in which a truly competitive market for retail banking services can thrive. Sadly with this industry, as with others, such as rail, the official regulator has been kept docile and toothless to satisfy vested interests. The same vested interests incidentally who will no doubt be queuing up to hand out non-executive directorships to Messrs Brown and Cruickshank in years to come just as they were to the likes of Clarke and Lamont in 1997.
The answer, contrary to popular opinion, is not more regulation but less. The financial industry is still tightly controlled and comfortably protected by legislation. Operating in a real free market, banks would quickly lose their comfortable positions and start competing for our business just like relatively free market industries do today.
Asking "why should I pay to get at my own money" is no more sensible than asking, "why should I pay for a haircut when it's my own hair"? Providing the services costs money, and someone has to pay for it.
Why don't we just stop using our banks. Surely we can invest our money some other way.
It is not just the ordinary customers the big banks are against, they can destroy small businesses too. Those who rely on overdrafts to cover themselves whilst waiting for larger companies to pay their invoices. These businesses are crippled by interest rates and hounded by faceless people at the other end of a telephone. I changed my bank years ago and would never go back.
A huge number of people below are ranting
against banks making profits. Since a great many
people have pension plans, insurance policies,
etc, they are shareholders (indirectly).
Banks have a duty to their shareholders to generate
profit. And the largest shareholders in the UK are
pension funds. Your pension funds. So stop whinging.
Sounds just like here in America...Banks make billions in profits and still find ways to cut services and staff. I agree that profits are one the reasons they're in business, but where is the sense of social responsibility? I long to see the day where executives really see from their towers what's happening down below in the streets...Where the real people live.
I understand the sentiments of the shareholders but surely even they can see the lengths some of these banks are going to rip of customers. They provide us a service of holding our money (and using it themselves to increase profits) yet then they wanted to charge us to get it back. That one back fired so now they are on the look out for other ways to effectively double charge people. I agree banks need to make a profit but the sector is too tightly sown up with too regulation so consumers have very limited choice. What should we do? Put it under the mattress instead.
If we all drew our savings on the same day the banks would be in serious trouble! Let's have a bust the banks day!
Banks are businesses. There are so many of them competing for our business, and yet we still think they are a nice couple of men, in suits, taking our money and putting into a big safe in the office.
Of course they take us for granted - we are customers for heavens sake. Since when did a retailer not take us for granted? Petrol, holidays, hotels, telephone companies, they all do it.
They are multi-billion pound organisations, which you give your money to, or borrow money from.
So, if you don't like your bank move your account. If you don't like high street banks then take your choice of the Internet banks, and if you don't like banks at all then stick your money under your mattress. But for heavens sake, stop moaning.
I think it is only right and proper that banks close branches which are making losses. In today's highly competitive world, the banking industry can ill-afford to retain losing branches for the sake of pleasing customers.
Only then can banks survive. Customers ought to realise that financial organisations like banks and insurance companies are basically commercial organisations, whose priority will naturally be to maximise profits. They will do well to remember that banks are not run for charity!
My bank, Nat West, offers a limited range of services which often end up costing more than is reasonable. Their staff have been incompetent and rude to me on several occasions. I am very tempted to switch but why should any other big bank be any different? They are, as any commercial organisation quite naturally would be, only interested in profits.
At the end of the day, banks are profit-making organisations. They have used new technology to de-skill banking jobs, and so shed jobs and increase their profits. The only way to provide a decent banking service for the whole community, with sensible ethical investment policies, is to nationalise them all.
I've banked with one of the big 4 for years and find them very efficient and helpful. OK I don't borrow money from them - I've got more sense. Significantly I almost never go to the branch now. It's a mixture of cashback cashpoint and website. I think a lot of the complaining customers are dinosaurs who can't or won't change.
If there is a need for 'social banking' let the government do it. The Civil Service could do it the way they do CSA, Min of Defence, Revenue and other successes...
The banks have been allowed to plunder their customers repeatedly over the last 10 years whilst the Government stood back and did nothing. At last the Cruickshank report provided the Treasury and this Government with the proof of continuous overcharging and profiteering - particularly where small business is concerned. What are we now waiting for? The banks have prospered whilst businesses have been destroyed - the social costs have been horrendous. The answer was and still is IMHO for the Government to impose a minimum £5 billion windfall tax against the big banks for their repeated profiteering. The sooner the better!
Banks in the UK are trying to grasp on to their monopolistic powers by trying to keep the status quo and adding charges. What they don't realise is that innovation and better service will reap rewards in the long term. Profits are good in a competitive market, where service is one of the key differentiators. Here we see that the market is not as competitive as it should be, as service is a secondary thought.
Alex Nicholls, UK
Isn't it obvious? The pursuit of paper money above all else is the central tenet of capitalism.
Looks like people need some basic lessons. How can a company win custom and make profits by servicing them poorly? The customers would just go elsewhere. Barclays must be doing something right and if you don't agree then bank elsewhere.
Please, Please, Please, could they spend a fraction of this money on some sensible, unchained pens in the few branches that are still open? What would it cost them to replace a few pots of biros now and then?
Thomas Lloyd, UK
Like Pete Morgan-Lucas I too am a satisfied Barclays customer - I have only noticed enhancements to the services on offer such as internet and telephone banking. As for profits, - a business is owned by its shareholders, who demand increasing profits. If Barclays did not produce consistently improved results, it would eventually cease to exist at all, going bust or being acquired by another, leaving even less banks, and less competition. Barclays has an excellent internet banking service and branch staff are always extremely helpful - these are just two of the reasons why they can increase their customer numbers and hence their profits - people like what they see. So for goodness' sake everyone wake up and stop jumping on the "lets knock Barclays" bandwagon.
Banks answer to shareholders first? How many shareholders are there? If thousands or millions of people are made poorer by the greedy banks and that is OK, then we live in Plutocracy.
I have thought for years that the government should exert far stricter controls on what banks can and can't do. Modern financial institutions have, almost without exception, no concept of ethics. It the UK, there is little competition between banks, with each providing a similar, poor level of service. As far as investing goes, most banks will invest in literally anything that generates revenue, regardless of the human or environmental impact.
Rob Williams, Cornwall
Banks have too much power and not enough accountability. I have had many cases of inaccessible funds, money transfers and shear confusion on their behalf. Each time no one knows what is going on. However if I miss an agreement (even if it because they have caused this) I get charged and receive attitude over the phone! Service is non-existent and all they want is profit. The bank in question is Lloyds, who have forgotten what it is they are actually there to do.
A response to Keith Philips - yes, I'm sure many people who complain about their banks would love to move, but Keith doesn't seem to appreciate the vast undertaking that moving your current account involves. The sheer number of people who must be notified is what puts a lot of people off. I had a lot of trouble with my Direct Debits the last time I moved a few years ago and I'm in no rush to do it again. Perhaps the banking regulator could impose rules on all the clearing banks to make moving your account easier?
Barclays: The internet is still a fairly new venture for most businesses, Barclays is one of those businesses. There is no doubt that the internet will be absolutely essential for the future of all industries and it is refreshing to see a corporate such as Barclays making that move, it shows that they are dynamic, modern, and feel that it is important to move with technology. By the time that every single person is on-line, Barclays will have their market sown up. With a bit of patience the results will come!
Mark M. Newdick, USA/UK
I don't understand the question. Banks exist to make profits for shareholders, the bigger the better and the only place they can get those profits is from the customer, exploiting every avenue they legally can to extract yet more money. Welcome to capitalism!
I am sick of the banks profiteering. My personal account with one bank earns less than 1% interest. My business account costs £10.50 per quarter and in exchange for that I get... a statement. Perhaps if they paid a little more, charged a little less they could still make large profits but improve their public standing. Without their customers they are nothing.
The profit motive does not take account of need. Any other service industry that does not respond to customer needs goes to the wall. Banks 'tell us' what we need and we as consumers have very little repose to challenge them. Legislate against them, regulate them, broaden competition and let the consumer of financial services decide. Present profits are obscene but are equally inevitable when
there are very few options. Making their money out of our money while the consumer becomes more and more disgusted! What an excellent business ethos. Greed gone mad.
Barry Wickett, Wales
The high street banks have typically made their money from UK customers. In the past they had to write off a lot of overseas debt, so their headline profits were not so high. All the major banks are going through a consolidation phase to boost their profits even more, and by closing out-of-town branches they are certainly giving many of their customers a raw deal. The problem is, if all the banks act in the same way, how can you vote with your feet?
What people fail to remember is that the big banks are profit-making organisations who have to answer to their shareholders first. How do you explain to your shareholders that you have kept open loss-making branches to support a local community that realistically will never generate enough income to support the branch!
Keith Philips, Rural England
My standing charge for a current account at Lloyds TSB worth in excess of £10K has gone up from £2 to £5 without notification
The debate about ATM charges sums up the banks greed completely. ATMs save banks a lot of money through reduced staff levels - to then ask us to pay extra to use them is absurd.
In addition, they were blatantly operating a cartel by joining together as members of the Link network to fix the fees - not many businesses would get away with that!
It seems to me the that banks in the UK are only interested in profits. Here in Belgium, the banking system and the use of paying with your bank card in the shops is very advanced compared to the UK. We even have the "Proton" system where you load some cash into a chip in your card and use it to buy small things such as newspapers, sweets, medicines etc without having to constantly run to the bank to withdraw money. Due to a spate of robberies a few years ago, it was decided not to charge customers each time they used their cards for payments so that supermarkets and shops would not have to take in big amounts of cash. It is time the UK caught up with the Continent and modernised its banking as well as realising that they don't have to charge customers through the teeth.
I'm a satisfied Barclays customer, both in terms of the service they give, and the dividends they pay out! Long may they continue to be profitable, and long may we celebrate their profits - that's what they are in business for, isn't it?
03 Aug 00 | Business
Barclays profits leap
31 Jul 00 | Business
Barclays re-opens online banking site
26 Apr 00 | Business
Barclays says sorry
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