Lloyds considers improving service and redress for wealthier customers

Lloyds Banking Group is considering plans to prioritise wealthier customers by offering them better service and more compensation for problems in an attempt to boost returns over the next four years.

In an internal presentation, seen by the Financial Times, the bank suggested the top 5 per cent of customers it regards as most valuable could have their phone calls sent to the “most experienced colleagues” and be awarded “higher . . . complaint payments” when they had grievances.

Customers in the next 20 per cent in terms of the money they held with the bank would be given branch appointments on the same day, shorter call answer times, and a more flexible approach to borrowing decisions under the proposals.

Lower-value customers would receive “standard” services, and encouraged to “self-serve” by using the mobile phone app, for example, the presentation said.

One person close to the bank said these were options being considered and that no decisions had been taken.

Banks are attempting to “personalise” customer service to improve relationships and generate more revenue. Another person close to Lloyds said: “It’s all about differentiating service — they’ve talked about it for years, as have all the banks. They’re trying to offer customers a ‘hyper-personalised’ service.”

Gary Greenwood, analyst at Shore Capital, said: “I’m sure Lloyds is no different from any other bank and most companies, by giving better service to higher value customers.

“But it should be irrelevant whether a customer is more valuable or not when it comes to complaints, which should be handled in the same way.”

Lloyds said: “As we said at our strategic update in February, we are looking to deepen relationships with existing customers and to develop a mass affluent offering, where we are currently under-represented. This means we will continually look at ways to tailor what we offer to meet the changing needs of all of our customers.”

According to the presentation, Lloyds said two-thirds of new customers went elsewhere for products such as loans, representing about £800mn of lost value a year.

It said customers representing about £17bn of mortgage balances moved to a rival, typically at the end of their fixed term, meaning the bank lost about £134mn of income a year.

The presentation added: “A significant proportion of our high value customers are taking mortgages with competitors. Winning more of this business poses an opportunity for value growth.”

Lloyds, which is the largest mortgage lender in the UK, is seeking to expand in areas such as wealth management and insurance, where it has a much lower market share relative to its size.

The bank found that only about a fifth of mortgage borrowers also took out a general insurance product from Lloyds.

Lloyds is aiming to become a top three provider of protection by 2025, where it currently has a 5 per cent market share through brokers. The bank is also seeking to grow in individual pensions, home insurance and motor finance.

Lloyds added: “This will set the group on a higher growth trajectory with more diversified revenue streams while we retain our strong focus on cost and capital discipline.”

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