Banks must shift focus from costs to value

A story is told of a restaurant owner who sold a litre of bottled water for $10 (Sh880) — 10 times more than his competitors. He had made his customers believe the water was tapped from some of the best and freshest waterfalls and springs in the world. The truth was that the water was from his garden and bottled without any form of processing. Nonetheless, he roped in sophisticated corporates and individuals as clients, and sold more bottles than his business rivals did.

This story may not have the most moral of messages, but it certainly describes how much people are willing to pay for goods and services when they think they are getting value for their money.

There was a time Kenyan banks were ranked the worst in customer service in the world. Some agreed, some disagreed. I disagreed; maybe someone stole our “votes”? As bad as the customer service standards in the banking industry in Kenya may be, they could not be the worst in the globe.

I, however, think we may not be very far from there. We are more surprised to get excellent customer service from our banks than we are to be treated badly. We have become so used to our standards of service that we think they are normal.

But what made customer service in Kenyan banks dip so low? I believe it is because these institutions have been so drained by the cut-throat competition in the sector that their main objective is to acquire as many accounts as possible and expand their loan portfolio, instead of striving to provide the best standard of service. The competition is so stiff that banks have also forgotten to invest in their operation controls, giving fraudsters a field day in their systems and processes.

You are a king when you are a potential customer, but once you open that account or apply for that loan, you are treated like a needy beggar and will be lucky to get speedy, timely and convenient service.

Banks must realise it will be useless to recruit thousands of salespeople, carry out massive promotional campaigns and sell hundreds of accounts only to lose these hard-won clients due to incompetence and a lack of passion in service delivery.

Another pitfall in the banking sector as it is currently is the notion and imagination that pricing will win the war for clients.

Many banks are offering accounts with zero monthly charges, no opening balance, and in some cases, all you need is your national identity card to walk away with an account. The thinking behind these kinds of products that sometimes put quantity above quality is that the bank will win more customers and beat the competition.

This is misguided. Customers are willing to pay fees and charges — within reason — if they believe they will get the experience they deserve. Individuals who opt for quality accounts are not interested in the “free but costly” additions, but in quality service that matches their status and gives them the dignity and prestige they want. Banks must stop selling prices and start selling value.

These institutions also need to understand that operation controls, business growth and customer service are mutually inclusive and cannot exist without each other. If banks continue focusing mainly on business growth, the quality of customer service will remain dismal.

The writer is a business analyst. bizbeat@standardmedia.co.ke