Lloyds Banking Group plans to prioritize wealthier customers with better service and problem compensation in a bid to boost returns over the next four years.
In an internal presentation, seen by the Financial Times, the bank suggested that the 5% of customers it considers most valuable could have their phone calls sent to “more experienced colleagues” and be rewarded “higher”. . . complaint payments” when they had grievances.
Customers in the next 20% in terms of the money they hold with the bank would be granted same-day branch appointments, faster call response times, and a more flexible approach to borrowing decisions. within the proposals.
Low-value customers would receive “standard” services and be encouraged to “self-service” using the mobile phone app, for example, according to the presentation.
A person close to the bank said those options were being considered and no decision had been made.
Banks are trying to “personalize” customer service to improve relationships and generate more revenue. HSBC, for example, offers a Premier account for people with a certain level of savings or an annual income of at least £75,000 and a mortgage or other product with the bank. . The Premier account offers worldwide travel insurance and preferential terms on mortgages and savings rates, among other benefits.
Another person close to Lloyds said: ‘It’s about differentiating the service – they’ve been talking about it for years, like all banks. They try to offer customers a “hyper personalized” service.
Gary Greenwood, an analyst at Shore Capital, said: “I’m sure Lloyds is no different to other banks and most corporates, in providing better service to higher value customers.
“But it shouldn’t be relevant whether or not a customer is more valuable when it comes to complaints, which should be treated the same.”
Lloyds said: “As we said in our strategic update in February, we are looking to deepen relationships with existing customers and develop mass supply, where we are currently underrepresented. This means we will continually look for ways to adapt our offering 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 around £800m of lost value a year.
He said customers with around £17billion in mortgage balances switched to a rival, usually at the end of their fixed term, meaning the bank lost around £134million in revenue a year.
The presentation added: “A significant proportion of our high-value customers take out mortgages with competitors. Earning more from this business represents an opportunity for value growth.
Lloyds, which is the UK’s largest mortgage lender, is looking to expand into areas such as wealth management and insurance, where its market share is far below its size.
The bank found that only around a fifth of mortgage borrowers had also taken out a general insurance product with Lloyds.
Lloyds aims to become one of the top three protection providers by 2025, where it currently has a 5% market share through brokers. The bank also wishes to develop in individual pensions, home insurance and automobile financing.
Lloyds added: “This will put the group on a higher growth trajectory with more diversified revenue streams while maintaining our strong focus on cost and capital discipline.”
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