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Saturday, 9 February 2008

Credit Crunch Reveals Just How Much the Banks are in it for Themselves

The credit crunch is doing a great job of opening up opportunities that the banks can't service because they're too busy lining their own pockets rather than focusing on the consumer.

Resigned to the fact that retail banking “...is going to be less profitable than it is and is going to be growth constrained,” as the Chairman of HSBC put it last November, now the banks have been asking their otherwise idle credit teams to use your credit data in reviewing the current and likely future profitability of their customers.

The results? Rising fees and the withdrawal of products from low risk but unprofitable customers.

Nice one guys.

No wonder Gartner has warned banks "not to attempt to copy social banking practices, unless they can clearly establish a strategic intent centered on social welfare, as opposed to traditional commercial return."

Of course, it's not news that banks are more intent on their own profitability than solving their customers' critical needs. Until 2000, they enjoyed comparative immunity on this front because some of their activities are key to our economic stability. Then the FSA was given powers which reflecting society's concern that banks must minimise consumer detriment as well as systemic risk.

The problem for banks is that Web 2.0 'consumer empowerment' and the run on Northern Rock have unleashed our expectations when they are least able to cope.
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