During a recent ‘Town Hall meeting’, Mr. Robin Budenberg, the new Chairman of Lloyds Banking Group, said the bank would be offering a range of non-financial services products to customers in future. Mr. Budenberg declined to give examples of the products Lloyds would be offering to customers saying that any announcements would be made by Mr. Charlie Nunn, the new Group Chief Executive, when he joins the bank later in the year. We think that Mr. Budenberg realised he was saying too much and tried to row back his original comments.
It’s not surprising that Lloyds is looking for alternative income streams with net interest income, the bank’s main source of profit, remaining squeezed with interest rates set to stay lower for longer. We know that Lloyds is entering the housing rental market, because we announced its plans for the first time a few weeks ago, but it seems that’s just the start of Lloyds’ plan.
We understand the bank’s need to seek alternative income streams, but it should be careful before rushing headlong into selling gas, electricity, telephone and broadband packages for example to new mortgage customers. Lloyds has been there before, and it never works. If my broadband lags just as the fourth caddy “H” is being unveiled in the final episode of ‘Line of Duty’, who am I going to blame? Virgin or the MaPA who sold me the package in the first place? The marginal gains Lloyds might accrue from the sale of such products are not worth the effort. Equally, getting retail staff to push those products to customers, which is what will happen in the end, will signal that Lloyds is going back to bad old days of pushing sales at the expense of customer service.
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