Lloyds Banking Group has been heavily criticised in the press recently for its proposal to offer 10.4 million active customers a reduced level of service because they don’t produce any value for the bank. According to the bank these customers will get the ‘Align cost to value’ treatment strategy, which will see the bank reduce the cost of servicing these customers. What the various commentators have focused on is that many of those, so called, low value customers are the very ones who need the most help during this cost of living crisis.

The bank is planning to take the current customer profiles and align them with its ‘new’ value treatment strategies. Those value treatment strategies are: ‘Protect’ (15.66% of customers), ‘Protect & Grow’ (13.34%), ‘Grow’ (27%), ‘Align Cost to Value’ (30%) and ‘Support’ (14%). The bank says that over 2,000 different variables have been used to determine the future value of customers. Those value treatment strategies will then determine how customers are treated or, to use the language of the presentation, the personalized experience they get from Lloyds & Halifax. So, those who are considered to be the most valuable customers (according to bank the top 5% produce 54% of value) will get a proactive dedicated relationship manager, route calls to more experienced members of staff, higher ‘distress and inconvenience’ payments and personalised pricing, offers and rewards. One newspaper quoted that Lloyds & Halifax would be reducing call wait times for priority customers from 15 minutes to 15 seconds. In response to the media backlash, Lloyds Banking Group has said that this service is for Mass Affluent customers only but that’s not what it says in the presentation. Unless of course, the bank’s claiming to have 9.3 million such customers.

‘Project Gold’

Let’s be honest, nothing the bank is proposing to do is anything new. We’ve seen it and heard it all before.

In 2011 Lloyds set up ‘Project Gold – turning Data into Value’, which aimed to “drive over £1bn of additional income and creating sustainable competitive advantage”. That presentation goes on to say: “It will create a single analytical customer view. It will turn data into value through increased sales effectiveness, with focus on value and customer share of wallet, increased sales conversion in a seamless way across all channels”. Now, a lot of what ‘Project Gold’ was planning to do never happened, in part due to the fact that the bank’s IT infrastructure wasn’t capable of doing anything with the large amounts of data it held. That was back in 2011. What’s changed?

Members will recall that at the end of 2021 the scale of the Group’s technological problems were laid bare in a teleconference by Mr. Nick Williams, the then Group Transformation Director. In that teleconference, Mr. Williams talked about the Group’s IT infrastructure, Project Voyager and use of cloud technology. In seeking to differentiate between where Lloyds was and where it wanted to be in future, he said the Group’s “on premises capability is not fit for purpose”. To underline his disquiet, he then said: “The age of our estate is a real concern” and simply buying new hardware is not the solution because “a lot of the applications won’t work on new hardware”. We said at the time that: “Given the billions the bank’s invested in IT over the years, for a senior executive to be forced to admit that the bank’s current on premises IT infrastructure “is not fit for purpose” is both astonishing and deeply worrying. He should be commended for his honesty”.

Whether Lloyds IT infrastructure is going to be able to deliver the level of personalisation in which customers receive unique propositions and experiences generated by AI technology seems a bit far fetched given what Mr Williams’s said. Even Netflix can’t generate that kind of hyper-personalisation. If you watch ‘Parasite’ (an Oscar winning South Korean film) on Netflix, then your ‘Because you watched’ menu will be all things South Korean for the next few weeks. Not exactly cutting-edge AI is it?

Cross-Sales & ‘Share Of Wallet’

Whilst the bank’s proposed new treatment strategies are all very well and good, what we are concerned about is the increasing pressure on frontline staff to meet the bank’s growth objective of producing £1.5 billion of additional revenue by 2026.

The bank’s presentation says that “almost 2/3rds of new customers are fulfilling their needs elsewhere, representing £800 millions of value per annum”. It also refers to increasing cross sale opportunities in respect of a range of products including general insurance and protection products.

And all this talk of deepening ‘share of wallet’ and ‘cross sales’ at a time when the Board is proposing to change the way senior executives, like Charlie Nunn, are rewarded with a greater focus on the achievement of “clear growth objectives” will have clear implications for the future culture of Lloyds & Halifax?

This is an important issue for the union and its members in Lloyds and Halifax and we will return to it in more detail in our next Newsletter.

Members with any questions can contact the Union’s Bedford Office on 01234 262868 (Choose Option 1).


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