Most banking associations worldwide have, as principal objectives, a code of conduct. This largely involves ethics, disclosure norms, customer education and protection, transparency, prompt and fair dispute resolution and so on).
Most cast a protective eye on customers, engaging with the community in creating awareness with regard to rights and responsibilities, education on improvement of bankability, etc. And, cardinally, especially in loosely regulated markets, the creation of a robust banking ombudsman.
The UBF’s (UAE Banks Federation) customer charter has a laudable list of obligations incumbent upon banks and their clients to follow. However, any guidelines or protocol will remain just that, unless a mechanism to surveil and evaluate its adherence or success is instituted.
Any scheme is successful only if it has sufficient oversight and regular appraisal. As former US President Ronald Reagan said when asked about his success. He said he chose wisely, left them to their devices, and added, “I trust. But verify”.
It is beyond the pale of the UBF to monitor or appraise banks, but it can certainly use other tools to ensure that the high standards are maintained and constantly improved. Self-regulation is one thing, but a public watchdog always improves institutional behaviour … irrespective of the nature of the industry.
Each bank is at a different stage of evolution and not all have the same attitudes towards customer service, transparency, response orientation, dispute resolution, etc. Having worked in banks for a long time and then dealing with them while representing customers, we have experienced widely varying cultures at banks, resulting in vastly different levels of customer service.
Hence the need for a more activist approach in proffering robust oversight — non-regulatory of course since that is the prerogative of any central bank — over conduct. Here are a few suggestions on what the UBF needs to take up on a priority basis; a) create a banking ombudsman; b) address customer service levels and c) initiate customer awareness programmes.
A banking ombudsman is commonly present in both developed and emerging markets with a view to abetting the creation of a fair banking sector. It is a neutral, credible and independent party that provides free investigation and dispute resolution services to anyone who wants a complaint against a member bank addressed, after failing to elicit a satisfactory response from the bank.
An ombudsman also proffers the following services: provide advice to customers and banks; remedy things when they go wrong; communicate the latent causes of complaints to all banks, enabling them to make elemental changes to policies and processes to fix the source of these issues. And last but not the least, work towards creating more trust in the banking system.
The consequence of a robust body playing a meaningful role is that it will go a long way in improving customer service, raise productivity, reduce disputes, increase transparency, and bring fairness to the marketplace. The reality is that an ombudsman will serve the most deserving — the small customer with no voice. The big fish somehow always get heard!
The second suggestion is to play a more proactive role in improving customer service levels. This differs from the role of the ombudsman, in that the latter’s part is more reactive. The UBF can galvanise banks into working harder at improving client satisfaction by independently surveying their service levels and ranking banks publicly.
It can rate banks and publish findings on customer satisfaction on various fronts — service levels, value propositions, range of services, etc. Gathering such information and disseminating it widely will force banks to sit up, take notice and improve.
To the best of my knowledge, hardly any bank in the UAE conducts corporate or SME customer satisfaction surveys.
My last suggestion is to address the customers’ side. One must be fair to banks too, by educating customers not only on their rights, but also on their responsibilities, which will in turn contribute to more enlightened behaviour, reduce the probability of disputes and so on.
Some important subjects that lend themselves and warrant information dissemination are common KYC (know your customer) requirements and what infractions could imply; security and fraud; the importance of basics like understanding bank agreements and forms; comparison of bank tariffs; online banking risks and so on.
It is not difficult for the UBF to arrive at a set of priorities for customer education. It could be achieved via seminars, newsletters, radio shows and so on. The UBF could also pre-qualify reputed financial advisers and publish lists for customers to go to for advice to avoid costly errors. The advisers could cover the gamut of consumers — individual, SME or large corporate clients.
One last observation about banking associations is that most of the good ones are staffed with qualified, senior and reputed ex-bankers (among others) with sufficient knowledge and the credibility to carry weight with banks. The UBF may want to consider this aspect as well, with an eye on the future.
A robust, credible banking association can only be better for the market as it will serve to get both service providers and consumers to behave more responsibly and productively.
The writer is Managing Director of Vianta Advisors.
