Retail-RelationshipEasy

3 min read · 583 words

What the seat actually does

This is the seat almost everybody has met and almost nobody on a trading floor can describe. It opens accounts, takes deposits, arranges overdrafts, loans and cards, and handles the things that go wrong with all of them.

Most of the decisions are already made. Whether a customer can borrow, at what rate, and against what security is set by a credit policy and largely by a model; the seat gathers what the model needs, explains the answer, and handles the small band of cases where a human judgement is permitted. That is a narrower job than it looks from outside and a harder one than it looks from inside.

• Everyday banking — accounts, payments, cards, and the disputes that follow them.
• Credit — consumer loans and overdrafts inside a policy, and small business lending where a file is genuinely read.
• Referral — mortgages, investments and business banking handed to the seat that actually holds them.
• Vulnerability and hardship, which is a formal part of the job in most jurisdictions rather than a courtesy.

A day, and where it goes

• Appointments, most of which are about something that has already happened rather than something being bought.
• Applications — completing files, chasing documents, and explaining a decision somebody else's model made.
• Arrears — customers who have missed a payment, and what the bank is required to offer before anything else.
• Checks — identity, source of funds, and the questions a seat is obliged to ask. See compliance, whose rules land here.

What it is measured on

• Customer numbers and balances, and how many products each household holds.
• Credit quality of what was written, which shows up long after the seat that wrote it has moved on.
• Complaints and their causes, which in retail banking is a regulatory measure as much as a commercial one.
• Whether the file supports the sale. What was explained and what was recorded are two different things, and only one survives.

What it touches on this site

• The products — savings deposits, certificates of deposit and building society savings.
• What protection exists — investor protection, which in banking means deposit guarantee schemes.
• What a bank actually is — deposits and payments and treasury and ALM, which turn these balances into a business.
• When it goes wrong — 2007, the year a queue outside a branch became a funding crisis.

How it goes wrong

• Selling to a target rather than to a need. The characteristic retail banking failure is a product sold correctly to somebody it did not fit.
• Explaining a rate and not a cost. A headline rate that expires, a fee that starts later, or an insurance attached to a loan.
• Treating the model as the answer. A file the policy declines can still be a customer the bank should keep.
• Missing what the customer did not say. Hardship and vulnerability rarely announce themselves at the counter.

Concepts to master

• A deposit is a loan to the bank, repayable on demand, and that is the whole of why banking is fragile. See liquidity.
• The cost of credit is not the interest rate alone — see costs and fees.
• Advice has a legal meaning. Explaining a product and recommending it are different acts with different records.
• Behaviour is the product. How long a balance stays and how fast a customer leaves decide what an account is worth. See behavioural finance.