Is Irish banking broken? Scandals, ghost branches and growing customer ire indicate a big problem

Earlier this month a video appeared on TikTok of an Irish bank living its best Mary Celeste life. This bank, in a Dublin suburb, had all the trappings of a financial institution — the polished counters, the chrome and the glass, the breakout meeting rooms with the frosted walls, the flyers and the posters of smiling happy people positioned over bold promises that the bank would be there for them when they needed it and would be looking out for their best interests no matter what.

All that was missing was staff.

With no one behind the counters of what looked like a ghost — if not a zombie — bank, the woman behind the camera wandered around for a couple of minutes marvelling at the absence of someone to talk to. Never mind cashless banks, she had found a staffless one.

The video was a mini viral sensation, attracting about 40,000 views in a matter of days. But while it was striking viewing, it was hardly news.

Ireland’s banks might not be ghosting their customers exactly, but these institutions, which have been so central to Irish communities for so long, are trying to break up with us or at least change the nature of the relationship dramatically.

Just as the formation of human relationships has moved from the real world into the virtual one with swipes left and right replacing slow sets and cheesy chat-up lines in smoky pubs, our relationship with banks has moved online, allowing them to flog premises and dispense with staff in the name of profits.

Last month, AIB found itself in some unexpectedly hot water after it moved too far, too fast in this direction. It rolled out plans to take the cash out of 70 of its 170 branches on the basis that people were no longer using its old-fashioned services.

“In recent years there has been a dramatic increase in the use of digital banking services and a decline in branch visits and cash usage,” it said. “In AIB’s case, there are 2.9 million daily digital interactions compared with 35,000 customer branch visits. There has been a 36 per cent decline in cash withdrawals from ATMs and a 50 per cent fall in cheque usage over the past five years. AIB has also seen a fall of almost 50 per cent in branch over-the-counter teller transactions, while mobile and online payments have increased by 85 per cent in that same time frame.

The climbdown marked one of those rare occasions when people power has triumphed over the power of money in recent years

“It was in the context of this evolving banking environment and the opportunity to enhance its long-standing relationship with An Post that AIB took the decision to remove cash services from 70 of its branches.”

The rationale did not wash with customers or politicians and, days after it had announced its plans, it reversed them, “recognising the customer and public unease that this has caused”.

Subsequently, its chief executive Colin Hunt was in full contrition mode on Morning Ireland admitting that his bank had “made a mistake. We had very strong negative feedback from our customers; they contacted us through email, through mail, by telephones, in branches, made it clear that they did not want this to happen.

“I want to reassure customers that existing bank services will continue as they are today,” he continued. “This plan was all about keeping the branches open. It was all about maintaining a strong physical presence in communities around the country, it was all about keeping AIB staff in the communities that we serve. The plan is withdrawn. It is not going to be revisited.”

[ ‘We got it wrong,’ says AIB chief executive on bank’s cashless move ]

People power

The climbdown marked one of those rare occasions when people power has triumphed over the power of money in recent years, an era that has been volatile for an industry that for centuries prided itself on being the great bastion of steady conservatism.

First off was the great unpleasantness of the crash. In case you’ve forgotten, that was when the banks effectively stole our money and the money of generations of Irish people to come. Through their greed and fecklessness, they saddled us all with tens of billions of euro worth of debt, which we will still be repaying when the robots have taken over the world and turned us into their playthings.

Then, after their irresponsibility brought the country to its knees, they became as tight as Rod Stewart’s trousers and effectively stopped lending money to people or made it so difficult that they heaped endless stress on the shoulders of many responsible borrowers.

They also decided to bring many of their customers to their knees on an individual basis by charging many hundreds of thousands of Irish mortgage holders rates that are frequently twice the EU average.

Banks then mis-sold payment protection insurance (PPI) to thousands of Irish consumers. Policies were sold to self-employed people who could not claim against becoming unemployed. Some customers were denied loans or mortgages unless they took out PPI. Some were not even aware they were paying for it.

Then there was the tracker scandal. Mortgages that track the main European Central Bank (ECB) rate were introduced in the Republic in 2001 by Bank of Scotland, after which banks fell over themselves in their haste to offer them to Irish borrowers.

Cases of lenders wrongly denying borrowers their contractual right to tracker loans first emerged in 2009 but it wasn’t until August 2015 before AIB set up its own internal review

It was all fine for years but then the crash came and the cost of financing for banks went through the roof. They withdrew tracker products from new customers and then decided to take many thousands of trackers off customers who had taken them out — frequently breaking contractual obligations when doing so.

Some people lost their homes as a result. Relationships broke down. The banks were dragged to heel. Cases of lenders wrongly denying borrowers their contractual right to tracker loans first emerged in 2009 but it wasn’t until August 2015 before AIB set up its own internal review, and it wasn’t until that autumn when the Central Bank turned the spotlight on the banks, ordering the industry to go through their books looking for borrowers who had been affected.

Ulster Bank and KBC are both leaving the market, forcing hundreds of thousands of people to go in search of a new bank, an ongoing process that has not been entirely seamless.

Banks across the board have also increased their charges and reduced the level of service they offer, meaning anyone who has any even slightly complex transaction in mind — such as lodging a cheque, buying a money order or exchanging some shrapnel for notes — is likely to be met with blank stares or a blanket refusal to help.

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The future of banking: Early signs not great

The Government is aware that all is not well in the world of banking and it is carrying out a review of the sector looking at business models, choices on the table for consumers and what is likely to change in the years ahead.

The project is being overseen by the Department of Finance, and the early omens are not overly encouraging.

One of its early findings suggests most Irish consumers believe the culture of banks has not improved since the financial crisis.

A separate study found that poor business practices and an absence of transparency across Ireland’s financial institutions were among the risk factors working against consumers

Research published earlier this summer found that 27 per cent of respondents to a Behaviour & Attitudes survey of 1,500 individuals said the culture of Irish banks had actually worsened since 2008, while 31 per cent said banking culture had not changed and 42 per cent said it improved.

“Those not using online banking are more likely to feel that the banking culture has disimproved,” the report found.

It also reported that 97 per cent of those polled had their main current account with a traditional retail bank, with 1 per cent having their main current account with a digital bank, a percentage that will surely rise in the years ahead.

Online channels are the main point of contact for almost three-quarters of people with 23 per cent saying their primary interaction was a branch.

A separate study published earlier this year by the Central Bank found that poor business practices and an absence of transparency across Ireland’s financial institutions were among the risk factors working against consumers.

In a Consumer Protection Outlook report, it identified five key risk areas facing customers of financial services.

The report also highlighted a dramatic shift in the landscape financial institutions are operating in and an increased reliance on technology, which, it said, was a potential risk for adequate customer care.

It stressed that the “fundamental responsibility” of financial service providers was to provide “good quality service, placing the best interests of the consumer at the centre of how that service is designed and delivered”.

However, it warned that “poor business practices and weak business processes” can “lead to consumer harm” and highlighted how a failure “to give clear information to consumers at any point in the life of a product or service [can] affect the consumer’s ability to make informed decisions”.

The report also noted that while technology provides “great opportunities” to improve access to and choice of financial services, firms “must ensure that they take sufficient care to also mitigate the risks of harm to consumers that can arise from the use of those technologies”.

We can’t get no satisfaction: Banks’ commitment to customers on the wane

Anyone who has ever tried to call a bank and found themselves listening to endless hold music broken up by assurances that the call is “important to us” will not be surprised to learn that Ireland’s traditional banks do not fare well when it comes to delivering a decent consumer experience, according to a leading expert in the field.

Cathy Summers, chief executive of the CX Company — which publishes an annual chart of the 200 best and worst performing companies in Ireland — says legacy technology issues have created “major challenges for customers and how they interact with the banks”.

She says that although financial institutions have put a lot of investment into digital services, “it doesn’t always improve the customer experience and can cause more issues if the technology doesn’t work”.

She points out that customer experience “covers every single interaction you have with a company and how you feel about them as a result of those interactions. Customer service is an important functional part of it, of course, but CX is all about the overall relationship. Do you like them? Do you trust them? Would you recommend them to others?”

Every year the CX Company published its CXi report, which measures companies’ commitment to putting the customer at the heart of everything they do.

“Conversely, the lower brands rank in the survey demonstrates that their leadership teams are less focused on customers and possibly more focused on their own internal processes, meeting regulatory requirements or delivering results for their shareholders. It also demonstrates the challenges that many large organisations face in delivering a consistently good experience to their customers.”

CX scores for many banks are very low. “When we look at the financial sector we see one of the biggest drops in scores was under the heading ‘You make it easy’. This indicates the challenges faced in improving customer experience if the driving force behind transformation is cost saving and that not enough consideration has been given to the needs of customers.

“As self-service offerings have increased, the number of people answering phones for the financial institutions has dropped. However, with increases in fraud, challenges with technology and the likes of Ulster Bank and KBC leaving the market, the need to speak to a person has increased”

“Consequently, customers face issues with using the technology and end up having to call the bank, which costs money and huge customer frustration — the two things it was trying to avoid.”

She says resolving customer issues is another area where the financial sector, among others has not scored well.

“As self-service offerings have increased, the number of people answering phones for the financial institutions has dropped. However, with increases in fraud, challenges with technology and the likes of Ulster Bank and KBC leaving the market, the need to speak to a person has increased,” says Summers.

“This has resulted in long wait times to get through to some of the banks, creating a very poor experience. As well as investing in digital channels, the banks and other financial institutions need to invest in empowering and training staff to improve their delivery of CX excellence.”

She points out that anyone looking to open a new current account should consider three key questions: “Do they trust the financial institution? Does the institution make it easy to do transactions? Does it resolve issues quickly when thing go wrong?

“Given a lot of the institutions offer similar products and services, prospective customers who now have to set up new accounts should really look at what these financial institutions offer from a customer experience perspective.”

She says customers expect and want to be understood, respected, looked after and valued for their custom. “Considering a financial institution’s CX ranking will give a good indication of how well each one lives up to these expectations. Unfortunately, Ireland’s CX scores are at a seven-year low across all sectors and, with some notable exceptions, financial institutions have not been immune to these falls.”

She has some tips for people changing banks ahead of the departure of Ulster Bank and KBC.

“Trust is at the core of any relationship — most of us are likely to stay with the same bank for a long time, so it’s important. What do they promise? How will they protect you? Are they friendly and helpful? Do they understand your needs?”

People should also consider whether or not it is easy to get in touch, to apply online, to get a meeting if required and what the app is like.

And finally, she says people should ask whether or not banks are “clear about the process and if/when things go wrong do they resolve them speedily. Do they have a good reputation for dealing with things like lost cards, hacked bank accounts, issues with the app?”

‘An absolute nightmare’: Readers’ experiences with Irish banks

We asked readers to share their experiences of dealing with Irish banks. Here are just a section of the responses.

“I had an absolute nightmare dealing with AIB,” writes Suzanne. “I was trying to put a hold on my loan repayments for a three-month period while I was unemployed. It took seven weeks to finally get approval, by which time I’d had to borrow money from a relative just to cover it. I spent over 18 hours on hold waiting to speak to someone during that time. I was eventually told I had approval, but they put in writing in the documentation that I had to repay the whole loan in one go after the postponement period.

“I rang to explain I couldn’t do this, and could they put in writing that this was not the agreement and they said, no, that was the way it had to be done in documentation, but not to worry, they’d never expect me to do that in reality [and] I just need to phone them at the end of the period to re-explain my situation again! I had no choice but to sign. Just to add insult to injury, I had to go into a branch to sign the documents. I had to repeat the story four times, to four different members of staff, in the middle of a busy bank floor — and one of them laughed at me he thought it was so funny and complicated.”

A reader called Catriona does voluntary work with an Irish-language youth club, which she says is “kind of like a Gaeltacht course but in a youth club format”.

The club recently applied to open an account with Bank of Ireland. “We filled in the reams of paperwork [and] one of the things we had to provide was the constitution or rules of our organisation.”

Catriona did all that was asked of her and handed it to the local branch of Bank of Ireland,

A few days later she got a call to say the club constitution/rules “were in Irish and neither he nor anyone on his compliance team could read Irish and I would have to provide him with an English translation. I pointed out that there must be someone in Banc na hÉireann who can read Irish, look at our constitution and confirm for him — ‘Yes, that’s a typical constitution for a youth club’. He said there wasn’t. I asked him to see if he could find someone in Banc na hÉireann who could read our very ordinary, uncontroversial youth-club constitution. That was July 8th. I’m still waiting to hear back and am not hopeful we’ll get our account even though all our finances and compliance matters are fully in order. ‘Banc na hÉireann’ my eye.”

We also heard from Paul. “I joined Bank of Ireland as Ulster Bank is closing,” he says. “I went to the branch, where there was a long queue for one staff member (let’s call her Sharon) and none for the other as she was on the desk for foreign currency. I had a UK cheque to lodge and I needed to verify my identity for online banking. So, happy days, I went to the desk that was free. She lodged the UK cheque and told me I had to use the in-branch phone to verify my identity. As I walked away I turned and asked ... How will they know it’s me over the phone? Reply: ‘You need to check that first with my colleague Sharon! I just went home.”

It wasn’t all bad, mind you. “Changed from Ulster Bank to AIB,” wrote Orna. She was given an eight-week waiting time in a local branch to make an appointment to do the changeover. She “was then recommended AIB hub in Dundrum Shopping Centre — appointment made within 24 hours, new account set up, so good in every way.”