Will it harm the Co-op Bank to take over the Lloyds branches?
It was announced that the Co-op will probably take over the 635 Lloyds branches. This would more than triple the number of branches that the Co-op has, which on the face of it is good because the lack of local access has always been a problem for the Co-op. But is this necessarily a “good thing”? The danger lays in four areas:
1) In the ability of the Co-op to bring the inherited staff into the Co-op ethos. Does the Co-op have the level of deep leadership that will inspire the Lloyds staff to the levels of service the Co-op offers? Time will tell.
2) The Co-ops image as a clean bank. There is a risk that their image will be tainted by the link with Lloyds, especially if the Lloyds staff will not buy into the Co-op ethos The Co-op has always been a favourite with customers and last year they reported a nearly 80% increase in people moving their accounts to them and one suspects its not for their interest rates, more for the trust people can feel in them. Has the Co-op got a strong enough message to overcome the Lloyds link?
3) Many of the Lloyds customers are long term clients of Lloyds, will they want to stay? However many of the “new” customers are ex Cheltenham and Gloucester people acquired along with the Lloyds take over, will these people be more likely to buy into the Co-op ethos? They have tended to be better off, older people.
4) The ability of the Co-op to handle rapid expansion and there is a risk that poor management of the rapid expansion, especially in their back office systems, could lose the Co-op their reputation for customer satisfaction. Maintaining levels of customer service and satisfaction The Co-op came third in “This is Money” customer satisfaction survey out ranking the big five by a large margin (Only Virgin and First Direct beat them) and as a any business keeping customers happy is cheaper than getting new ones. The problems of new staff, rapid expansion, and back office supply could all seriously challenge this.
One hopes that the Co-op management will have the leadership talent to bring the new staff on board, the communication skills to inspire the ex Lloyds clients that their new bank has a new and better ethic and ethos than Lloyds and finally the back office systems that are robust enough to handle this rapid expansion.
If they can pull all that off then maybe, just maybe we are starting to see a shift in British banking that is sorely needed.
