I went to see my bank manager this week to discuss a small irritation in the business accounts – that’s a bank account, not a part of the anatomy. The irritation was that I needed to transfer a large amount of money fast – £20,000 – and it could not be transacted online due to a transaction limit of £10,000.
OK, so it's an unusual transaction, but is should be easy as the money was moving from my business account to my personal account with the same bank. In my naivety, I therefore thought it was just like moving money between personal accounts and should be a simple instant transfer.
Not only did the bank make me get out of my comfortable office and toddle off down to the branch, but they then asked me for numerous points of proof that I managed the account – including photo ID and an ability to remember a couple of regular direct debits or standing orders – along with filling in forms in triplicate.
This all seemed a bit rich in the age of the mobile internet, particularly as all I wanted to do was transfer an amount from my business account to my personal account in order to pay a large bill two days later.
Anyways, all went through according to plan and the funds were available in time for the payment to be processed from my personal account.
Then the shocker.
When the monthly statement arrived at the end of the month, it transpired that what the branch had done in order to ensure funds would be available 48 hours later – this is a slower payment, not a faster one – was to act as though I had cashed the business cheque. That way, they could pay the cheque into my personal account as though it were cash, and hence funds would be immediately available.
Obviously, this is a new form of faster payment.
The trouble is that this switched the transaction from a cheque transfer between accounts to an exception request for funds, which incurs a charge of 66 pence per £100 cashed. That doesn’t sound like much, 0.66 percent, but the cheque was for £20,000 and so they charged £132 for cashing a cheque.
Again, this is silly as it costs the bank no more to process a £20,000 cheque than it does to process a £2 cheque but, more importantly, no-one had mentioned there would be a charge so I was a bit irritated to say the least.
Luckily, my business relationship manager tolerates me quite well and he said that the charge would be waived on this occasion. As a result, and in my relief, I asked to meet him to review my account and whether I was getting the best from the bank and so we met this week.
And here’s another aspect of modern banking that surprised me.
My banker explained to me that the reason the cheque charge was waived is that the issue I had encountered happens all the time.
“Why's that?” I asked.
“Because they don't understand charges on business accounts,” he said.
“Is that an issue with staff training?” I wondered.
“No”, he replied. “It’s all down to this branch being a retail branch. They don’t deal with businesses.”
The branch in question covers a small town conurbation on the outskirts of Greater London with a population of tens of thousands and many small businesses.
“OK”, I asked. “But that doesn’t mean they shouldn’t be aware of the charges on business accounts.”
“Nah”, he said dismissively. “It’s all about cost and process. These guys want this branch to just be a processing centre for retail transactions and that’s what they do well. If you want business transactions, you need to go to a bigger branch.”
I wondered about this as, several years ago, Barclays Bank had tried to overcome this very issue through an internal project called Jigsaw. The idea of Jigsaw is what it says – it’s a bank with lots of bits and they should be joined up.
The bank recognised that small businesses are often family-based or sole proprietor, and that they ran their business accounts like their personal accounts. In fact, many treat them as interoperable and they therefore joined up the SME group with the personal accounts people so that all branches could service both communities as one.
That makes sense, but it creates other issues.
For example, if you want business advice, will you get good business advice from a consumer focused financial advisor and vice versa? Is it a good investment to have a small business advisor cashing consumer's cheques?
This challenge of how to split or correlate the retail and commercial banking operations is obviously a challenge.
For example, as a result of the error on my account it had cost. It had cost my time – two visits to the branch plus three phone calls – and their time – applying £132 charge and then removing it, plus the two half-hour visitations to the branch to instigate and then retract and discuss this transaction.
In fact, it had cost far more than if either a higher level were set on my internet transactions or if the branch was better versed in bank policies.
What was really intriguing was that, at the end of the conversation, I said to my manager that the one thing that really gets me about the particular small bank branch for retail transactions is that it always has queues.
“Oh, queues are good”, he replied.
“They’re good?” I asked incredulously.
“Oh yes, because whilst you’re queuing we can sell you stuff”, he retorted smugly.
My brow furrowed as I ponderously threw back the remark, “but no one is ever free to sell anything. They're always busy cashing cheques and dealing with transactions.”
“Ah, cut backs”, he said thoughtfully. “Cut backs, not enough staff, too much cost focus … you know how it is.”
I sure do.