By : Robert Johnston
September 22, 2014 11:01 PM
Differentiation is vital for banks that want to sell more products and attract new customers. But sometimes there is a lot to be said for collaboration.
British banks have this month launched a new same-day retry process to cut down the number of late payment charges for their customers in a move that highlights how the industry can work together to answer consumer demands.
The system means that if a standing charge like a Direct Debit bounces because there are insufficient funds in the account the bank will retry the same transaction later that day to allow time for funds to clear. For example, it solves the problem of bill payments going out a few minutes ahead of salary payments coming in, which is a needless headache for customers and source of friction for banks. How many man hours are spent in call centers dealing with customers annoyed by being charged for this sort of discrepancy?
Banks can, of course, can do this themselves, individually if they want to. But there is a lot of merit in the kind of national collaboration seen in Britain with this system - 29 banks and building societies are on board, representing the vast majority of consumer accounts. The drive was led by the UK’s Payments Council in response to customer demand and builds on an agreement reached last year between the UK’s financial regulator and seven of the country’s biggest high street banks.
Jemma Smith, director of communications and education at the Payments Council, says: “The introduction of the retry process helps to give customers more control when it comes to meeting their financial commitments."
“This new process acts like a safety net for those situations when you might not have enough money in your account, giving you a chance to put things right by paying in cleared funds.”
But she stresses that if consumers are regularly relying on the retry function they ought to reassess the timing of payments.
Even if US banks and others around the world are not about to roll out their own version of the retry process, this is an issue they could tackle themselves with the right kind of software and data analysis. If customers are regularly being charged for late payments, the bank could flag this and suggest they review their payment timings. It’s a simple thing to do, and while revenue negative in the short-term, it's just the sort of initiative that engenders trust and loyalty in customers.
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