Select Committee on Treasury Minutes of Evidence

Examination of Witnesses (Questions 400 - 419)



  400. Is one possible attraction to you of supporting the Universal Bank that you would see it as a source of identifying customers for your basic bank account?
  (Mr Goodwin) No, because we would not have access to the customer information of Universal Bank's customers. It is a stand-alone entity.

  401. You will not know who those account holders are?
  (Mr Goodwin) Not unless they had some other interaction with us through the money transmission system.

  402. Mr Crosby, the same question.

  (Mr Crosby) No, we would not know. On the general point of competition, I think it probably is in competition. I do not think that is necessarily, in any sense, a bad thing. As I said earlier, we have promoted our basic banking policy for 15 years and we will continue to do so.

  404.[5] What do you do to promote your basic banking service?

  (Mr Crosby) You will see it in our branch network, which is in practice the best place for us to promote it.

  405. You do not advertise it outside the branch network?

  (Mr Crosby) No, we do not.

  406. Why not?

  (Mr Crosby) It is just a question of the overall economics, but the way we promote it inside our branches did pull in 285,000 new customers last year into that product. That is an enormous number.

  407. Do you not think there are customers to be found who do not necessarily cross the threshold and come into bank branches?

  (Mr Crosby) Yes, there may be, and that may be something we can consider in trying to expand our business.

  408. Mr Goodwin, how do you promote and advertise your basic banking service?

  (Mr Goodwin) We advertise on television. We started doing this in the lead-up to Christmas, that NatWest had this product. We mailed all of Scottish Power's customer base. We have an alliance with Scottish Power on some aspects. They have a utility proposition for some of the socially excluded, and we mailed all of their customers to try and pick up the banking there. We have arrangements with the Employment Service, who provide for the long-term unemployed, and we specifically approached them about the basic bank account. Through the New Deal we make it available to the DSS new dealers, and it is promoted through leaflets in the branches.

  409. How many customers have taken up the basic banking service since you introduced it?

  (Mr Goodwin) We introduced it in the summer of 1999 in the Royal Bank and since then we have picked up just under 40,000 customers in the Royal Bank. We launched it in NatWest in October or November of last year, and we got roughly the same number of customers there[6]. It is a bigger market.

  410. Finally, I just wanted to ask you about the Banking Code in relation to this. The Banking Code says that banks will offer information on their basic accounts to customers "if we think you might be interested in it". Can you explain what that means and how you interpret that?
  (Mr Goodwin) No, apart from the obvious. We would not offer it to someone we thought was actively uninterested in it.

  411. Why would someone not be interested in the terms of their account?
  (Mr Goodwin) In the terms of that account?

  412. The basic account.
  (Mr Goodwin) Why would they not be interested? It does not have attached to it the ability to have a credit card, it does not have attached to it any ability to borrow. There would be a number of customers looking for an overdraft, for example, who we would not offer the details to, because the account does not provide that functionality. That would be one category. Normally when we get to the point of us offering customers material, it is usually as a result of some form of conversation, so it would not be too difficult to envisage a conversation where someone had already self-selected to the point that you would know that they wanted some form of borrowing from you, so the basic bank account would be a less likely choice for that individual.

  413. How much information do you give to a customer when they open a basic bank account?
  (Mr Goodwin) The same as we give with any other account. There is a product leaflet with all the product terms and conditions. They are available in the branches for collection. Customers can just come in and take one. If it gets to the point of us actually giving it to customers, it would tend to be as a result of either a conversation at the counter or a more detailed interview, where we would give the customers the product literature.

  414. So you do not differentiate what information you give to individual customers?
  (Mr Goodwin) Other than in relation to customers' needs. I would not give someone a savings account brochure if they were in for a mortgage at that moment in time. I would not treat a basic bank account customer any differently from a normal customer, if that is what you are asking.

  415. Mr Crosby, how do you interpret the Banking Code statement that the banks will give information on the basic account "if we think you are interested in it"?
  (Mr Crosby) I think it is a technical observation that is basically saying something we would say about almost any product. It is just saying we will try as far as we can to give product information about products that are relevant to those customers. I do not think that piece of drafting was meant to imply anything more or less than that. Certainly our view is that there is no sense in which we are holding back on information about basic banking products in our branches. We treat it as something that is solely led by customer needs.

Mr Kidney

  416. Mr Goodwin, when you talked about the PAT14 accounts, is that the basic account?
  (Mr Goodwin) Yes.

  417. Could I ask all of you: do you actively employ profiling techniques to identify the kinds of customers you want for your business?
  (Mr Head) No.
  (Mr Goodwin) In some parts of the business, with particular campaigns and particular products, you would seek to understand the section of customers you could target.
  (Mr Crosby) Yes, we would profile a whole range of different segments of the marketplace.

  418. To what extent is the reverse true, that having identified the customers whom you could make a lot of money out of, you are not interested in the others?
  (Mr Goodwin) I do not recognise that. Anyone who walks in and wants a product we would have as our customer. We try to offer a range of products that cover everyone. We are not in the business of actively turning away customers who meet the basic money laundering requirements. That would be a basic requirement for entry to become a customer.

  419. In terms of the kind of account you would offer them, we have just talked about the basic account and the Current Plus account earlier. Would it make a difference because of your profiling what kind of account you are willing to have them on?
  (Mr Goodwin) If somebody walks in the door, we have not been able to profile them. It would depend on what happened in the branch. They either come in and take leaflets themselves and go away and apply, and then there is a selection or screening process of applicants to determine whether the person did or did not meet the criteria of the account. Alternatively, someone may come in and go to the counter and ask for a brochure on X, Y, Z. They may simply get the brochure, or the teller may enter into some discussion with the customer, at which point there may be a refining of needs. If you got into a full-blown interview situation, there would be a form of profiling of the customer, going through a "know your customer" type of questionnaire. You would get a sense of which products would suit the customer more than others.

5   There is no Q 403. Back

6   Note by Witness: NatWest Step Account launched 9 October 2000 with approximately 30,000 accounts opened to date. Back

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