Examination of Witnesses (Questions 400
TUESDAY 30 JANUARY 2001
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
(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.
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
405. You do not advertise it outside the branch
(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
(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.
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
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.
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
(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
5 There is no Q 403. Back
Note by Witness: NatWest Step Account launched 9 October
2000 with approximately 30,000 accounts opened to date. Back