OK, I know I'm stating the obvious, but they really do run on paper.
We very rarely do CHAPS transfers (UK same-day EFT) - they involve getting in a car and driving to/from the bank (wasting time and increasing our carbon footprint) and filling in forms (wasting time and increasing our carbon footprint).
Today was one of those rare occasions that we had to do a CHAPS transfer and I found myself laughing hysterically at the bank clerk. Here's why...
I turned up at the bank with my bank details, passport (required photo ID) and details of the account where I wanted the money sent to.
After standing in a queue for 45 mins, I finally got to the enquiries desk. The lady there told me that I needed to first go to a cashier. So I jumped queue and did just that. The cashier then took my details and told me that I needed to go to the enquiries desk - where I had just come from. So, I go back to the enquiries desk and enquire as to why they sent me to the cashier when they knew they would just send me straight back to the enquiries desk. The reply: "It's just normal procedure" WTF?!
The lady at the enquiries desk told me that they could not do the transfer because I didn't have my cheque guarantee card. WTF?!! A cheque guarantee card is only for cheques and certainly didn't cover the amount I wanted to transfer. So why did I need it? They had no idea, they just had to ask for it.
When I told them I didn't have it they said it was OK, they did not need it. WTF?!!!
So, then I get handed a form to fill in. You'd think that the bank would do this stuff for you, considering we have a large pot of money stored with them, but oh no - that would be deemed "good customer service" and the bank can't be seen to do that.
Whilst filling in the form, I decided to find out why the process is so crap...
Me: Why can't I do this over the Internet?
Natwest: Because it's impossible to do this online.
Me: <blank stare>
Me: Why is it impossible to do this online?
Natwest: Because it's not a service we offer online.
Me: <hands over prize for stating the obvious> Why don't you offer this service online?
Natwest: Because it can't be done on the computer.
Me: What will you do with this form once I've filled it in?
Natwest: We fax it to the main regional branch.
Me: <shocked that they are going to use even more paper> And what will they do with it?
Natwest: They fax it to head office.
Me: <almost lost for words> Why don't you just fax it to head office?
Natwest: Because we have to fax it to the main regional branch fist.
Me: But why?
Natwest: I don't know, it's just the procedure we have to follow.
Me: <not bothering to explain the stupidity of their process> So, what does head office do once it eventually receives this much transcribed piece of paper?
Natwest: They enter it in to the computer to start the transaction.
Me: So, why can't I do that from online banking, surely it would be much faster, easier and cheaper for everyone involved?
Natwest: Because the transaction isn't done electronically.
Me: You just said that they key it in to their computer - why would they do that if it's not electronic?
Natwest: Because that's just to keep a record on our computers. The [paper] form then has to be processed between the banks.
Me: Why don't you just do all this on the computer and avoid all this messy paperwork?
Natwest: Because we have to follow the procedure defined by the Bank of England.
By this time I was literally laughing in her face and handed the form over.
Me: Don't you think it's time you changed the way things were done?
Natwest: We can't change things, it's the way they have always been done.
Me: <handing over a piece of paper> I think you'll find things are going to change...
What the Natwest and other UK banks don't seem to realise is that there is a big change on the horizon.
In the old days, paper would have made sense. You'd go to a bank and fill in a form then some bloke with a horse would travel to the regional office to deliver said piece of paper. Daily, a horse drawn cart would take lots of these pieces of paper to the head office down in London.
Then electricity was invented and after several years, the fax machine. The fax machine was a huge breakthrough for the bank because now they could replace the slow horses with a piece of wire and two clever boxes at either end. Unfortunately, they forgot to update their now-antiquated procedures and continued to send the paper via the main regional office rather than directly to the head office in London.
Then, the Internet was invented and in a relatively short space of time virtually all business communication was conducted via the Internet. Except for banks that is - they were creaming their pants over the new sheet feeder mechanism they had on their fax machines. Now that's high-tech!
Unfortunately, the Internet is not paper based, making it impossible for banks to understand how it works. Why would any bank want to allow customers to directly action every form of bank transaction - they'd waste all that money they'd just invested in sheet feeders for their fax machines?!
But here's the good part. The Internet didn't just bring new ways to communicate - it brought a whole load of new ideas. Groups of people, frustrated by the incompetence of banks, decided to find a new way to transfer money. They made the shocking discovery that if you remove paper from the equation, all the delays go away.
Suddenly, their computers can run 24/7 - they don't need to synchronise with dinner breaks, weekends and bank holidays. You send an instruction in and it gets done there and then, not when Mildred finishes eating her bacon butty.
The banks still don't seem to be aware of this. They love their paper because it allows them to do things in much the same way as when banks were first invented. They don't like change.
But change is coming. A few months ago, PayPal announced that they'd finally managed to get "Bank status" in Europe. PayPal are now a bank. Because they set up their bank in Luxembourg, they aren't tied to paper like the UK banks are. They are a fast bank. A 24/7 bank. A bank without the overheads of paper. A low-carbon footprint bank.
I really do look forward to the day when that little electronic bank in Luxembourg attracts so many customers from the lethargic UK banks that the entire UK finance sector collapses under the weight of it's own incompetence.
While bankers are leaping to their deaths from high storey buildings, I'll be having a party. As they plummet earthwards on their long-overdue trip to becoming pavement pizza, the last thing they'll hear are the laughs of millions of dissatisfied customers and me saying "told you so!"
Hey, Natwest... There is another way! And you're not invited. Sweet dreams.
Comments (3)
Oct 15, 2007
Guy Fraser says:
The observant amongst you will notice that there seems to be a break in the flow...The observant amongst you will notice that there seems to be a break in the flow of the discussion above, just before I start asking about what will happen to the form once I've filled it in. That's the point where they tried telling me to draw cash out, drive to the supplier to get a paying in slip for them and then drive to their bank to make a cash deposit. I left that bit out for brevity, but thought it still worthy of a footnote.
Why do banks make it so hard for us to transfer our own money around - considering that's one of their primary reasons for existing?
Nov 29, 2007
Anonymous says:
I find your article a bit disturbing! I work for said bank in the outward payme...I find your article a bit disturbing!
I work for said bank in the outward payments centre, where we process thousands of CHAPS and Foreign payments daily. The advice from your branch is wrong!
The reason you have to fill out a form is for the purposes of FSA audit trails and you must send the form to the outward payments centre so we can do security checks on it e.g. anti-fraud, money laundering etc, to ensure all is well. (PS: Forms actually appear on our screens, as faxes now appear as emails on our screen to save paper!).
Once our checks are done, we register the payment onto our payments system and release the funds electronically to the beneficiary bank. CHAPS are real time gross settlements, so the beneficiary gets the money almost instantly.
Also, the reason you have had to fill in a form is because from what it seems, you have no direct fax or phone indemnity with the bank. Register for codewords or signal numbers so you can fax or phone your payments direct to payments centre.
If you are a commercial/corporate customer, why not sign up for Bankline. You can now send CHAPS from that!
Nov 30, 2007
Guy Fraser says:
Well, I have to say I find your bank, and indeed all UK banks, a bit disturbing....Well, I have to say I find your bank, and indeed all UK banks, a bit disturbing. I don't know if you'll read my response to your message, but I hope that if you do you calmly consider the points I'm making...
Why would we want to sign up for "Bankline" or some silly codewords / signal numbers? We've only had had to do two CHAPS transfers since starting the company and in both cases it was because your bank screwed up a payment we'd tried to make using other methods.
The fact that you're telling us to go through even more hassle just so we can better handle your existing incompetence really does speak volumes. You should re-read what you've written and try and put yourself in the shoes of a customer and you'll see just how absurd your suggestions are.
Why doesn't your existing online banking offer CHAPS transfers as standard? Why do we have to pay such a high fee for CHAPS transfers? Why doesn't online banking allow us to see more than 6 months of transactions? Why doesn't it allow us to see our credit card transactions via the same login? Why do banks not get anything done (like transfers) on holidays, weekends, non-office hours, etc? The list goes on.
Let me guess your answer: Because the FSA this, the BofE that, blablabla... Do you honestly think we care?
If PayPal can handle well over 100 million accounts worldwide 24/7 without all this hassle, why can't the banks - especially considering you've been around for decades (if not centuries) longer than PayPal?
At any time of day or night we can send or receive money to/from another PayPal account anywhere in the world in under 4 seconds, and so can our customers. We can see the entire transaction history - with comprehensive search, export, online review and back-end API - without some stupid 6 month limit. We can trade online 24/7, even on bank holidays, in 15 currencies.
Sure, PayPal charge a transaction fee - on every transaction - but that's a small price to pay for the benefit we gain from using them.
Read back through my blog and you'll see other crazy things that banks tried to make us do - like you can't take cc payments online until the company is 3 years old or has a proven track record of taking cc payments (which you can't get without being able to take cc payments). Our company still isn't 3 years old (we'll be 3 in May 2008) and if we'd relied on the UK banks we'd have gone titsup.com within our first year because we wouldn't have been able to sell online!
PayPal allowed us to sell online when we were only 4 months old and have since enabled us to gain 2000+ customers in 55+ countries - without any hassle.
We only retain UK bank accounts (NatWest and HSBC) for 3 reasons:
Now that PayPal has achieved bank status in Luxembourg I'm pretty sure the last two reasons will fade sooner or later. We'll just be using UK banks to earn interest on our stash of cash. And if PayPal starts offering a service that gives interest on account balance, we'll ditch you guys completely.
I really don't think the UK banks realise or care just how loathed they are by their business customers and consumers alike (don't even get me started on the nightmares I've had with you on a consumer level). I do a fair bit of networking these days and my experiences of UK banks are shared by practically everyone I've spoken to.
UK banks are a problem - a problem that prevented us from doing business. Luckily, the mob rules - we found ways (PayPal) to route round the problem (UK banks) and have reaped the rewards.
Just as mesh networks are the counterpoint to telcos, PayPal and Google Checkout are the counterpoint to banks. You need to spend some time thinking hard about what that means for you. I guarantee that you'll be even more disturbed when the penny drops.