Between the financial crash and the tracker mortgage scandal, many peoples view of the banks is tarnished.

The Irish Banking Culture Board (IBCB) was set up in 2019 with the aim of improving trust levels in the banking sector through improved outcomes for customers, staff and wider stakeholders. The board is doing this by working with its member banks to improve culture and behaviour.

Martin Stapleton represents farmers on the IBCB. The IBCB Chairman Mr. Justice John Hedigan decided at the outset that farmers should be represented on the board. At that time, Stapleton was chairman of the Irish Farmers Association (IFA) Farm Business Committee (he is now the organisations Treasurer) and was invited to interview for the position. He is now in his second three year term.

Martin explains his role “The CEO is Marion Kelly and I am one of seven non-bank directors. Although board costs are funded by the banks, it is independent. They have given the chairman, the CEO and the board the authority to analyse and make recommendations as they see fit. We analyse the situation - what’s causing the poor perception of the banks - and how we can work with the banks to best remedy it. It is not a quick fix, it is long term solutions.”

Board structure

Five of the board members represent each of the (current) five retail banks. A number of directors represent stakeholders directly, such as Martin for farmers and rural businesses and Sue O’Neill who represents the small firms association (SFA).

In terms of supporting rural business Martin says; “We in IFA, and in the IBCB recognise that we have a responsibility towards the small businesses that provide services to farmers as well.”

The board also benefits from the skillsets of a Trinity College Corporate Governance Professor, the Secretary General of the Financial Services Union, a solicitor, the former CEO of MABS (money advice and budgeting service) and Padraic Kissane, who is synonymous with the tracker mortgage scandal.

According to Martin, “The IBCB is the bank’s finding a vehicle in which they can engage with their stakeholders on a non-prejudiced basis”.

What would a better service look like?

As part of its work the board commissions regular “EIST” surveys of customers and staff around perceptions of the banks to assess what they think needs to change to improve customer outcomes and relationships. This year, Martin secured a survey specifically focusing on measuring the trust levels of farmers in the banks. The results he said were “really, really poor, significantly below trust levels of comparable results for the general population and also, significantly, for all SMEs”.

On the back of those very poor results, a meeting was organised between farm representatives and the senior agricultural leads in the three remaining banks. This meeting took place on the first morning of ploughing match in Portlaoise and was attended by the Chair and CEO of the IBCB.

The purpose of this engagement was for the banks to find out why farmers thought so poorly of them and to discuss the possible solutions and ways forward to improve trust levels.

Martin clarifies; “people trust banks to be accurate but what it really comes down to is; ‘do farmers as customers of banks feel valued?’”

The results suggest that clearly they don’t. Martin listed the reasons as “poor communication, lack of service provided, poor information around the digital tools as they become available, poor product information on loan type and poor support to farmers borrowing under half a million.”

The banks have provided services for the bigger stuff even though it might have been a smaller number of people (average loan is ~€50,000). Martin feels that although the banks might disagree with him “they seem to have forgotten the need to provide services to people who weren’t tech savvy and for whatever reason want human interaction.

This absence of a personal relationship was flagged as problematic with farmers funnelled into either applying for a loan on the phone or online. And if not happy to pursue this route, farmers got the sense that they were better off going elsewhere.

This was something Martin said that the banks didn’t seem to recognise; “Most farmers would have that sense that unless you are borrowing “big money”, there’s no relationship, you don’t get to talk to anybody except the call centre “press button one, press two … and that frustration clearly fed into the survey results.

Over time the banks have changed their way of doing business and sometimes didn’t analyse the consequences of that change on relationships. The reality is that many people are happy to borrow money online and never go into a branch. This meant footfall dropped in branches and it didn’t pay to keep staffing the banks at that same level.

However, Martin asserts that this evolution also meant that relationships broke down with many farmers feeling the bank no longer valued their business; “There was a point in time when the bank manager was a significant part of the team of service providers to a farmer. “For many that’s gone”.

According to Martin, many farmers want to borrow money online, but there are a significant percentage that don’t and they need to have better trained staff available to them. “Most of the money borrowed online is borrowed without advice. A trend that’s developing is that most of the bigger money is borrowed by an agent, a consultant or accountant, operating on behalf of the farmer.

What can banks do?

The banks represented at the meeting in Portlaoise emphasised the importance of farming to their business and committed to acting on the feedback that they received.

Two areas where there is room for progress are first accessibility of credit could be supported through better information around the full range of products and secondly more communication to assist in filling out the loan form. Farmers that attended the meeting in Portlaoise put significant emphasis on the complexity and length of the form. As a result, the banks committed to reviewing the process of applying for a loan and looking at how they can provide better support and improved information for farmers.

Non-performing loans

There was huge criticism and dissatisfaction among farmers whose loans were non-performing and they didn’t even know they were non-performing. How that evolved is a big part of the lack of trust in the banks.

“They were sold without warning” Martin said; “without getting the opportunity to rectify the non-performing aspect of the loan. When you became a non performing loan holder, you were no longer seen as a as a wanted customer of the bank. What does that say? “We’re happy to be with you as a bank, as long as you do what you are supposed to, but once you meet trouble on the road, good luck and thanks.”

On this, the banks committed to looking at how they can communicate with customers whose loans fall into the category of a non-performing loan.

Martin acknowledged that this non-performing loans area is highly regulated; “it’s not something that the banks decide ‘we are putting you on that list’. You have to meet all of the different Central Bank regulations to stay performing and then once you fall outside, it is difficult enough to get back in”. Ensuring customers understand these requirements is crucial to success and will be an important focus for the IBCB in the short term.

“While there are clearly significant changes needed to address the results of the EIST survey there is a strong commitment from all of us in the IBCB to work to resolve as many issues as possible. The IBCB will continue to survey the sector and assess progress. All of us are dependent on better outcomes,” Martin concluded.

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