FRIDAY INTERVIEW: RaboDirect's Tim Bicknell predicts the future of banking will be online rather than in branches as customers take greater control of their financial affairs
TIM BICKNELL tells, with some pride, a story about how a member of his team at the online deposit-taker RaboDirect thought on his feet and used social media to poach a customer from a rival.
Bicknell’s team are constantly looking at what’s being said on the social networking websites and one staffer noticed comments by someone on Twitter who was complaining about the long queue they were stuck in at a bank branch.
“Quick as you like, he was in there [on Twitter] saying, ‘Look, come and join RaboDirect – you will never have to queue again’. I think we got a new customer that day,” says Bicknell, the new general manager at RaboDirect.
“It just shows you how the world is changing; it becomes
so immediate now. I was delighted that a member of my team just saw the opportunity and took it. As long as the guys are doing that, I can sleep well at night.”
Bicknell, like his predecessor Roel van Veggel, has embraced social media as a means to reach out directly to customers. One of his first acts as general manager was to write a blog introducing himself and including plenty of personal detail, saying that he was originally from the UK, has lived here for the last 12 years and has four children with his wife Niamh.
Given how depositors took fright in 2007 at Northern Rock, which had a single office in Ireland and relied heavily on postal and online contact with customers, Bicknell knows that online banks must offer the personal touch.
“One of the things you have to be careful with an online bank is that you don’t want to be seen to be impersonal, distant and technology-focused. The way we do things there – we use images of staff on the website – we try to make it very personal,” he said.
While there will always be a requirement for branches to take care of part of the relationship between banks and customers, Bicknell sees there being fewer bank branches in the years ahead as customers want to take greater control of their financial affairs.
“There will be an increasing incidence of customers going online because they can get better value that way and they can manage their cost of banking. We expect to see that growing,” he says.
Bicknell moved to RaboDirect from Permanent TSB where he was head of personal banking and later head of customer relationship management and online banking at the lender that fell into Government control last year after avoiding a bailout for more than two years of the banking crisis.
Irish banks are still fighting for deposits, given the high cost of market funding due to the relentless volatility in the financial markets over concerns about the euro.
RaboDirect has €3.6 billion in deposits from more than 80,000 customers or an average of between €20,000 and €25,000 per customer, says Bicknell. This is up from €1.4 billion held by 63,000 customers two years ago.
Bicknell says RaboDirect’s business ranges from customers “who put their children’s communion money in” to customers who have more than €1 million on deposit.
Buying deposits from Irish retail customers isn’t a cheap business, given the battle out there for funding in Irish banking.
RaboDirect’s average rate on savings is 2.2 per cent – higher than two years ago – and the best deposit rate it offers is 3.1 per cent on a demand account of up to €20,000 and 2.4 per cent on sums above that. This is lower than rates being paid by the guaranteed banks and well below the market-leading 4.1 per cent rate being on offered by the Belgian-owned KBC Bank Ireland on a term deposit.
Bicknell says that the high rates at the guaranteed banks show that they are still try to fix their balance sheets. He hopes that the deposit market will return to normal soon for the good of all the banks.
“It reflects the fact that they have a job to do to bring things back and to repair the balance sheet, certainly. They have some challenges still,” he says.
“I hope that levels out because the more we can get back to a little bit of balance in the marketplace the better for everyone.
“We would like to see it very competitive. We want to be part of a vibrant, competitive marketplace and it would be better for customers in the longer run as well.”
RaboDirect recently encouraged customers to focus on the demand deposits rather than term deposit accounts as they offered higher rates at the bank. It still offers term accounts to customers, but this is where the competition is strongest among rival banks.
Bicknell explains that the way the central treasury operations work at the bank’s Dutch parent company Rabobank means that it is not in a position to offer competitive rates on term deposits, but he says that this is something that they will look at in the future.
The funding model works by RaboDirect being offered a price for money from Rabobank’s treasury unit in Utrecht. Bicknell runs a profit and loss account for the business, though when it comes to setting rates he has to be “sensible on the price we are given by our treasury team”, he says.
Even though Bicknell sees the break-up of the euro as “an extremely remote possibility”, the potential effect on his customers – and whether their deposits would end up being denominated in Dutch euro or Irish euro, for example – would depend on legislation adopted by the Irish Government to resolve the issue.
“Although we are licensed by the Dutch Central Bank we
must comply fully with the
codes of practice of the Central Bank of Ireland and with all relevant EU and Irish law,” says Bicknell.
“So if new legislation is passed by the Government to affect all banks operating in Ireland, RaboDirect could potentially fall within the remit of that legislation and we can’t speculate on the consequences of legislation which hasn’t even been proposed.”
Rabobank has raised about €20 billion of funds from about 500,000 customers through its direct banking operations in Ireland, Belgium, New Zealand, Australia and Poland. Ireland is seven years old and the second oldest after the Belgian subsidiary.
The Dutch bank is opening a new RaboDirect subsidiary in Germany, the launch of which is being spearheaded by Bicknell’s predecessor, van Veggel. This is proof of Bicknell’s statement that “Ireland has been seen as one of the star pupils” in the RaboDirect class.
The Irish bank’s attraction to online depositors has not just been about the rates it offers but the perceived safety of the bank, given that its traditional status as a conservative lender to the agri-sector has ranked it as one of the world’s strongest, most secure banks.
Even though Rabobank lost its prized “AAA” credit rating earlier this year, its “AA” status ranks it eighth among the world’s safest banks in a listing published by Global Finance magazine in April.
“Safety is one of the primary things of interest to customers right now,” says Bicknell.
Despite general concerns about a break-up of the euro zone, Bicknell says that the bank has received calls from concerned customers but not in huge numbers.
“Customers are very pragmatic and even with all the discussion of this recently they have probably had about four years of relative uncertainty, so they continue to move through it. There is almost certainty in the uncertainty.”
While customers like the security that Rabobank offers them, Bicknell says that RaboDirect’s plain-speaking approach and the high-profile advertising campaigns selling this message has also appealed to new customers.
“Rate is really only one of the things that people are interested in when it comes to savings. Safety is extremely important and you will see us talking a lot about that – that is very, very important to our customers. There are different parts of the market interested in different things,” says Bicknell.
“Some people are going to move money for a few basis points [on interest rates]. Some people are more concerned about safety and access. Some of our customers have been interested in us because we have taken this no-nonsense, no-sneaky-stuff approach. That’s important too. We are playing in different parts of the market.”
RaboDirect has kept a close eye on whether deposits are migrating back to the Irish banks which have reported increasing lodgments since the second half of last year after the banks were stuffed with capital following the 2011 stress tests.
The bank’s sponsorship of the Pro12 rugby and the success of the Irish teams in the tournament – Leinster were beaten finalists and Munster semi-finalists – has helped RaboDirect maintain a high profile in the Irish market in the face of this returning competition.
“We have continued to have an active voice out there through rugby and various campaigns. Our deposits have been quite stable,” he says.
RaboDirect is one year into a four-year sponsorship on the Pro12 rugby tournament with a review pencilled in as part of the deal after two years.
Bicknell says the bank is committed for at least another year and that it “would make a lot of sense” to continue sponsoring it beyond that for the full term, given the profile of the tournament and the success of the Irish teams.
It amounts to “a good part of our marketing budget”, says Bicknell, but he declines to say how much the contract is costing.
“Rugby was chosen because it is seen as being on the rise in Ireland, and to establish our credentials and focus on savings,” he say.
The popularity of RaboDirect has been in stark contrast to the problems at Rabo’s beleaguered Irish retail business ACC Bank, which came very late to the property party, funding developers such as Liam Carroll and John Fleming at the very end – and even after the boom – on some projects.
Bicknell says although RaboDirect and ACC share a building on the Grand Canal in Dublin, the two subsidiaries have separate reporting lines into their head office in The Netherlands.
The heavy losses taken on property loans has raised questions about Rabobank’s commitment to ACC and Ireland but the Dutch bank is sticking by its Irish presence.
“If you look at Rabobank and the culture of the business and the inner cooperative, it is very important to be in it for the long haul,” says Bicknell.
“They will certainly see things through and in terms of the commitment to the local marketplace Ireland is seen as a very strong franchise for Rabobank internationally. There is a very successful corporate banking business here with a strong interest in the agri-foods sector.”
While Permanent TSB may not have had the same problems as ACC Bank with property and construction, Bicknell joined that bank just months before the run on Anglo Irish Bank led the Government to introduce the guarantee of Irish Life and Permanent and the other domestic banks.
It was the start of a long crisis for all the banks that is far from over. He learned a lot during his four years at Permanent TSB trying to attract new customers and cross-sell products across the bank’s customer base, he says.
“The last several years in Ireland regardless of what sector you have been in has been challenging, but it has been a good time to learn skills for the future,” he says.
The uncertainty around Permanent TSB’s future earlier this year played no role in his decision to jump ship for RaboDirect, he says.
“Looking at my career the things I have been interested in over my career – development of brands, technology, looking at the customer – it really all came together in the opportunity at RaboDirect,” he says.
“It is a young business just celebrating its seventh year. I have a seven-year-old son and it is around the time that things start to get very interesting. It is good to get involved with the team and move it on to the next level.”
Name:Tim Bicknell.
Title: General manager, RaboDirect.
Age:40.
Born: Leicestershire, England.
Family:Married to Niamh, he has four children.
Hobbies: Cycling and rugby.
Education:He has a degree in economics, politics and political economy from the University of Exeter and a MBA from UCD.
Career:He trained at accountancy firm Arthur Andersen in Birmingham before working at NatWest Bank between 1994 and 1997 and later as a management consultant at IBM from 1997 to 2000. He worked at semi-state ESB from 2002 to 2008 as head of communications and online channel development. He moved to Permanent TSB in early 2008 just months before the start of the banking crisis where he was initially head of personal banking before becoming head of customer relationship management and online banking. He took over as general manager of RaboDirect in May 2012.
Something that you might expect:As a fan of rugby he coaches under-8s "mini" rugby team for St Brigid's club in Cabinteely, Dublin.
Something that might surprise:He was working in a bank in the Turkish capital of Istanbul as a consultant at IBM when a severe earthquake hit in 1999.
