HSBC: Firing the world’s most incompetent bank

Dear reader, I’m going to beg your indulgence as I take a brief editorial detour from my normal writing about new media, journalism and innovation. I promise I won’t make a habit of it.

But, hey, blogging is about personal expression, and I need to vent about my former bank, HSBC. I promise to return to return to our regularly scheduled blogging after this.

Sorry it’s so long, but HSBC is just that crap. Skip to the bullet points, and if you’ve experienced horrible service with HSBC (or another bank), feel free to share. Retail banking customers deserve better than we’re getting, and it’s time for our governments to not just bail out banks but also to work with consumers to ensure we’re well served. Many banks are not just too big to fail but also simply too incompetent to survive.

To relevant regulators, I ask that you start doing your job and look out for retail customers too. Retail banking may not be a high margin business, but like or not, people need banking services. It’s long past time to clean up this industry.

Again, if this story or even parts of it are familiar, share this and share your stories. A little social media action might help. We need retail banking reform now.

Dear HSBC CEO Mr Stuart Gulliver:

I thought about sending this letter to relevant banking regulators, but I don’t have faith that they’d actually do anything so I thought that this public letter might be more effective.

HSBC, you’re fired. I wish I had the power to fire you, the CEO, personally and not just the divisions of your bank that I had the infuriating misfortune to bank with since 2005. I would have fired you long ago, but you know that switching costs are high. I actually thought about buying some HSBC stock and leading a shareholder revolt, but after my experience as your customer, I see you as a very bad investment. Besides, I’ve got better things to do with my time and my money.

Why am I firing you? Where to begin. If it were one branch of your global empire that was totally incompetent, I might write it off, but no, my experiences with HSBC UK, HSBC Expat and HSBC US (or what is left of it) were so uniformly bad that I came to believe that you have serious systemic service and security issues at your retail banking and credit card divisions. On that point, I’m not joking at all. I am completely serious.

I’ll try to make this brief, but it’s hard to summarise all of the crap I put up as one of your customers.

• Moving to the UK in 2005 for what I thought would be a brief work assignment, I opened up an HSBC US account. Things started off well enough, although as I would come to find out, the whole “world’s local bank” looks good on the ads at the airports but is actually nonsense.
• In 2006, I opened up an HSBC Offshore (now Expat) account because I needed an account quickly and needed multi-currency services. I had the money to open the account, and the minimum balance to avoid paying fees was better than your competitors. Then it started to go all wrong.
• You sent me my first credit card and cancelled it a few weeks later. You said that I must have used it online on an insecure site. Nope, and then when I asked how a card could have been compromised so quickly, your staff said it was “a known Milanese fraudster”.
• Several months after opening the account, you sent your customers a letter saying that “in order to serve you better” we’re jacking up the minimum balance required to avoid fees. You didn’t increase it a few thousand pounds, which would have been high. You didn’t double it. No, you increased the minimum fee-free balance 5 times to £25,000. The better service never materialised. As a matter of fact, over the next several years, your service got worse and your fees just got higher. I don’t mind paying fees, but I do expect good service in return. You didn’t hold up your end of the customer contract.
• In 2008, I was in the US on business, and my PayPal account was compromised. PayPal immediately snapped into action calling me on a Saturday. The thieves rang up purchases of $1800 in less than 24 hours. I called HSBC alerting you of the fraud and asking what I could do. The answer? Nothing unless I came into a branch. The nearest branch was a seven hour drive away. On Monday, I watched helplessly as my bank account was drained. You then you slapped an overdraft fee on me. World’s local bank my backside. Weeks later when I was near a branch, I demanded a refund of the overdraft fee. You gave me one, but I should have fired you then and there.
PayPal was excellent, and having been a customer of theirs for several years, they waived the fee for a security token to help me prevent this from happening in the future because I had been with them for years. That’s customer service and a business repaying customer loyalty. You didn’t help me solve my problems at all.
• In 2011, I was woken up in the middle of the night in Australia on business. I had an automatic payment scheme setup on my HSBC UK credit card to pay for my storage space in the US. For some reason, that stopped. Fortunately, Public Storage rang me, and I was able to process a one off payment. I still don’t know what happened.
• In 2012, HSBC’s incompetence was on full display. In January, my employer was unable to pay my wages. To be fair to HSBC, my employer’s bank, Lloyds, was pretty useless too, but HSBC really took the biscuit. You screwed up changing your sort code to the new faster payments system, and my employer couldn’t pay me. You didn’t inform your customers. Why not? You were so kind to allow my employer to pay me via free SWIFT transfers. Normally, you charged £20 a crack for that service. For emphasis, your screw up meant I didn’t get paid for a month. Most people don’t have that luxury.
• Despite the fact that I’ve travelled 310 days out of the last three years, for some reason, HSBC UK started blocking my credit card when I travelled outside the UK, even when I called or left instructions on the website. HSBC blocked my card after a flight to Dubai because the WiFi company on the flight had a US billing address, and I had only said I was travelling to Dubai and Indonesia. You’ve got those cute ads with the kids taking multiple currencies at their lemonade stand, but yet, you’re thrown by a US company providing WiFi on an Emirates flight? The reality doesn’t quite live up to your ads, does it now?
• Last summer, HSBC UK blocked my credit card while I was on a business trip to New York. I’m a US citizen. I travel there at least once a year, and I had an HSBC US account at the time. What would be suspicious about that?
• As my credit card was blocked, I then had to use my debit card, which was compromised. WalMart alerted you to the fraud, and you blocked the payment or so I was told. You might want to change the script that your foreign call centres use. They didn’t tell me that £400 would go out of my account for up to eight weeks until I called them up and asked them about it. I had totally lost my patience with you and your bank.

Saving the worst for last

By this time, I had already decided to fire you. I was tired of paying your exorbitant fees, which by this time seemed a perverse way of rewarding you for being utterly useless. Moreover, your serial incompetence and poor security were too much of a risk to my personal finances.

I did some research, and Citibank had a managed transfer service. They brought the switching costs down, and I couldn’t risk banking with you anymore. However, you still had a few opportunities to shine as the masters of suck, and you didn’t miss a single one.

It took me months to fire you. Citibank worked with me, and you did not. I had more communication from Citibank in the first month of being their customer than I did in years of being a customer of HSBC. HSBC Expat didn’t even mention that Citibank had requested information on my direct deposits and transfers. As a security issue, I would have expected that much.

When I was in the US on business, I fortunately was in one of the last remaining cities where HSBC US has a physical branch so I could close my account. I went to the branch, and you were going to charge me $12 for a cashier’s cheque. It shouldn’t be standard procedure to charge for a cashier’s cheque when closing an account. Lovely, I have to pay you to get my money so I did the very insecure thing and withdrew the cash. Fortunately, the Citibank branch was just across the street.

But wait for it, your worst is yet to come. Several years ago, my HSBC US credit card was compromised. Sigh, who runs your security operations? A known Milanese fraudster? The card was cancelled, but for some reason, it had a one cent balance. I had tried to pay it off several times, but you only allow payments of one dollar or more online. Knowing HSBC’s level of stupidity, I had the foresight to bring a penny to the branch with me when I closed my bank account. The teller struggled a bit with what to do because the credit card account was closed. Bless her. She tried to sort it out and meekly asked if I had a penny.

I tried to cancel the credit card too, but I was told that I couldn’t do that at a branch. Face palm. Was the mystery one penny balance sorted? Hardly. I now have a one cent outstanding balance on the old card and a one cent credit on my existing card. I’ll give you points for consistency, the consistency of never missing an opportunity to screw up. Seriously, this is a global financial institution?

Sir, I wouldn’t trust you or your managers to run that little girl’s lemonade stand in your ads. Let’s make a deal. You got an $11.1 m bonus last year. Flip me that penny, and we’ll call it even.

Your utterly incompetent service and your farcical security has cost me time and money. I’ve got a choice in banking, and you have come up wanting over and over and over again. You left me with no choice. You. Are. Fired.

Sincerely, your former customer,

Kevin Anderson

News, advertising, subsidies and revenue streams: Disentangling products and profits

Yet again, I started to write a comment and then decided that it was a blog post rather than a comment. I was responding to a post that Jeff Israely, a former Europe correspondent for Time magazine and founder of Worldcrunch, has written for Nieman Lab. I love Worldcrunch, and when I was thinking of doing my own news startup, we had a chat or two. I completely understand the point that Jeff is making in his post, and this isn’t a criticism of what he wrote, but a conversation that we need to have amongst journalists trying to get our heads around the business of what we do. 

Journalism! We don’t need no stinking subsidies!

Ok, so that’s a tongue-in-cheek summary of Jeff Israely’s post for Nieman Lab, Don’t you call me subsidised — people are paying for news. Jeff, please take that in the good-natured way in which it is intended. 

I agree people are paying for news, and I understand how the idea of subsidy grates as a journalist. It’s offensive to think we’re taking handouts. However, in business terms, a cross-subsidy isn’t a handout but a revenue stream, often but not always, closely aligned with the core business, that generates net profits to support the entire enterprise. It happens in a lot of businesses. I can see the problem that Jeff has with the term subsidy, but I think it’s helpful to think of this in a different way. Does Gilette subsidise its shaving business  by selling the blades? No, but it’s become the way that it keeps the entire business profitable.

The journalism business debate is littered with unhelpful terms, and we’re not using the business term subsidy accurately. It bleeds out the business nuance of what’s really going on. Journalism is the business of news, but that business is supported not by a number of subsidies but rather by a number of revenue streams, some more lucrative than others. So, let’s stop using the term subsidy, or at least stop using in inaccurately. Let’s think about revenue streams, with the idea that a revenue stream may not necessarily be a profit centre. (I know that’s stating the bleeding obvious, but I often think that Econ 101 should be compulsory for journalists.) Reframing the discussion in terms of revenue streams rather than subsidies is a lot more productive. That’s why I like Jim Brady’s formulation that the business model problem for journalism isn’t going to be solved by a silver bullet but rather shrapnel, a bundle of revenue streams that support the mission. 

Jeff mentioned Google. Is it in the search engine business? Sure, that’s one of its products, but its business, it’s main source of revenue, is advertising, with 96 percent of its revenues coming from ads. Just like the news business, Google wouldn’t be able to dominate online advertising the way it does if it didn’t provide the search product. Google saw off other search engines – Hotbot, Altavista, etc – because it did a better job of delivering results, but it has excelled as a business because it has developed (well acquired really) an incredibly lucrative revenue stream tightly integrated to its core business of search. It has attracted a huge user base, one that dwarfs that of most news sites, so while CPMs have plummeted, it still is able to be profitable.

That’s why the MailOnline is pitching itself as competing not as other news sites but against internet giants. It’s in the volume business, and it wants what Google has. Smart, I say begrudgingly. We need a world where the Mail’s brand of journalism and its fellow travellers aren’t the only ones with good business models. Yes, I’m looking at you, when I say that. 

Back to news and in particular print media, we used to have a Google-sized fat revenue stream that more than paid for news and information that we journalists provided, and it happened to be advertising. The US newspaper business was especially dependent on advertising to pay the bills. Newspapers in other countries had a much larger percentage of  a lot more on news stand sales or subscriptions. In the US, the big problem for print media is the collapse of advertising for print newspapers, especially newspapers. Alan Mutter makes a lot of really terrifying graphs that put this collapse in the stark terms. From 2005 to 2012, first half newspaper ad sales dropped between 23 percent to 86 percent, depending on the type of advertising. Advertising used to be 80 percent of revenue for most US newspapers, what Ken Doctor called the 80/20 rule of newspaper revenue. Newspapers, like a lot of other post-industrial businesses, are just struggling through a transition where their primary source of revenue has been disrupted. 

To tie this up, I would say that hopefully with a wider range of revenue streams, we’ll end up with a more resilient journalism eco-system, one that isn’t so reliant on a single point  revenue failure, advertising. The over-reliance on advertising was especially problematic because it so cyclical. Newspapers have always taken a big hit during recessions because ad budgets are often the first to get slashed. 

Ok, this is a relatively dispassionate, rational look at the news business. Why does this entire discussion pose a problem for journalists?  The economic decline of the print business, with thousands of jobs lost, already has us feeling very vulnerable. The collapse of the business that supported journalism in many developed countries feels like a critique of the value of journalism. Why won’t people pay us for the valuable service we provide? It feels painful even writing that, and I don’t mean to dismiss or diminish the cultural upheaval we’re going through. It feels like an attack on the value of journalism, and we have to recognise the emotional side of this to work through it. But again, we’re letting the imprecision of our language get in the way.

I keep going back to some advice that was given to my college classmate, Theo Francis, when he was working for a news startup. A business-minded uncle said:

You know you’re creating value. But can you capture it?

For those of us who believe in the social value, and the economic value of journalism, what we need to rethink is how we capture economic value to support the work we do. We need to think of revenue streams to support the mission. I believe in journalism, and to quote Kunda Dixit at MDIF’s Media Forum last (MDIF being my day job):

To be truly independent, media needs to be financially viable. 

We’re already creating value, and now, we’ve got some heavy lifting to do in terms of figuring out how to capture value in the digital age.