Managing customer information is one of the biggest challenges now facing retail banks, according to the managing director of AIB Bank, Kevin Kelly.
"Competing with non-traditional entrants into the banking market will be a key battleground. Look at what supermarkets have achieved with loyalty cards based on customer knowledge. Banks will have to be able to manage customer information so that they know customers' needs and preferences and can serve them better," he says.
Unusually in the banking industry, the man who is now in charge of the bank's retail operations in the Irish market, Northern Ireland and Britain, responsible for 9,000 staff and a network of 374 outlets, is not a career banker. He joined the AIB Group as financial director in 1991 after a varied career in accountancy practice, management training and industry.
One of his better-known roles was that of government-appointed administrator of the old PMPA he reorganised the operation and arranged its sale to Guardian Royal Exchange (GRE). But he was also managing partner of accountants Coopers and Lybrand and group chief executive of the AGRA Group before he turned to banking.
Mr Kelly took charge of AIB's retail operations 2 1/2 years ago. He is currently touring the banks outlets on a communications exercise, seeing 200 to 300 staff a night, two or three nights a week, over a two-month period.
With the organisation facing major challenges in its traditional market, Mr Kelly is adamant that communication with staff is vital to successfully implementing the changes needed to ensure continued successful growth.
"The purpose of the exercise is to talk about the changes we are facing, to spell out our plans so that everyone is familiar with what is going on. . . it takes the uncertainty out of it."
The meetings include a question and answer session in which staff can express their concerns and put Mr Kelly on the spot to say how these concerns will be addressed. The results of the tour will be analysed through a staff attitude survey.
Mr Kelly is no stranger to change. He was born in Castlebar, but moved to Cork at the age of five and received his primary and secondary education there before the family moved again, this time to Dublin. He feels closely associated with Cork and lived there again in 1972 when he set up the Coopers and Lybrand office in the city.
When it came to deciding on a career, his first choice was journalism.
"I actually wanted to be a sports journalist. My parents were horrified at the time. I was passionate about all sports. I played everything badly. But there were no opportunities and when accountancy was suggested I did it. And it turned out fine." After qualifying as an accountant in 1966 he applied for several jobs. Pushed by three sisters who held him to a promise that he would move out of home when he qualified, he ended up in Rome with Price Waterhouse Europe.
"The interview was in Paris. I had never been outside the country before."
After Rome he was transferred to Holland where he was involved in audit work and business investigations. By 1969 the time had come to decide whether he wanted to remain in Holland and make his career there or to move on again.
"Even at that time there were a lot of opportunities for accountants," he says.
He moved to London where he took on a new role at Coopers and Lybrand, stepping outside the mainstream of accountancy work. He was involved in setting up a management development and training unit.
"I had never done anything like that before. It was a fascinating challenge. We were developing training programmes and lecturing. It was a great learning experience. It involved getting in behind things to see what the real training and development needs were."
That job involved stints in Africa Kenya, Uganda and Tanzania setting up development programmes for the staff of Coopers and Lybrand there. In 1972, he came back to Ireland with Coopers and Lybrand spending some time in Dublin before he moved to Cork to open the firm's first office there.
Between 1975 and 1982 he was back in Dublin, taking on a number of major audit clients as well as corporate finance, investigations and insolvency assignments. In October 1982 he became managing partner of Coopers and Lybrand. One year later he was appointed administrator of the PMPA Insurance Group by the Government.
"Coopers and Lybrand had been involved in investigations for the government and then it emerged that the government was going to appoint an administrator to run the motor insurance company. I had a lot of experience over the years in running businesses for clients for a short period. Initially, I had in mind that after a year or so I would pass it on to somebody, but I became so associated and involved with it that it wasn't on, so I actually spent six years ferrying between the two firms."
The collapse of PMPA and his appointment as administrator brought him into the public eye for the first time. "The staff of PMPA were great. There was a lot of uncertainty. There were a lot of redundancies, difficult negotiations with the unions and closures of businesses. But the loyalty and support of the staff were incredible. With the staff and the team I brought in, we succeeded in turning the business around. The staff were key players the way they embraced change and their hunger to survive."
The PMPA experience encouraged him towards another career change and he decided to go into mainstream business. He was offered an interesting job by the founder of AGRA Group, Mr Friedhelm Danz, who had acquired the former Polaroid factory in Newbridge. The plan was to develop a highquality "Greenfield" brand for chilled Irish beef like the Kerrygold brand for Irish butter.
However, the project was abandoned when it became clear that the costs would be far greater than had been initially throught. "It was going to take far longer to change consumer habits than initially envisaged. Only a multinational with very deep pockets could have done it in the end."
After two years with AGRA, Mr Kelly got an approach from AIB Coopers and Lybrand was the bank's auditors when Mr Kelly was with the firm and he had done some consultancy work for the bank. "For someone used to going into companies and having to learn about them quickly I was surprised at the length of the learning curve. It was much longer than I expected. Banking is a complex business, it is a myriad of businesses. It takes time to get a feel for the totality." In his early days he spent some time trying to interest foreign institutions in AIB shares.
"We wanted to diversify the shareholder base to reflect the fact that it had become an international company after the US acquisition. But the bank was not well known. It involved knocking on doors and trying to get their ears. You were just one in a long queue. Once the door was opened you had to get them to listen to you." Today, more than half AIB shares are held by overseas investors.
The move to head up the retail operation was "a challenge", he says.
"I had a broad knowledge of the area from my role as finance director. It is a fantastic business with a great management team and an enthusiastic and committed staff. That made it easier to work myself into my role."
But he is acutely aware that retail banking is facing major challenges, including the use of new technology and competition from non-traditional suppliers.
"We have put an enormous amount of effort into rethinking our strategy and benchmarking ourselves against trends in international markets. Every aspect of the business has been reviewed and we have employed consultants to advise on different aspects. We did not find too many surprises. We did not need to make much change in our overall direction. In fact the outcome gave us some comfort," he said.
Among the key challenges for retail banks are the impact of technology and the speed at which consumers will change and adapt, he explained. AIB is "experimenting" with new developments from its 24-hour telephone banking centre in Naas to pilot banks in five supermarkets two in Northern Ireland and three in the Republic.
It is too early to tell how customers will respond to supermarket banking which is commonplace in the US, according to Mr Kelly. But he strongly believes that new technology will not spell the end of the current branch structure.
"Even on a seven-year view the core delivery to the customer will be through the branch network. But the nature of branches will change. There will be a gradual split between how we serve the personal customer and how we serve the business customer. The traditional branch will evolve more and more into personal sales outlets and will open for hours that will meet customer needs."
He accepts criticism of current bank opening hours. But he argues that the overall quality of service is far better than in US banks. Opening hours have already been extended and now include lunchtime.
Another challenge he faces is building on the current distribution system. Currently AIB achieves three product sales per customer. In the US some banks achieve six or seven sales per customer.
