My Job: Allowing Irish banks to evolve and survive

Banks are trying to build trust in the post-tracker-mortgage world, but have much more to do

The ever-changing banking landscape includes managing the increasing cybercrime risks and grappling with the extensive regulation of the financial services sector. Picture: iStock

That ancient Chinese proverb — ‘may you live in interesting times’ — has a fair degree of application for the Irish banking system these days. 

During these turbulent times of interest rate movement and regulation changes, the traditional vision of banks continues to change with every passing month. Delta Capita helps retail banks stay ahead of this new financial curve in assisting with revenue generation, cost takeout and simplification, delivered through expertise and cutting-edge technology. 

In his role as head of retail banking service delivery, Ronan Brennan is tasked with delivering the solutions which will allow Irish banks to evolve in and survive the ever-changing banking landscape, to manage the increasing cybercrime risks, and to grapple with and navigate the constant red tape facing the financial services sector. 

“My position as head of retail banking service delivery with Delta Capita in Ireland is to continue our growth in the retail banking area, with the provision of resources that are required by retail banks and really to offer a support to banks at times of need.”

Mortgage repayments

While much media attention has focused on rising interest rates and their impact on borrowers, less attention has been given to the potential for increasing numbers of people to now fall behind on their mortgage repayments over the coming months. 

Delta Capita predicts this will likely see many experienced staff being reassigned to the arrears departments of the various banks, which in turn could see those institutions struggling to process new mortgage applications as quickly as they currently are — meaning prospective house buyers could face long delays getting their mortgage over the line. 

“We simply don’t know what the future holds in terms of a rate increase or decrease point of view. There is an element of expectation in the marketplace of perennially low-interest rates, because of what we’ve had from 2009 or so — but that is not a norm. While it is unknown what the future holds for rate rises or decreases, it is unlikely to see a return to such low rates of the past — and even if we do, it is unlikely to be as prolonged,” Mr Brennan explains. 

Head of retail banking service delivery at Delta Capita Ronan Brennan

With the ECB base rate having remained effectively at 0% since 2016, any expectation of low rates is misplaced. 

There is a built-in expectation of lower rates in perpetuity from a certain cohort of customers — typically younger people who would not have necessarily seen higher interest rates in their adult life. 

"There is a generational expectation of low rates, and probably a lack of appreciation of what value there was in long-term fixed rates.” 

Inevitably there are people coming off fixed rates onto much higher rates, in addition to people who were on tracker rates who are now, for the first time in over a decade, seeing their mortgage rates increase. Meeting with their banks to engage and arrange alternative repayment arrangement is very much the best route in this changed interest landscape. 

“Banks really do want customers to engage with them as early as possible so that alternative repayment arrangements can be agreed — customer centricity and support is a key concern for banks at times of customer stress.” 

However, mediation and arbitration all take time and resources and tend to involve more experienced staff to help determine most beneficial outcome for customer. 

“Existing resources are stretched from ongoing high demand, coupled with two less banks in the Irish market offering the product for sale. This is where Delta Capita can provide support. We regularly place QFA and APA’d resources in to help with surge capacity at times of high stress/demands on banks’ customer contact centres.”

Mr Brennan joined Delta Capita following 15 years with Bank of Ireland, notably as head of asset quality and pricing for seven years, overseeing a department which was vital to the bank’s successful credit management and pricing policy. 

Prior to this, he was commercial branch manager for five years, managing busy commercial branches in Dublin city centre and directing a large team. He was also senior relationship manager for four years, managing a portfolio of Bank of Ireland’s business banking clients in Dublin. 

Cashless society

In the ongoing changed banking landscape, another controversial issue confronting the sector is the progress to a cashless society — a vision that is often less than palatable for the older bank customer. 

AIB’s plan to make many of its branches cashless last year created a sustained furore, with criticism from the public, various organisations and politicians. 

The plan whereby notes, cheques, foreign exchange, bank drafts and cash machines would have been unavailable at branches was eventually scrapped due to the sustained outcry. 

Cash services are expensive and increasingly unutilised, however, the banking review is likely to result in banks slowing down withdrawal of cash services and branch closures given political pressures and public relations impact. 

"It is likely that the three remaining banks are the only ones here who will provide broad service offerings, with niche non-bank lenders competing in different sectors.” 

Banks are clearly trying to build trust in the post-tracker-mortgage world, but with more yet to do: “Being there to guide and support customers in stressful times is one way. By knowing the customer and engaging with them accordingly, financial institutions can optimise interactions that result in increased customer satisfaction and wallet share, and a subsequent decrease in customer churn.” 

Having worked in the retail banking sector for much of his career, Mr Brennan has witnessed the sea change in that customer centricity over recent years: “It may not be appreciated on the outside as much as it should be, but there is a real change toward customer centricity and that is how banks will want to deal with customers who are in challenging situations.”

Ireland has not been, over the past 15 years, in a normal interest rate environment — in fact, an argument can be made that 2023 is a more normal eurozone rate environment. 

“The last 15 years has been driven by a great financial crisis, which we unfortunately know too well in this country, followed by covid happening just as we were coming out of that — resulting in another three years of depressed interest rates. 

"So, for a period of 15 years and for a generation, that is the expected interest rate level. And therefore it may be that there is not an appreciation of the impact that a rate increase can have on mortgage repayments.”