In the UK, there's this odd thing where some big high street banks have sub-brands that use the same core bank, but have their own customer service, online banking, etc. The Co-Operative has Smile, HSBC has First Direct. And these sub-brands generally have fantastic customer service!
Why? Why not just have great customer service for the main bank?
These sub-brands aren't, AFAIK, aimed at better-off customers who are worth more (there are examples of that too - Santander has Cater Allen), so it's not like there's some greater payoff to decent customer service.
They are phone and online only, without physical branches, so there are lower costs. Perhaps it's that?
besides the lower prices due to operational efficiency that you mention, it's probably about having a different marketing mix (the 4 Ps--product, price, placement and promotion) to attract a different cusotmer segment. many of their customers probably don't even know or care that the sub-brand is owned by a high street bank. the sub-brand might also be part of a strategy to funnel younger, new customers into the fold.
i'd say the main reason the main banks don't have good customer service is that they simply don't have to, and the actors therein have selfish aims. the fiefdoms of the large organization will typically divert resources to themselves (increase revenue, decrease operational expenses, and increase managerial compensation/headcount). consumer inertia allows this to happen (which is why i advocate moving away from big banks to promote competition and better service).
Why? Why not just have great customer service for the main bank?
These sub-brands aren't, AFAIK, aimed at better-off customers who are worth more (there are examples of that too - Santander has Cater Allen), so it's not like there's some greater payoff to decent customer service.
They are phone and online only, without physical branches, so there are lower costs. Perhaps it's that?