From branches to call centres: New strategic realities in retail banking

Relationship marketing and its application to retail banking has become a common theme in managerial and academic literature. This article argues that the rhetoric of relationship marketing has been used to obscure banks' real strategic objective, cost reduction. Those cost reductions have been achieved through the mechanisation of processes within the branch network and the creation of centralised call and administration centres, or service factories. Those service factories enable banks to generate significant economies of scale and the sources of such economies are explored in detail. In conclusion the article argues that banks have sought to use the rhetoric of relationship marketing to disguise the impact of their cost reduction strategies on customer relationships and service provision.