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The Sunday Times December 17, 2006


The Louise Armitstead Interview: Human cyclone hits Lloyds TSB
Terri Dial was brought in to revive the retail division of the bank. She built up Wells Fargo in America by attending to the small things, but will change come fast enough to satisfy her City critics?


::nobreak::IT TAKES about three seconds to conclude that Terri Dial, head of retail banking at Lloyds TSB, is not the stereotypical London banker.
“Oh, my gosh. Your shoes! They are so great. I love them.”



The American accent comes booming out of Dial’s office where the PR woman, sporting a pair of leopard-skin high heels, is announcing my arrival.

“And you’re wearing brown, too. I knew it was a brown day.”

Still squealing, Dial, 57, spills out of the room towards me. I gear myself up to join the “brown” debate, but Dial’s mop of bright blonde hair, youthful looks and broad grin stun me into a meekly English “Hello”.

“Come in, come in,” she says, still laughing.

There is a cricket ball on her table, signed by the Australian team. It seems to offer me the perfect chance to regain ground. Pointing at it, I ask if she has been following the Ashes.

“Actually that’s from the last Ashes series when the Aussies played Scotland,” she says.

What? More laughter. “My husband is Scottish and, yes, they do have a team, which is sponsored by Lloyds TSB,” she says. “That time, it rained all day so the match never started — we just spent the whole day having a great time. They all signed the ball and gave it to me at the end.”

Dial explains how she didn’t understand cricket but now, after studying it and watching test matches, she recognises it as a “complex game of amazingly interesting tactics”. I begin to understand how she has wowed the City.

It has been 18 months since the arrival of the “human cyclone” — as Dial was dubbed in American banking circles — to save Lloyds TSB’s flagging retail division. She was instantly hailed as a superwoman and shot up the ranks of Britain’s most influential businesswomen.

Dial sees it differently: “I wanted to live in London from a long time ago. The opportunity came up and we’re here.”

Only six years earlier, Lloyds TSB had been the biggest bank in the world and, under Sir Brian Pitman, had seemed indomitable. But the bank Dial joined was suffering from indigestion caused by the £7.3 billion acquisition of Scottish Widows in 2000, and its confidence had been dented when it failed to buy Abbey National in 2001. Customer satisfaction was plummeting and the bank’s market share falling.

Credited with building Wells Fargo into one of the most successful retail banks in America — she started there as a teller in 1976 and left in 2005 as chief executive — it was assumed that Dial would breathe life back into Lloyds TSB’s flagship division.

But now, halfway into her three-year turnround programme, commentators and shareholders are beginning to grumble that, while progress has been made, so far the recovery has been slow and disappointing.

One top shareholder said: “Lloyds TSB as a group is still seen as the lame duck of UK retail banking. And it’s not just the market — Royal Bank of Scotland was a regional branch compared with Lloyds and now look at it. The honeymoon period is over. She’s been good, we’ve seen some interesting developments, but we need movement in this crucial division.”

Another analyst said: “Look, Terri is terrifically energetic. But people need to be realistic — Lloyds is still a middle-of-the-road operation whose only prospect for proper growth is to be bought out. You can go on about customer services and internet availability but this is mere tinkering.”

Dial is firmly in the camp that believes an American takeover is highly unlikely — “Put it this way, I’m not running the bank with this in mind,” she says.

But in terms of “tinkering”, it seems that critics might have a point. Over the past 18 months the new policies have been very distinct “Dial-isms”.

One example is the “Ditch the Scripts” initiative launched this year to encourage call-centre staff to answer customer calls as trained professionals rather than by sticking to standardised scripts.

In the past few weeks, Dial has launched a new “Save the Change” scheme aimed at encouraging customers to save by rounding up purchases they make to the nearest pound and sweeping the change into a savings account.



Dial says: “Retail banking is not about a big bang. It’s about progressive change.

Our goal is to earn the right to customers’ lifetime financial needs. To do this there are three things we need to do: give the services they want, an experience they like, and products they need. I repeat this again and again.”

Such policies may not have delivered the knock-out solution the market hoped for, but they are yielding results. Profits on overall product sales at the retail division were up 17%. Sales through branches were up 31%. Online and telephone sales were up 38%. Bancassurance sales, derided by critics as being anachronistic, were up 64% at the half year.

As one analyst said: “Those who expected fireworks will be disappointed by Dial but that doesn’t mean she won’t deliver what she promised. She gets the basics right in terms of the small things — that’s how she turned Wells Fargo from a one-town bank into a coast-to-coast giant.”

Dial certainly has a track record of achieving against strong odds. She was born and raised in Miami to “solidly working-class parents” who had endured the hardships wrought by the 1930s depression in America’s deep south. She managed to win a scholarship to Northwestern university in Chicago.

“It was before Harvard and the others took girls, so it was the best place to go — but nothing prepared me for the cold there — it was freezing,” she said.

Dial worked throughout university and forced herself to save. With the cash, she travelled around America and then Europe. “I completely fell in love with London,” she says. “I wanted to stay here.”

However, Dial returned to America to work. “I moved to San Francisco like everyone else and sat down with the Yellow Pages to try to find a job. When I got to banking, I saw the huge lists of branches across the United States and thought, that’s it — everyone is in banking.

“I chose Wells Fargo because of the name: I’d watched the film and had no idea it actually existed.”

So Dial started as a teller and began her 29-year rise to the top of the bank. As a result, colleagues say, she understands the importance of the branch network at Lloyds TSB better than anyone else.

She says: “One of the biggest problems in Lloyds TSB was the disconnection between head office and the workforce. For instance, when I joined I took some time to go round the branches as a customer. It took me 65 minutes to open a current account — and this was before I was even offered internet or telephone banking registration. By that stage I had lost the will to live and was just saying, ‘please can I go now?’. The thing is, the front line knew the process sucked — but the smart guys at the centre didn’t. We’ve worked hard to reconnect.”

But it’s not all about service. The Competition Commission recently announced an investigation into payment protection insurance — the highest-margin product in the bank.

“The UK is one of the most unprotected markets in the world in terms of insurance,” says Dial. “I don’t think this product has been mis-sold. But the industry probably needs to recognise that the one-size-fits-all approach isn’t going to work.”

Another public-relations timebomb is the rise of unsecured loans in Britain. Bad debts have risen from 4% to about 6.5% in this sector and led to accusations of irresponsible bank lending.

“You’ve got to remember that, for all the accusations, banks don’t want to lend money to people who won’t pay it back,” says Dial. “But the percentage of bad loans is too high at the moment — due to imprudence or naivety. This is something we need to help people with. For instance, we’re launching an affordability tool online to help people understand the debt they take on.”

Vital statistics



Born: October 30, 1949


Marital status: married


School: Miami High School


University: Northwestern


First job: bank teller at Wells Fargo


Salary package: £570,000


Homes: London and Napa, California

Car: 1997 Porsche turbo


Favourite book: Catch 22, by Joseph Heller


Favourite music: Patsy Kline


Favourite film: The Long, Hot Summer


Favourite gadget: Lever corkscrew


Last holiday: Madrid

Terri Dial's working day

THE Lloyds TSB executive is in the office by 7.15am. Every day is different, but Terri Dial usually meets at least one of the bank’s customers and every week she spends a day in a branch or at a call centre.

She makes a point of avoiding committee meetings because “committee meetings are the death of good business”. Dial has noticed a trend to rebrand the committee meeting and call it a forum, “but I’m not falling for that — they don’t fool me”, she says.

Most of her evenings are spent at a staff or customer event so she is rarely home before 10.30pm.

Downtime

TERRI DIAL enjoys walking round London for relaxation. “After 18 months of being here, I haven’t even begun to exhaust all there is to see and do in London,” she says.

The Lloyds TSB head of retail banking also enjoys the ballet and goes whenever she gets the opportunity. Travelling is another love.

Since coming to Britain, Dial has caught football fever, but her husband is a big fan of rugby “so we tend to go to more rugby than football”.


She has also developed an interest in cricket, thanks to Lloyds TSB’s sponsorship of the game.