ICC Digital Library Forum

Just to add some humor as started by Mr. Lee, which I believe have a justification after this heated but fruitful argument.

It is said that there is a male cat that was very “active”. His owner didn’t like his too much of preoccupation with sex. The owner tried to advise him many a times to control his activities but with no avail.

Ultimately, one day the owner gets frustrated and in fit of anger he castrates the male cat.

This news gradually spread to surrounding areas and other cats start coming and consoling the cat. A few months after, one male cat asks our cat teasingly “what do you do these days?”

our cat promptly and confidently answered, “ I’ve become a consultant”



[edited 9/17/01 2:24:10 PM]

Dear Jeremy,

DC PRO IS A FREE DISCUSSION FORUM

Please do not see your involvement in the DC Pro Discussion Forum as sitting in a witness box to be cross-examined or sitting in the CDCS examination room to answer questions. In both situations, you need to answer the questions exactly as they are worded and be 100% related or relevant.

Don't forget this is a FREE discussion forum that any side issues brought forward or inspired by a member can be discussed. You choose not to respond to those side issues which you consider "irrelevant", fine. We respect your right to remain silent. But you have no right to police other members, what to talk and what not to talk. Only the DC Pro editor has such power. In other words, if you see a message from a member not being removed here, it is however relevant, whether one likes it or not!

LATERAL THINKING AND CREATIVE THINKING BY EDWARD DE BONO TO RESOLVE DIFFICULT PROBLEMS

In fact our attitude and approach are quite different. Since we cannot convince you by "direct confrontation" which may hurt our feelings and not effective at all, we whould like to inspire you with side issues to consider the issue of "releasing documents to the applicant without the beneficiary's approval" from a customer service point of view, IN ADDITON TO purely from a DC Technician's point of view.

Although we are also a DC technician, but taught by our consultancy experience learnt from the market place, the hard way if you will, we follow and practise "Creative Thinking" and "Lateral Thinking" by the great master of creative thinking and problems solving - Edward de Bono. Some problems, like the issue we are discussing, may not be easily resolved by limiting us to a narrow point of view. The answer may come from lateral thinking (or irrelevant thinking as you may call it). In fact we cannot communicate effectively unless you do understand what lateral thinking is.

THE NEWTONIAN CONCEPTS OF "RIGHT OR WRONG" "BLACK OR WHITE" ARE NOW OUTDATED

Dear Jeremy, the "right or wrong" (depending on which perspective one takes, banking, customer service, common sense or legal) "black or white" (we may have grey areas) concepts pioneered by the Newton School in Physics are now outdated. To resovle the problems encountered in Quantum Mechanics, the Principle of Uncertainty should be applied. So your world of "right or wrong" "black or white", being Newtonian, may not apply to the issue like what we are discussing. Please broaden your mind. The Principle of Uncertainty may also apply to DC operations, particularly on international banking practices.

Please ask a 100 metre world champion why his instructor asks him to practise ALSO weight lifting, swimming, dancing and soft exercises, which all seem irrelevant to 100 metre race. The answer is : Those "irrelevant" exercises provide him the break-through needed to break his old world record in terms of merely 1/10 of a second!

VIEWERS HERE HAVE ALREADY CASTED THEIR VOTES FOR APPROVAL

If our opinions were irrelevant, we should not have scored over thousand viewers here, the highest record so far in the DC Pro Discussion Forum. So viewers have already voted for their approval with their record number of visits.

Do bear in mind that we consultants do care for our rice and noodles and would not have the luxury to dwell on irrelevant issues.

Hatem, when I meet you in Jeddah at the end of this month, may I have the pleasure of meeting your noble cat who has joined our profession? I like cats.

http://www.tolee.com

[edited 2/2/02 8:18:22 PM]

T.O.,

Your views are noted.

Jeremy.

Jeremy,

in your posting of 14.9.2001 you appeared to favour the saying ‘Prostitutes and hair dressers have clients; banks have customers’.

My dictionary defines client as "a person, company, etc that seeks the advice of a professional man or woman", whereas customer is simply "a person who buys".

In my opinion, one of the main facets of a major bank is its resource of professional advice. Thus if you regard your bank as having customers rather than clients, this would seem to indicate that your bank does not offer such advice. I think that most banks would disagree with treating clients as customers only and I doubt that your bank fails to provide professional advice, but I would welcome comments from banks in general.

Laurence

From our understanding as a consultant giving training in quality customer services and trade finance, we consider there are differences in the terms “customer” and ”client”.

“CUSTOMER” FOR “SERVICES”

When we put highlight on customer services, we use the term “customer”, which means a “buyer” of goods and/or services. That is why in such a situation, we use “customer services” rather than “client services”.

“CLIENT” FOR “LEGAL RELATIONSHIP”

When we put highlight on legal (contractual) relationship between a supplier/provider and a receiver/purchaser of goods and/or service, we use the term “client”.

HOW THE COMMON LAW JUDGES USED THESE TWO WORDS

In Common Law the judicial decision is more relying on what is WRITTEN in the contract or in the legislations. In Civil law, judicial decision is more relying on what is the INTENTION of the parties when they sign the contract or the lawmakers when they draft the legislations. So let us see how Judges from the Common Law, who, by their training and experience, are experts in playing with words and they have to use words carefully, accurately and precisely by their professional standard.

In the two famous DC cases of recent years, Glencore and Santander, reported by the Lloyd’s Law Report from England, let us see how the Judges use these two terms “customer” and “client”.

IN THE GLENCORE CASE

In the Glencore International AG Bayerische Vereinsbank AG v Bank of China (QBCMF 95/1469/B) (1995) case, on page 4, the first column, the last paragraph, Sir Thomas Bingham MR used the term “CUSTOMER” and “BUYER” when he stressed on the buying and selling ACT/PROCESS. He stated:

“The banker is not concerned as to whether the documents for which the BUYER has stipulated serve any useful commercial purpose or as to why the CUSTOMER called for tender of a document of a particular description”

IN THE BANCO SANTANDER CASE

In the Banco Santander SA v Bayefern Limited and Ors, (Court of Appeal February 2000) case, on page 167, the second column, the second paragraph, Lord Justice Waller used the term “CLIENTS” when he stressed on the CONTRACTUAL RELATIONSHIP between the Discounting Bank (Banco Santander) and the Beneficiary (Bayfern). He stated:

“So Mr. Hapgood wished to take as his first point that the effect of the discounting by Santander was not an assignment, but a discharge of Santander’s obligation to Bayfern, and thus he argued his CLIENT’S claim was simply to reimbursement under Article 14 a i of the UCP. He submitted there was nothing in the authority granted to his CLIENTS to forbid early payment, and he submitted that provided his CLIENTS did not look for reimbursement until 27 November 1998, they were entitled to succeed”.

So Jeremy should be convinced that his interpretation of the terms “customer” and “client” (i.e. "Prostitutes and hair dressers have clients; banks have customers") based on laymen usage may not be accurate enough. We support the interpretation by Laurence.

HOW TO CHOOSE YOUR BANKER

Having said that, we also realise that both terms are used by bankers to describe their customers or their clients. Psychologically, those who use "customers" appear to be more service oriented and those who use "clients" appear to be more contractual oriented.

Some customers we have met in the workshops are already complaining to the global conglomerates: "Please don't treat us as a number in your computer. Please handle us as human beings!". So for those who are concerned about quality customer service, you can easily find your bankers by the language they use.

AN INSPIRING TV INTERVIEW

About fifteen years ago, I saw a TV documentary programme doing an interview with a housewife in a bank in Hong Kong. The interviewer asked the lady a sharp question: "We understand that the charges of this bank are higher than other banks. Then why do you still use its services?" The housewife replied with a smile: "It is simply because I find myself still a human being here! And I don't mind paying more just for that good feeling".

WHAT IS GOOD CUSTOMER SERVICE?

When I gave customer service workshops, I used shock therapy to make the new concepts staying longer with the trainees. I asked one young lady on the floor: "Elsie, please tell us what is good customer service?"

The lady answered readily: "Good customer service is to smile to your customers".

"Not exactly!" and the whole class opened their eyes with amazement.

Then I said slowly but firmly: "Good customer service is not to smile to your customers but to make your customers smile to you!"

OTHER PERSPECTIVES WELCOME

We would also like to hear the opinions from the English literature point of view by our friend Hatem in order to hear from broader perspectives.

If Hatem also favours our interpretation, then we are afraid that Laurence’s opinions should appear more accurate, although Jeremy has the perfect freedom to “disagree to agree”.

Other members are welcome to join this discussion. We need not have to be bound strictly by the query itself.

May we wish you all A Merry Christmas & A Happy New Year!

(It is now snowing outside and we may probably have a white Christmas in Toronto this year).

http://www.tolee.com

[edited 2/2/02 8:42:32 PM]

Customer Versus Client
Language Overview:

The Concise Oxford Dictionary Of Current English defines “customer” as: a person who buys goods or services from a shop or business. 2- a person one has to deal with. As for “client” it goes to say: a person using the service of lawyer, architect, social worker, or other professional person. 2. A customer

A “consumer” is defined as: a person who consumes, especially one who uses a product 2- a purchaser of goods. This word is generally connected with household goods of a relatively long useful life.

The banking industry uses all these words with different connotations. We have bank customer, customer service, customer-focused bank, and customer care. If we take a close notice of the use of the word we can draw a conclusion that “ customer “ is used when referring to the mass users of service with a loose sort of relationship. The banks have current customers, potential customers, and previous customers. We mean by loose relationship that although there are sort of a contract of deposit services and bank accounts, this relationship is not looked at in the same manner as when the contractual relationship on credit and trade finance is looked at. This is purely from a practical point of view.

A “ client “ is more specific to a certain type of business, which entails more professional advice, and contractual relationship for a certain specific “project”, “assignment” or the like. The word puts more weight on legal relationship stemming from the contractual obligations. Therefore, in banking, the Personal Financial Planning we talk about a client not a customer, because he is more inclined to receive a professional advice against a set of contracted terms and conditions.

A “ client “ is used also for business-to-business relationships i.e. between entities. T.O. Lee Consultants “ as an entity “ looks at The Institute Of Banking in Riyadh as a client not a customer, why? Because IOB contracted with T.O. Lee Consultants to provide a professional service on specific training solutions against stipulated terms and conditions.

In non-business organizations, the term Client Public is used to refer to direct consumers of the product i.e. the student body. The General Public includes parents, graduates, employees and the university senate.

This explanation, which is purely from the language point of view, tries to shed light on different usage of the words. It is of course in conjunction with the analysis of both Mr. Bacon and Mr. Lee.

My Personal Opinion

WOULD ANY BANKER, BANK ACCEPT TO BE RESTRICTED WITHIN THE DOMAIN OF THE DICTIONARY DEFINITION OF “CUSTOMER”?

A prudent banker would not look at himself expect as a professional who is trained to provide a professional advice otherwise a robot can do his job. This is particularly true in different facets of banking like credit, corporate, trade finance, treasury and investment, where expertise count and is considered the milestone in bank–customer relationship. There are numerous examples where the bank strives to provide a professional advice to its customer. Consider having received an export L/C, which you are required to advise to the beneficiary. Wouldn’t the bank provide an advise to the beneficiary regarding the terms and condition of the advised L/C, despite the stipulation of article (7a) unless the banker is fanatic and narrow minded towards UCP. Would any banker question the necessity of this professional advice? Although professional advise might not be binding on the customer, however it is an essential tool for customer retention.

THE BUSINESS OF BANKING IS NOT MERELY OPERATIONAL OR TRANSACTIONAL:

It is very important for bankers to understand and comprehend to root factors that condition customers’ relational behavior towards a particular bank or perhaps a banker. In this diverse yet very competitive environment, almost all the banks offer the same type of products and services, yet the benchmark remains in the personal touch, the smile, and the added value to that service. The customer is likely to defect due to mismanagement of his relationship with the service organization. On the other hand, he is likely to be retained if he “uses the same service next time”, or “uses additional services”. These observations of customers’ responses should be the cornerstone toward establishing a concept of customers’ cognitive management of their relationship with the bank. Only a professional, un-static banker can apprehend this.

Why? Because not any lay-banker is capable of creating customer-psychological attachment to the bank. This requires insight into customers’ behavior when they use services, and on the top of it, a professional and diverse knowledge in the business of banking. This concept of professional service is highly critical because if one is pre-opinionated with the shallow definition of customer with a “generic” relationship with the bank, then this will entails our submission to the fact that the relationship dynamics between customer and the bank will be determined absolutely by the customer. While if the concept of professional service and added value is well apprehended and has become part of our daily banking routine, then based on the psychological attachment, the bank will have more say in the customer choice of either staying or defecting. For, based on the customers’ own cognitive process and evaluation of the relationship the customers cannot afford a defection.

CONCLUSION

There is no harm to use the word customer, although English language allows the use of both words interchangeably, but with a perspective of a client meaning. That’s what is customer service is all about. Remember that in English language although two words seem to be of the same meaning there might be a shade meaning that one has to consider. This is the case of these two words and hence Mr. Bacon and Lee’s interpretation is correct. Further it should be noted that both words are of classification rather than of literal meaning; you start with customer in the broader sense of the word and at a certain point in time he becomes your client. When? That you have to decide dear banker.

Hatem,

Although you consider our relationship as client to principal, we see and treat your banking institute as a customer. Therefore we always try to please our customers by giving them a little more than they ever expect to keep them. By giving them more than they expect, we have automatically fulfilled our contractual obligations. Therefore we do not have to worry about the client part and our mindset is 100% focused on customer to alert us of the importanace of customer service.

This year is our 10th Anniversary. It is not easy to do business on such a narrow scope of services. In resolution of DC disputes, which form the more profitable part of our business, we are like a fire service station. If our customers have no fire, they won't call us. In this sense, as far as you can put out their fires efficiently, they will call you again next time they have fire, even if your customer service attitude is not good at all.

Would you not call the same fire station in your area even if in your last fire, the firemen treat you badly but they are successful in putting out the fire <within reasonable time>?

However, we do not take such attitude. Why? We would like to let our wise members to guess the reasons.

httpL://www.tolee.com

[edited 12/16/01 3:51:30 PM]

Dear T.O.

I am afraid you have misunderstood me. It doesn’t matter what word you would use customer or client what is important is the attitude behind the word. Of course I knew that your relationship with IOB is not just within the limited boundaries of the contract, it came because of the extra value that it offer to the banking community in Saudi Arabia. I used it as an example to show that the word client is used to reflect business-to-business relationship meaning (entity-to-entity relationship), if you like to see it as a customer relationship, then no harm, what matters in the end is the attitude, the approach and the result, which I believe is still giving water to this relationship.

Please take note that this example was in the first portion of my post before the title my personal opinion, therefore it reflects the correct use of the language itself, although stepping from your comments which focus on the added value, positive attitude and care, I still see that “client” reflects better those qualities than the word “customer”. But I tell you, that “customer” in practice has replaced its clothes with the clothes of the “client”

Firefighting is a professional job for which people come and seek help when the need arise, therefore the word “client” would be more applicable for approaching you for this professional firefight. Secondly I did not suggest directly or indirectly that the word client does entail that the relationship is over upon the termination of the contract, therefore I do not see that using the word client is a narrow approach. Any contract will be terminated or expire at a certain point in time, however what matters is the continuity of the relationship. Hence you should have noticed my emphasis on the psychological attachment between the “customer” or “client” and the service provider.

I hope you got my point now.

Hatem

Your points are understood and agreed.

T. O.

[edited 2/2/02 8:06:45 PM]

I can see your interesting discussion has been silent for some time. However, Jeremy Smith stirred the soup a bit with an article „Alternatives when giving notice of refusal“ in the latest issue of DC Insight. So I would like to come with some comments, too, if possible.

I was a bit surprised to read in the aforementioned article that „First, and most important, I cannot see that this (the right to find another buyer) is of any concern of the issuing bank; it is the applicant that is legally its principal (or „customer“), not the beneficiary.“ I do not personally think this is the correct approach, but I do not think, either, this is the core of the discussed problem. So, why not go back to the source?

Jeremy, undoubtedly, addresses a topic that is of everyday concern of all the documentary business practicioners who happen to think about their business. However, as it comes from my practice, vast majority of the banks do not think the way the Banking Commission recommends. I have checked hundreds of discrepant sets of documents and received hundreds refusal advices with „documents held at your disposal“ clause. However, I have never been asked by the bank that held documents at my (our) disposal to confirm that we as the presenter agree that documents be released to the applicant against bank’s fullfilment of its obligations under the Credit. Moreover, after having adopted the „right approach“ in our bank, we faced some misunderstanding on the part of remitting banks as they did not react quickly enough (i. e. within days rather than weeks) to our inquiries regarding release of documents to the applicant. And these are the facts, I quess, of Jeremy’s concern.

So I think Jeremy starts with very correct assumptions but ends up with a solution which may not seem correct to some others including myself. Why I do not see his suggestion be a correct approach?

I cannot see in the above discussion any remark on a point that I find very substantial. We must return here to the very contract between the parties, which lies under the Credit transaction. You may argue that as per Article 3 of UCP 500 such a contract is of no concern to the bank, but now we talk about the situation prior to the issuance of the Credit. Suppose a sales contract which stipulates that a Documentary Credit be a vehicle for payment for the goods and that such Credit be governed by the UCP 500. I have seen lots of such contracts (or pro-formas and similar documents) but none of them have expressly stipulated that Article 14(d)(ii) or its effects be excluded. That is the thing to start with. Say that the issuing bank need not know that. But, in absence of any explicit requirement in the applicant’s DC application, do you think that the issuing bank by itself is the right person to impose such a condition? Please, bear on mind that the parties have agreed upon applicantion of UCP in full! You may be right saying that if the issuing bank issues a credit containing exclusion of Article 14(d)(ii) (the „alternative approach“) and beneficiary presents documents, the bene has in this manner agreed with an amendment of the underlying contract. But do you think that the issuing bank is the person to amend contracts it is not party to? At least I do not. Neither do I think that the issuing bank should be the person to force the applicant to include such exclusion in its DC application unless the exclusion forms part of the underlying contract itself. Therefore I presonally would be against the practice to include such exclusion in any pre-printed manner (like in „general terms and conditions“ or similar) in the bank’s DC application standard form. But still I see a space here for the issuing bank to advice their customers p r i o r to signing their contract to incorporate such exclusion in it.

But what if the Credit has already been issued and the „alternative approach“ has not been adopted? Still I see a solution, which might, however, bee a bit demanding on the part of beneficiaries’ bank, at least.
Let me go back a bit. Say there is a „non-alternative“ credit and documents are presented to a bank of beneficiaries’ choice. Even in case that this bank does not act as a nominated bank, it would, most probably, check the documents and advise beneficiaries of any discrepancies therein. Beneficiaries will then assess whether they wish the documents to be sent to the issuing bank „for approval“ or rather to retain the documents and do whatever they opt to do with them. They might have already sent the goods to the disposal of the applicants, the goods might be tailor-made or otherwise specific (note our clients do not always deal in commodities or on otherwise volatile markets!), they might believe that applicant would waive discrepancies or for whatever other reason they might wish that documents be sent „for approval“. Do you see any reason why they should not explicitly authorise the issuing bank to release the discrepant documents to the applicant, without their (beneficiaries‘) prior agreement being sought even after having sent a refusal notice, on condition that this release takes place against issuing bank’s full performance under the Credit? Bear on mind that if they really wish that the documents be held at their unlimited disposal if found discrepant with the intention to, say, look for an alternative buyer, they will simply not give the remitting bank such an authorisation.

So if the beneficiaries‘ bank has been granted such authorisation, it would then be entitled (in case it is the nominated bank and it agrees to perform under the Credit despite discrepancies) or maybe obliged (if it acts solely as an non-performing agent) to accept such authorisation and inform the issuing bank accordingly. The issuing bank then may, if documents found discrepant and the applicant does not seem to grant a waiver in due time, send a refusal notice while not holding the documents at unlimited disposal of the presenter but rather stating something to that effect that the issuing bank approaches the applicant and waits whether the documents will be accepted despite discrepancies. Notwithstanding the above stated, the presenter would be anyway entitled to request return of the documents up to the time of issuing bank’s performance under the credit.

I think this „another alternative“ may overcome possible drawbacks of Jeremy’s „alternative approach“, but still it has its own disadvantages. Mainly, the issuing bank does not play an active role here but merely waits whether it receives appropriate instruction. But the issuing bank may so request the presenter while issuing the Credit (say within the „instructions to the paying/accepting/negotiating bank“). And, if this approach sounds reasonable to the banking community, the Banking Commission may advocate for it and educate the bankers in order to adopt such practice whenever appropriate.

Sorry for the rather lengthy contribution. I am eager to read your comments!

Radek Dobas