When Banks Put ‘Products Sold’ on the Scorecard, Where Do Customers’ Interests Rank?

Geoffrey Chen

When Numbers Start Making Decisions · Season Two, “When the Measure Becomes the Target” · Article 3

1. How an act of “help” becomes a sale

A customer may enter a bank only to update an address, open a term deposit or ask about a home loan. The employee at the counter can see more than a service request. Under performance systems once widespread in retail banking, the encounter could also be a referral opportunity: was insurance sold, a credit card added, another product cross-sold with the mortgage, and how far were the individual and the branch from their targets?

Australia’s 2017 Retail Banking Remuneration Review found that individual financial targets were commonly used for employees in sales roles at the participating banks. Cross-sales and branch targets were also common. Some rewards included accelerators, under which each sale above the target generated a higher incentive. A number does not directly order an employee to mislead a customer, but it tells the employee with unusual clarity what the organisation will see, compare and reward. Australian Banking Association: “Remuneration Review Report 2017”

The banking Royal Commission later brought many forms of misconduct within a common structure. Its final report concluded that in many instances providing service to customers had become secondary while selling became paramount. Reward systems measured sales and profit without a corresponding measurement of whether people obeyed the law and proper standards. Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry: Final Report, Volume 1

This is not merely a moral story about greedy employees. The more useful question is how an ordinary interaction changes when a bank writes particular numbers into its performance system. A role described as helping customers can be structurally redefined as a sales role. The customer believes the employee is deciding what suits their needs, while the employee is also being asked to deliver what the organisation needs to sell.

2. What does the sales number measure, and what does it omit?

Revenue, product counts and referral conversion are highly measurable. Once a transaction closes, the system records the product, amount, employee and branch. By contrast, whether the customer understood the terms, whether the product remains suitable five years later and whether the employee exercised restraint under a conflict of interest require later observation, sampling and professional judgement.

The sales measure accurately records a transaction completed by the bank. It does not measure value received by the customer. A new credit card may be useful or may create unnecessary debt. Insurance may cover a genuine risk or duplicate protection the customer already has. The product count cannot distinguish those outcomes.

The omissions begin even before the transaction. Advising a customer not to borrow more, spending half an hour explaining risk, solving a problem for a vulnerable person, or declining to sell an unsuitable product may be among the actions most aligned with customer interests. None necessarily increases the sales count. If the scorecard mainly rewards recorded transactions, care and restraint become invisible within organisational knowledge.

This is a classic problem of delegated knowledge. A board cannot observe every frontline conversation, so a large institution must learn about performance through proxies. When the bank delegates its knowledge of employees’ work to sales metrics, however, it also permits the easiest-to-record variable to define what good work means.

3. A target is an environment for action, not an opinion

It is tempting to reply that sales are only one measure and that professionals remain free to do the right thing. That can be formally true while understating the structural power of a performance system.

Targets affect bonuses, promotion, rostering, conversations with managers, comparison with peers and records of underperformance. Even when a number does not directly determine dismissal, employees adjust their attention if they know a manager reviews the dashboard every day. Each customer interaction acquires two possible values: solving the person’s problem and adding to the score.

Adaptation can occur by degrees. An employee may become more active in identifying genuine needs, which is a positive effect. They may instead concentrate time on people who are easy to convert while neglecting complex service work with no sales opportunity. Under greater pressure, advice can be presented as help, disadvantages can receive less explanation, and the question “is this suitable?” can become “can I complete this transaction?”

The greatest risk is not always a conscious decision to break the law. It is the emergence of a normalising vocabulary. Referrals are described as service; cross-selling becomes deepening a relationship; meeting target embodies a positive culture. The number needs neither to understand the customer nor to believe that a product is appropriate. It simply produces a stable ranking. An employee can then be judged high-performing without anybody holding the belief that their transactions served the customers involved.

4. Does removing sales targets solve the problem?

Banks made substantial changes to frontline remuneration after the Royal Commission and the Sedgwick Review. A 2021 implementation assessment found that direct links between individual incentives and sales or cross-sales targets had been greatly reduced. Sales accelerators and financial gateways had disappeared, and most banks had moved towards a broader whole-of-role assessment including customer, risk, behaviour and values. Sedgwick: “Retail Banking Remuneration Review—Final Report 2021”

That was real reform. Historical evidence should not be used to pretend that every bank in 2026 still follows a 2017 model. Yet the implementation review also identified the new model’s difficulties. A complex overall score requires management judgement, and a manager can re-emphasise the sales results that remain easy to observe. Some home-lending roles retained stronger sales links. Employees did not always understand what actually determined their reward.

Replacing one hazardous number with ten numbers does not automatically make a bank customer-centred. Satisfaction can be prompted. A complaint rate can fall because customers stop trying to complain. Completing compliance training does not show that conduct changed. If non-financial measures decorate a formal scorecard while sales dominate daily meetings, the change in stated weight will not fully change the operative structure.

Eliminating measurement altogether is not an answer either. Banks need to know whether employees complete basic work, customers wait too long, errors cluster and complaints recur. The choice is not numbers or judgement. It concerns the role of each number and who can examine conflicts among them.

5. How current rules redistribute weight

APRA’s Prudential Standard CPS 511 Remuneration took effect in stages from 2024. It requires regulated entities to account for both financial and non-financial risks, and to align remuneration outcomes with performance and risk. Material misconduct, a significant failure in risk management or a material adverse outcome for customers must be capable of producing downward adjustment of variable remuneration. The standard also requires public disclosure of key arrangements. APRA: “CPS 511 Remuneration”

The important idea is not that sales and profit have ceased to matter. A bank must remain commercially viable. It is that one financial measure can concentrate behaviour too strongly, so customer outcomes, complaints, misconduct and audit findings must have material weight.

A balanced scorecard can nevertheless become a new black box. Employees receive a final assessment without seeing how a manager traded sales against service and risk. Customers cannot tell whether their particular mis-sale was recognised from an institution-wide satisfaction result. A better system preserves conflicting signals rather than compressing them into an unexplained total. If sales rise while complaints and early product cancellations rise, the board should confront those directions instead of allowing a weighted average to make the conflict disappear.

6. How can we tell whether sales growth improved service?

If a bank says that its performance system advances customers’ interests, it should be able to test at least the following evidence:

  • whether products match needs expressed by customers and sampled records can reconstruct the reason for the recommendation;
  • whether products remain after the cooling-off period or are quickly cancelled, fall into arrears or generate complaints;
  • whether sales concentrate among older people, people with language barriers, those in financial difficulty or other customers more vulnerable to pressure;
  • whether an employee can refuse a sale on suitability grounds without suffering in performance assessment;
  • whether reward depends on durable customer outcomes rather than the instant of contracting;
  • whether complaints, remediation, breaches and overturned internal decisions actually reduce rewards instead of being absorbed by overall profit; and
  • whether staff can safely report target pressure and managerial hints.

These checks force the sales measure to face counterfactual questions. Would this customer have bought the product without performance pressure? If the product later causes harm, can the original “success” be revised? An indicator that can only accumulate positive transactions and cannot absorb later evidence of error will systematically overstate its own value.

Conclusion: banks may measure sales, but must not define service through sales

Sales are a real part of banking and should be recorded. The problem begins when a sales count moves from operating information to the dominant judgement of employee value and customer service. The Royal Commission did not show that numbers caused every act of misconduct. It showed how incentives, information asymmetry and conflicts of interest formed a structure in which the outcome most visible to the bank displaced the obligation it owed the customer.

My judgement is that frontline employees’ individual remuneration should not be directly or mainly determined by product volume, cross-selling or revenue. Any financial measure must be constrained by durable customer outcomes, risk, complaints and compliance, and those constraints must not be averaged away. Declining an unsuitable sale should become recognisable good performance rather than empty space on the scorecard.

Numbers can tell a bank what it sold. They cannot independently decide whether it ought to have sold it. That second question requires someone to understand the customer’s situation, give reasons and make a commitment when sales and duty conflict. A bank can delegate record-keeping to a system. It cannot delegate that responsibility to a scorecard.

Principal sources

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