Explores the relevance (practice) of strategic HR (employee development) to the financial service arena and the extent to which it may be possible to use it as a means of retaining external customers. There is at present little understanding of the way employee development is practised within specific industries and particularly its impact on instilling a service and customer orientation aimed at achieving external customer retention. Presents some of the findings of an exploratory study carried out in the UK retail bank sector with the aim of shedding light onto the principles and practice of employee development within business units at a branch level. The study produced some interesting findings structured in the form of relationships. Two of the six emergent relationships form the subject matter of this paper. The study revealed that the strong competition and homogeneity that characterize the industry have put pressure on banks to raise their competitiveness by investing in their personnel. The quality of staff and its impact on the quality of customer service are vital in gaining a competitive advantage in the bank industry. Employee development is used to motivate staff to become truly dedicated to delivering high service quality in order to achieve customer satisfaction and retention.