N Touch
Wednesday 16 October 2019
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Commentary

Bogged-down banking

I know no more about banking than the average person, but it seems to me that banks are losing their way. It may not be unique to TT but it is increasingly frustrating to be a simple bank customer in this country.

I am sure to be not alone in my total dismay of the way in which our biggest banks have forgotten about good customer service while they deal with the burdens of regulation. And banks are not the only culprits. Most public institutions err in allowing clients to fall to the bottom of their list of priorities. For example, the National Insurance Board (NIB) changes its systems, introduces digital payment services and new rules and does not write to all its customers to inform them. The NIB has details of each employer and knows very well how to find us when they want to do checks, so there is no excuse. Such organisations have a duty not to waste our precious time. The NIB might feel no compulsion to be considerate, since they operate like tax collectors, but the banks are in no position of authority; rather, we employ them.

It is an open secret that this is a country of deeply dishonest citizens, that corruption is well entrenched and that it has led to international embarrassment. Now, as banks and government rush to comply with international financial standards, Peter must pay for Paul. Stress is being felt at all levels of business, in all sectors. Banks have not been open with us and the private individual is the furthest behind in knowing what is going on. Like the NIB, we turn up to do a usual transaction and get thwarted. The examples of how banks take us for granted are myriad: one very big bank has decided not to allow online payment to payees in another bank. You might ask, what on earth is online banking for, then?

One consequence is that our standing-order payments are not being paid digitally either. Instead, the bank writes a cheque to our payee on our behalf and posts it, not at once, but when they have a batch. Many people are complaining of receiving payments months later, if at all.

Why not tell us? We could issue a cheque, personally deliver it to our payee, and avoid much inconvenience.

Another big bank suddenly decided that cheques cannot be exchanged for cash. All cheques must be deposited into bank accounts and payees must wait four days for clearance. So someone turns up as usual, expecting to get cash, and is sent away empty-handed. Long queues, hours of waiting time, without water or toilet facilities, are the norm.

Banks are not enabling. Their interest rates on savings are very low but loan rates are comparatively high, thereby handicapping single entrepreneurs and potential private investors who want to develop businesses. Then they stop us paying all our bills online, whilst simultaneously abandoning effective paper transactions.

In this brave new world people are turning individual ideas into business, big mass-market ideas. Our banks should pay attention and have some care for small businesses and individuals in a more personal way.

Banks make a lot of money from us, so they know the customer is important, and they may well be trying to wean us off paper transactions because they know digital is the future, but they are not investing in us. Right now, they are investing in regulation and have lost their sense of priority and customer focus. That cannot be good business. The present banking system is not working for most of us and certainly not for the poorest, and the banks are endangering their own futures by not concentrating on fixing that.

Two weeks ago I wrote in this column about Facebook’s plan to introduce a new cryptocurrency, Libra, to “allow speedy person-to-person transactions at little or no cost by exchanging national currencies for Libra via Messenger and WhatsApp. The currency would closely track local exchange rates and be backed by a collection of low-volatility assets such as bank deposits and short-term government securities in currencies from stable, reputable central banks.”

That sounds absurdly ambitious, but it is no more preposterous than any element of the digital revolution that we once considered unfathomable. It is a genie that cannot be put back into the bottle, so how are the big TT banks going to prepare for it and what are they going to do with us, their customers, in the meantime?

Person-to-person lending threatens conventional banking, as it democratises banking, which is heavily regulated. It cannot be easy to run a bank when the sector has still bigger challenges than just regulation – banks have got bogged down just when they need to get smart.

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