Local Banks can Learn Much From Dogs!

[dropcap]B[/dropcap]anks in Saint Lucia continue to increase fees and charges for services while they remain complacent. Are the banks counting on continued silence from customers? Last week I had reason to visit one bank’s ATM and saw the following notice, addressed to “our valued clients”, signaling adjustments to fees associated with certain products and services effective 11 May 2017.
No rationale for the increases was provided to customers, only a list of the impacted services: automatic banking machine withdrawal fees, point of sale transaction fees, cheque-related services, maintenance services, lending services, deposit services, personal chequing and personal savings accounts, business banking, chequing and business banking and business banking interest accounts, personal chequing plus accounts, personal savings plus accounts.

Interesting, I thought. If I were this valuable I would at least expect such an important missive regarding fee increases to be addressed to me via email or post. Then there is the usual jargon: ‘We’re transparent about communicating these changes to our customers and we encourage customers to come and talk to us. We can guide you in selecting the best options that match your needs.’ Are banks hedging a bet that customers will continue to maintain a sluggish attitude because of the immense cost of moving accounts elsewhere?

The notable decrease in banking hall (physical) space to cause discomfort and drive clients to use the ATM with no regard to culture, then charge clients for using the service at the ATM is unacceptable. Charges levied by banks include but are not limited to:

• Increased fees for issuing cheques

• Increase in the minimum balance required to avoid charges on accounts

• Increased transaction fees for use of bank cards

• Minimum payment of interest on savings accounts

• Increased fees for negotiating loans

• Increased fees for maintenance of bank accounts

• Increased fees for point of sale transactions

• Increased fees for the use of the Automatic Teller Machine (ATM)

• Increased fees for authorized and unauthorized overdrafts

• Increased fees for late loan payments

Banks tacitly reduce services while increasing fees and charges. Is this fair banking practice? Does this represent a new optimal level of misuse of power?

In the face of any crisis, such as the banking crisis of 2008, radical change can be expected. What about strategic changes representing a model driven by innovation, acknowledging creativity?

The Eastern Caribbean Central Bank continues to highlight its concerns regarding the increase in bank fees and charges across the Eastern Caribbean. However, it remains powerless as it has no authority to regulate bank fees and charges. In 2015 the ECCB raised the issue of bank fees with the Monetary Council which comprises the Eastern Caribbean’s Ministers of Finance. One of the recommendations was to create a Working Group to review commercial banks’ fees and charges, and to report findings and recommendations to the said Council.

To date, banks continue to blatantly increase fees as there is currently no regulation in place. The Government of Saint Lucia must put forward a bill in parliament to create a working committee that has the autonomy and authority to review, regulate and approve amendment to bank fees. It is time for the citizens of Saint Lucia to take demonstrative action to impede this uncontrolled action by the banks that is costing customers hundreds of dollars through the overcharging of fees and charges.

Banks must also understand that they have a social obligation to their clientele, which includes serving the interest of the society in which they operate. The irony is that all banks have in place ethics policies. But what does this represent? Have ethics become one-sided? Or have they simply lost the health of their soul?

I can almost hear the banks: “We must keep afloat.” But does this justify the blatant increase in bank charges and fees? There is no question that banks are struggling to hold on to or expand a fair share of their clients’ wallets. It is said that a dog can change its bark depending on what it is trying to tell you. Banks can learn from dogs. Start by reducing the quantity of information requested for loans, and amend the inflexible business models and constructs. Non-traditional financial entities have been able to claim a fair share of banks’ clientele simply because they are not as risk-averse and are more innovative and accommodative to their clients by providing new competitive models.

What have banks communicated in recent times that have excited their customers? Absolutely nothing! So the question remains: why have banks demonstrated no innovation? Is it that they lack talent? Are they clueless? Are they too risk-averse? Are they afraid? Or is it just easier to increase revenue and profitability and appease shareholders by increasing bank fees?

The Banking Sectors in some countries have recognized the importance of digital sales and have invested in applications to facilitate ease of doing business, allowing customers to conduct a wide range of business on the go. This is a sure way to increase customer base and retain existing customers. Banks need to disrupt and transform the customers’ experience in a mutually beneficial manner as opposed to increasing their margins, through hidden, sneaky and blatant charges and fees.

The time to retaliate is now!

By Ingrid Floissac