Bank bashing – What goes around comes around

What is it with banks? I have written about this before – I have even written to individual banks and to the Secretary of the Australian Bankers Association about the matter. I have never received a satisfactory answer.

Why do many people take a delight in “bashing” banks? And why do the banks, seemingly, do nothing about it?

People “bash” banks because they have a sense that they are being exploited – for no good reason. Banks (in general) forget that they are in the service industry – they ‘serve’ people; they are not in business just to satisfy their shareholders.

I fully understand that banks need to make a profit – to pay wages and dividends and all the other things that businesses are in business to do. But I really believe that banks are in a different category from “normal” businesses – because in every sense of the word they “serve” people – and they are supposed to look after the money of the people they serve.

What irritates many people is the fact that banks keep raising fees to maintain their profits – in spite of the fact that, in Australia at least, the official Reserve Bank Cash Rate is falling. Banks say they need to keep being highly profitable to attract investors.

But banks need to look at money from a different point of view. Money is a token; something used in exchange for goods and “stuff”. And who are the investors? The investors are individuals just like you and I and also “institutional” investors, who are more often than not superannuation (pension) funds and other similar type organisations. Now these institutions receive increasing dividends from the banks who charge these higher fees. But who pays these higher fees? The individuals like you and I who, trustingly, place our savings with the institutions who invest in the banks to get higher dividends to pay their depositors increasing yields for their pensions!

Like a dog chasing its own tail. It is all just a “round robin” – what goes around comes around. If banks provided a service by looking after the interests of their individual depositors, not just servicing the institutional investors they might be less reviled and be respected as they used to be many years ago.

Take a big gripe of mine – trying to transfer money from my bank to someone else’s bank. This normally takes two working days. Some months ago I wanted to transfer $500 to someone in Melbourne (a distance of 3456km – about 2100 miles – from Perth). I “transferred” it at about 6.30pm on a Friday evening. The Melbourne bank received the funds on the following Tuesday – four days later! I complained but got all sorts of excuses from my bank – none were satisfactory. They had no answer to the fact that, feasibly, I could withdraw cash from an ATM at 6.30pm on Friday, climb in my car and drive the 3400 odd km to Melbourne and arrive before the (transferred) money on Tuesday! I would be driving at about 100km per hour whereas an electronic transfer would presumably travel along optic fibre cables at close to the speed of light with bank main frame computers down loading at speeds measured in the gigabytes per second category.

This is why I and many others get irritated with banks. They serve themselves with no reasonable explanation to the public they are supposed to serve. Most people (including myself) have limited contact with banks – the enquiries counter, a teller or a loans officer at the end of a phone. Most of us are unaware of the finer points of “banking” and the financial machinations that go on behind the façade. But then the banks never offer any explanation on their actions – just a bald statement that raising finance now costs the banks more therefore mortgages and loans will cost more.

They have yet to learn that if they treat the public with apparent contempt, surprise, surprise, they will be treated the same way. What goes around comes around.