MICHAEL WOLSEY: We can’t bank on the banks – we need an alternative
KBC bank is pushing ahead with its plan to leave the Irish market and the few banks left continue to cut back on branch offices and cash points.
The wheel is turning. Over the past 50 years, banks achieved such a firm grip on society that many people thought it would be impossible to live without them.
But recently, because it suits their business model, banks have loosened their grip. We seem to be heading back to the position where a few institutions will provide the limited services most of us need to manage our money, and others will handle mortgages, insurance and loans for business.
And that will be no bad thing. We used to function without main street banks – or, at least, with only basic services from them – and we got along just fine..
I first opened a bank account shortly after my marriage almost 50 years ago. I had been working on a newspaper for five years at that point, and my wife, having gone through university, was starting a career as a secondary school teacher.
So, while our chances of making the rich list were not great, we were far from being a penniless couple. Yet neither of us had seen any need for a bank account.
Like almost everyone with a job back then, we were paid weekly in cash. My wife had a Post Office savings account that somebody had opened for her when she was a schoolgirl. On the rare weeks when we managed to save some money, we put it there.
Dympna and I opened a bank account because our employers stopped paying wages in cash. Credit transfer through a bank was simpler and safer, they assured us; it made sound sense.
And indeed it did make sense for employers, and for banks, who gained a huge number of customers. And it made sense for both of them when weekly payments were moved to a monthly basis.
hat move made money-management a bit harder for Dympna and me. But it wasn’t a big deal. The bank provided us with a cheque book and the service was free. Well, free until we actually used any of the cheques. We had to pay for that. Then they started charging for transactions made over the counter – for withdrawing our own money that we had never asked them to mind in the first place.
But don’t worry, said the ever-helpful banks, there will be no charge if you do the work yourself and draw the money from an ATM.
Some banks now charge for ATM services. If you can find an ATM – banks are cutting back on them, forcing us to use online credit transfers and debit cards. And they charge for those too. They have even started to charge just for holding our money.
Banks can afford to act this way because they don’t really care about ordinary customers any more. They make their profit from mortgages, insurance and loans to business.
Shortly after we opened our first joint bank account, my wife and I went looking for a mortgage. We didn’t go to a bank; they didn’t do home loans. We went to a building society. There were half a dozen of them in Ireland. offering slightly different terms, conditions and interest rates.
One of the conditions was that we had to have insurance. And, again, we didn’t go to a bank. We went to a broker who could show us the policies on offer from a wide range of companies.
This shopping around was quite time consuming and the services were certainly not free, since the various agents charged commission on top of whatever interest rates or insurance costs applied.
But at least we had a choice and we weren’t in hock to a bank.
Nowadays banks have monopolised these services, which are the only ones they have any interest in providing to ordinary customers . They don’t want to manage our money so we need to find someone who does.
In Ireland we have the bones of an alternative system for money management through the credit unions and our excellent network of post offices. They could operate as stand-alone banks or in conjunction with online bankers such as Avant Money or Revolut, offering both virtual banking and real premises.
I don’t want to see the Government involved in banking, but it would be a good idea if the Department of Finance were to set up a coordinating body to explore how these institutions could best provide the services that no longer interest banks.
These services would not and should not be free. But we would be willing customers and, as such, could demand to be treated with a little respect.
It’s a long time since we have had that from the banks.