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CYPRUS EDITORIAL: Where are the banks headed?

04 August, 2018 | Posted By: Financial Mirror

News reports and public reaction to rising bank charges, supposedly in an effort to drive more customers to an ebanking culture, is the final nail in the coffin of what used to be people-friendly financial institutions.


With the Co-operative now out of the picture, probably the last bank to maintain some level of personal communication with the general public, especially in rural areas, local banks have simply become cold financial service providers, differing from each other in almost nothing, with no sense of loyalty and no sense of community understanding.

Even the social activities of the banks, under their “good corporate governance” responsibilities, are no longer convincing customers of their intentions, despite supporting community-based projects.

The reason is quite simple. The government has been projecting an image of growth and recovery, when the reality is still far from it. Admission of this truth would jeopardise the sovereign ratings of the economy and by extension of the banks themselves, thus preventing the state (and the banks) from returning to the markets where they could lend and borrow on a much healthier basis.

But until we get there, local banks continue to rely on net fee and commission income to boost their revenues, hampered by a revived growth in payroll, hurting profits. The only other positive contributor is the continued sale of assets, but for how much longer?

Banks are clearly not generating new business and need to find alternative ways to pay for expenses, hence the unfriendly charges, that started a while back with a 50c fee for the printing of statements at the counter.

If banks continue to maintain an extraordinarily large workforce, with wages determined by the bullying tactics of the trade unions, it is no wonder that ebanking was never popular or was not promoted. But with Hellenic now inheriting hundreds of ex-Co-op staff, the question is, what will these people do, if the banks claim to be migrating to online services?

Instead of introducing the stupid system of a long list of prohibitive charges and fees, the banks should have encouraged and incentivised those who do use online services with discounts, service privileges and faster responses. All they are doing now is hurting the large masse of customers of a certain age, especially pensioners, who liked to go to the bank and talk to the teller for information.

Bank of Cyprus rescue-investor Wilbur Ross, had told our paper in comments some four years ago that he would like to see the bank diversifying further into new areas of hydrocarbon and renewable energy industries, investing further in tourism and adopting electronic banking services.

It’s taken the bank four years to adopt one of the three channels. At this pace, it will no longer have any customers left when it introduces new services.