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Small man getting smaller

Sunday, April 22, 2018

Ours, like the rest of the world, is an ageing population, so there are many who recall the good old days when we, as bank depositors, received five per cent interest on our savings accounts and ten per cent on our fixed deposits. Those were the days when retirees, having worked and saved their entire adult lives, could live off the interest on their fixed deposits and still leave a lump sum to their families when they passed.

Then in the 1980s and 1990s, we were fed the line that we could become shareholders in our banks and receive dividends. That seemed like a wonderful shift towards making the small man part of big business, even with a say.

We gobbled up those few shares that we were allowed and felt part of a new way of doing things. Behind the scenes, however, the majority of the shares were still held by traditional wealth.

What followed from 1990 onwards was a rapid decline in the interest paid to depositors, because banks could then argue that they were working for their investors. Deposits were used to build the profits of the banks and traditional wealth continued to rake it up.

In those good old days, interest was calculated after the cost of doing business was subtracted. Now, depositors are not paid interest of any consequence and are still charged for the cost of doing business. The economists of today are doing a wonderful snow job, with all the models and technology available, with baffling explanations of why the business models of today are superior to those of yesteryear; but for some reason, the small man is becoming smaller and traditional wealth continues to get larger.

Helpful banks no longer need personal relationships with their customers; they would rather not even see customers in the bank.

On cue, enter technology and the branches are being reduced and the technology is taking the place of in-person bank transactions: digital banking. It does have its advantages, but with digital banking has come hacking and skimming. Nowadays, we can get a call from our bank advising that the credit card has been compromised and needs to be cancelled.

A list of the recent transactions on record is read out to compare with your known transactions and although there are no untoward debits, the card is on a list of compromised cards being used in California.

Of course, you want details because you try not to be casual with your card, even employing anti-skimming measures. It is still being investigated and no details are available, at this time; in tone and with attitude to discourage further questions. If you don’t take the hint, then robot mode takes over cycling through the opening message, with sentences shuffled. When details are available, will you be advised? That’s when you discover that your bank’s concern is not with you, their customer, depositor and part of the source of their profits, it is with the merchant where the card was compromised; he should not be embarrassed.

It is with traditional wealth. What else is new? Everything is being rebranded, as if calling a shovel a spade somehow changes it. Of course, when big business is involved, especially banks, Consumer Affairs is totally silent. There are some fussing about reparations. Those who are loudest in denouncing past injustice should stop trying to look busy doing nothing, become relevant and shift their focus!



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