ProBankingTips

Some national surveys (e.g. FSA figures) prove a growth of complaints about customer service of banks over the last years. Complaints to get an appropriate attention are one way. Alternative could customers consider to change their bank. May be such surveys illustrate that many banks neglect the relevance of relationship banking. And may be we see a global trend to more anonymity through automation of services. But which financial institution is the best today? A little check list could help to organize your thoughts:

As much banking as you need
Otherwise you run into danger to subsidize unused business divisions. Further you increase the possibility that your bank deals in high risks. Are you sure that you really need a small retail bank with a very large and high risky investment department? For special products like home loans or investments you should ask an expert.

Which financial products are essential for you?
Each product costs money. Free offers are paid by hidden costs – e.g. lower interest, profit margin. Writing a list of your preferred requirements should help to identify your financial products.

Consulting a financial adviser
Sure a financial adviser could help to find a right financial institution for you. But he should be independent. That means you pay for him directly not via hidden fees for any products.

Recommendations
Recommendations from friends or any customers are very useful. Nobody else is able to talk open about strengths and weaknesses of banking service or products. Look at the internet but avoid testimonials published at homepages of banks. Banks have a tendency to publish positive statements only.

Direct banking or branch banking
Direct banking is a cheap option for experienced clients. Though I see a combination of financial centers with direct banking service very critical. Mostly such institutions load their work onto it’s clients but charge large fees. However well-heeled clients use private banking.

Interest and Fees
Many people compare interest and fees but forget terms and conditions and service. Most finance comparison sites are a good source to compare figures. Though they tell us nothing about service quality not to mention customer ratings.

Are you satisfied with your bank? Please add briefly how did you found it.

Graphic: © Barbara Eckholdt / PIXELIO

In the Financial Times on July 30, 2009: Josef Ackermann – CEO of Deutsche Bank argues for protection of larger banks. The background: Deutsche Bank is partially an investment bank with small retail banking, big operating loss in the last quarter and Ackermann’s target is still 25 percent return on equity, impossible with classic banking. What does it mean for markets?

In the United States we see nearly each week a bankruptcy of a smaller bank. It seems, Ackermann is right. But was Lehman Brothers a small bank? Little or big has nothing to do whether we loose a bank or not. The key is its equity to prevent declining business.

Do we really need large banks?
Most people need an account, investment products, credit card, some credits for car and travel or mortgages. That’s it! Do we need in our daily life large investment banks with 25 percent return on equity?

How is it with companies?
Sure large banks are able to manage a lot of money, but a network of banks too. If a company is looking for a big deal, then it doesn’t matter whether the money comes from one big bank or five smaller banks. The single different will be, large banks get all profit on its own.

Bigger banks and high risk for economy and customers
How we learnt from Lehman are big banks a very high risk for markets. Many other financial institutes and companies are economically dependent on it. Additional, if large banks operating in retail business many people will lose their money too if such institute goes down the tube.

Finally, I can’t see the economical sense for big banks.

Photo: swisscan