By NEIL HARTNELL
Tribune Business Editor
The Clearing Banks Association’s (CBA) chairman has conceded there is “room for improvement” in the industry’s relationship with its customers, adding that it needs to show Bahamians that they receive “value for money”.
Ian Jennings, who is also Commonwealth Bank’s president, told Tribune Business that commercial banks were “challenged” by consumer misperceptions, especially over the level of bank fee charges.
Speaking after he met Jerome Gomez, the Consumer Protection Commission’s (CPC) chairman, last Friday to discusss the findings of the organisation’s consumer survey on bank fees, Mr Jennings acknowledged that the sector needed to “better educate” consumers on how the industry operates.
The Commission’s survey found that 72.7 per cent of Bahamians surveyed felt the bank fees/charges associated with their accounts were inappropriate for the services received, while 82.6 per cent of respondents believed there were too many fees.
Mr Jennings, though, suggested that most persons would say bank fees were too high “no matter what”, with public opinions failing to account for the level of investment financial institutions made to develop products and services in a small consumer market.
“A lot of the challenge for the banks is public perceptions,” he told Tribune Business. “There’s a perception that the banks sit around the table where we agree the fees, when we don’t.
“Each bank has different cost structures and objectives, and we charge on that. People have different structures.”
Explaining this point, Mr Jennings said that as a Bahamian-owned and centric bank, Commonwealth Bank incurred all its overhead costs in this nation, whereas the likes of Scotiabank, Royal Bank of Canada (RBC) and CIBC FirstCaribbean were able to spread these across several countries.
He added that the “initial investment” in developing, then offering, banking products and services tended to be significant, and the Bahamas’ relatively small size as a 350,000-person country meant returns took time to accumulate.
“You need scale to operate banks efficiently, so you can’t have small banks,” Mr Jennings added. “When it comes down to it, 300,000 to 350,000 people in the Bahamas is a very small market, and we need volume.”
Suggesting that many Bahamian consumers failed to account for this background when assessing bank fees, the CBA chairman said of many criticisms: “It’s a lack of understanding.”
Still, Mr Jennings acknowledged that there were things the commercial banks could do to improve communication with their clients, such as “standardising” where their lists of fees/charges were located on their web pages.
Some 64 per cent of respondents to the Commission’s survey alleged they never received warnings of increases, while another 12.4 per cent said they “rarely” received them 15.6 per cent “sometimes” got them.
“All the banks have fee schedules on their websites,” Mr Jennings added. “We could standardise where things are in the web pages. You find in many cases that the small things are important details.
“It’s an important part of communication and dialogue. Customer service is important to the banks, and obviously we realise we can’t please everyone, but we’d like to please as many as we can and for people to think they can get value for money for the services and products we offer.
“It’s one of the areas the CBA is looking at: To educate the public, so customers can choose services between the banks.”
Mr Jennings questioned the significance of the Consumer Protection Commission’s survey, pointing out that it was not “a statistical” endeavour where respondents were selected at random, but asked to send in their views.
“People will always say bank fees are too high no matter what they are,” he told Tribune Business. “I’m not surprised to that extent, but we want customers to understand what’s involved in banking operations so they feel we’re offering value for money, and getting value for the products and services they’re paying for.
“There’s room for improvement. Nobody is perfect, and there’s always room for improvement, but as long as we keep striding forward; we will never get 100 per cent on our side, but we will reduce the amount of people expressing dissatisfaction.”
Mr Jennings agreed that the commercial banks also needed “to demonstrate there is a case, basis for the charges” levied by the industry, especially given that many Bahamians continue to struggle financially in a weak economy.
Of his meeting with Mr Gomez, he added: “It was a very cordial meeting, and we discussed some of the challenges between the consumers and the banks.
“I think there was an exchange of information that was beneficial. We had a better understanding of each other, and the dialogue is open.”