It seems that there are two key drivers within the banks (and most other large corporates) that are working in concert to make things more difficult and slower than they need to be.
The first is something we see in a lot of larger companies and it’s got a very misleading name. Efficiency. We are introducing a new process to aid efficiency. We are closing your local bank branch in an efficiency drive. Calls will be taken by our wonderful staff in Mumbai, in our relentless quest for efficiency. Loan security documents will be prepared offshore etc etc etc. It’s all garbage of course. Efficiency is corporate speak for cost cutting and the consumer be damned.
The challenge for all companies is that they are judged on their share price and return to shareholders with little value placed on service. Better to use up the consumers time sitting on calls waiting than have sufficient staff¬ to actually pick up the phone. Better to have a talented banker desk bound and stressed out of his or her mind than provide sufficient support for them to do a good job. You get the picture. A while back the banks, to introduce further efficiency, adopted an automated valuation quote and instruction process. This has added, on average, two weeks to the time needed to get a management rights valuation report.
So, look at a 4-week valuation period as a minimum and you won’t be disappointed. Used to be two weeks. Gotta love efficiency! And, because banks are cutting staff and no one on the front line can make a decision any more, allow another two weeks for an approval and Letter of offer. That’s 6 weeks if everything goes perfectly. Not long-ago finance dates were set at 28 days, now we are advising clients to work on 48 days minimum, that’s a 70% increase in the time it takes from contract to formal documented finance approval. It’s not unusual for to encounter people who have been waiting months for an answer from their bank on a credit application. Gotta love efficiency. So, that’s driver number one in the game.
The second, and I suspect soon to be number 1 contributor to this sorry state of affairs is Compliance. We live in an age and culture of zero personal responsibility, so we need lots of rules and laws to protect us against both ourselves and our fellow citizens. In most countries, including Australia, it takes maybe 10 blokes (it’s always blokes) to do a bit of roadwork, fill in a few potholes, that sort of thing. Anywhere else that’s a couple of workers on the stop / go signs and 8 people swinging shovels. Not here though. Here we have 8 people on the signs and 2 people on the tools.
Gotta love compliance. It’s the same idea in finance and, post banking enquiry, it’s going to get worse. Just as our law makers assume we can’t drive through some road works without a cast of thousands supervising us, they also believe we can’t make decisions for ourselves regarding our finances. The laughable level of disclosure and documentation banks must provide has led to very simple financial products and services being delivered with mountains of paperwork, Product Disclosure Statements and the like. Who reads all that stuff?
The sad fact is that in an effort to protect the poor misinformed consumer we are simply delivering an impenetrable blizzard of rules, paperwork and…………………compliance.
Adapted from the Mike Phipps Finance newsletter. Ph 07 5470 2194 or email@example.com