Italian Banking Crisis: how to improve?
Looking at the Italian banking crisis with some seriousness I made certain observations. I hope to take advantage of living in Italy for 6 years graduating with a Masters in Finance. Comparing Banking in Italy with Banking in India I can make some constructive blog talk.
My basic experience with having a bank account in Italy is understanding how complicated it can become to get a bank account as a foreigner in possession of limited documents. In the present example, I was just accompanying an Italian citizen in the Christmas week.
As a student, you may get help from you university to get an account. While you work, you may be asked to get certain documents like the Italian Identity Card with an address proof. “Know Your Customer” or KYC is important but there seems to be a lot more other reasons keeping depositor’s money away from the banks.
Banking in Italy during the Holiday season: Error!
Two days before Christmas, I walked in to the nearby Unicredit and Intesa Sanpaolo, with a friend hoping to create a bank account quickly. Unfortunately, the staff at both these places acted so overwhelmed with work. Not only didn’t they decline helping us that day without an appointment, but they really didn’t seem that keen to invite us an other day.
The only thing they seemed to care was to get us away for an other day, with the Unicredit manager inviting us after a week. The Junior staff in charge of secretarial work seemed more friendly, while the senior officials in charge of opening bank accounts seemed to always want their sweet time in creating a silly bank account. To think that no bank accounts would be opened for more than a week is quite shocking.
With the banking crisis, this is the last thing I would expect to see. On one hand Indian PM Modi makes citizens eat dirt when everything seemed to be ok, while on the other hand we see Italian Banking on a holiday during the festive season in spite of a looming banking crisis.
Not asking employees to be denied vacation time, but I am sure that an activity like opening accounts can be facilitated in such a manner in order to compete with the Italian Postal Service, who give out prepaid cards in a jiffy even 2 days before Christmas.
Simple observations on Italian banking by an Indian
Instead of aiming to serve low income individuals who may nonetheless maintain some account limits, Italian banks seem to hold the door wide open for their competition, the Italian post. Have not been a big fan of the Italian post earlier, but I do get the feeling that it is improving in the right direction. They have adopted mobile payments.
Supposedly, you now have free wifi in a lot of Italian post offices too. Was also interviewed by a marketer who seemed really interested in my opinions on some of the postal services. You just get a good vibe that they are doing something right.
Intesa San Paolo evidently seems to have made big major changes to their website and offices. Appreciating the great makeover, my bank account with Intesa Sanpaolo is of the Superflash category and it continues to serve me well with very limited charges for use in Italy. The normal bank accounts in Italy always seem to come with large costs.
Unlike in India, where I would be paid a savings interest, In Italy I was expected to pay a big amount as fee for most normal saving accounts. Obviously, keeping my money in a Bank Account is only a way for me to keep it secure. I don’t get anything else in return for my parked money.
Future of Banking: Fintech and Robo Advisors
But, I never had considered the other alternative of loosing my deposits in case of bankruptcy of my retail bank. As a depositor, a certain amount of money is insured. But a higher amount can be under considerable risk. As depositors are looked upon as share holders instead of bond holders.
Saving money in banks in Italy some how doesn’t seem like a favorable option. Rather unfair, in days of Fin tech and peer to peer lending. You can make more returns from alternate investments these days. They would see a further rise when banks cant make bigger returns from the deposits.
As we peer lend to who we trust, Banks may just serve us in providing advice and we the people would finally get to decide where our savings would go. The rise of Robo Advisors will make banking more lean as an organization. Banking employees will have to contribute in some other way.
Suggestion to increase deposits and investments
Italian banking needs to expand depositor base, every euro counts and needs to be rewarded with a better savings rate. Time for the legislation to reward small savers. Need to get competitive with peer to peer lending, gambling etc. Need to encourage a savings culture among the young.
Immigrants hold considerable amount of liquidity that lies unaccounted. Utilized away from the system not returning gains as investments. Banks need to provide opportunities to allow small amounts of cash to enter the system.
Money entering in terms of deposits by providing a small savings interest rate would nonetheless be a great deal. Much better than the other financing available from foreign banks.
Time for Digital Italy
Reforming the banks to make an account opening and deposit process as efficient as possible will go a long way. Encouraging digital payments will allow banks to leverage on easy deposits and credits.
Unfortunately, mobile payments is still a recent trend that is yet to catch up in Milan. On the other hand, many Indians cant ignore mobile payments now, doesn’t matter if they have a mobile or not.
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