The Bottom Line / How to make NIS 3 billion overnight
Congratulations. As of this month we, the Israeli public, are worth NIS 2 trillion.
That's the value of the portfolio of our financial assets, including all types of financial investments that we own. Hefty sum, right?
The last four years have been good to us. During this period our financial portfolio grew by NIS 700 billion.
Now we have the opportunity to let this sum grow - without any effort - by another NIS 2 billion to 3 billion. All that needs to be done is to allow us to invest our money in deposits at investment houses or insurance companies, and not only at banks.
Today the banks pay us ridiculously little interest on our deposits. They are exploiting their customers' dependence on them and their widespread branch networks throughout the country, about 1,000 branches in all.
However, if we were allowed to move our deposits to other financial institutions we would earn much higher interest on our money - and come out NIS 2 billion to 3 billion ahead. Easy money, without having to work for it.
The anti-money laundering laws now require banks to identify every customer who makes a deposit. This process is very simple: You go to your bank branch, answer a few questions and that's that.
But investment houses and insurance companies do not have a real ability to properly identify customers because they have very few offices. An investment business with one office in Tel Aviv is completely unprepared to receive thousands of customers.
The result is that there is very little competition over our deposits because there is no real alternative.
Of course, these investment houses and brokers could solve the problem by setting up a branch network all over the country, but that would be an expensive and unwieldy solution.
Such financial institutions need a network of agents or distributors to be able to identify large numbers of customers.
There now exists a network perfectly capable of identifying huge numbers of customers. It is called the Israel Post. If post office clerks would provide this service for investment houses, customers could easily transfer their bank deposits and enjoy much higher interest rates than what the banks currently pay.
For this to happen, the Bank of Israel must take matters in hand and relate to the Israel Post as an alternative system for investment that would enable true competition with the big banks.
In the past we thought that a big foreign bank would appear one day and open branches to compete with the big banks. Such a solution no longer seems realistic. Even Citigroup, the world's largest financial services group, has given up on the idea of opening a branch network here in Israel.
So we are left with the network of post office branches. True, it sounds a lot less impressive than Citibank, but for now it is the only alternative that will allow the small saver to make a big profit.