Why We Really Hate the Banks

Look at your bank statement. No - don't look for what you paid in bank fees yet. We'll get to that soon.

See how much you pay every month for your cellular phones. Around NIS 300-400, isn't it?

Now take a look at what you spend for car insurance - probably about the same, isn't it?

And what do spend on gas, NIS 1,000 a month? What about property taxes - another NIS 1,000? Oh, and take a look at what you spend on cable or satellite TV, I bet it's another NIS 200 a month at least.
Now try to guess what you spend a month for banking services.

Assuming you do not have an enormous overdraft and huge credit lines, you probably spend a few dozen shekels a month for banking fees. No more.

But in any case, the Knesset has established a parliamentary investigation into bank fees to find out why we pay so much. They did not set up an investigative committee to look into property taxes, or cellular or telephone bills. They certainly did not choose to investigate your health tax bills or what you pay the gas stations every month - even though we spend a lot more on all of these.

The banks are less monopolistic than the Israel Electric Corporation; and the banks' pricing tricks are similar to those of the cellular companies.

The small print in the banks' contracts is just as small as those of the insurance companies. And they certainly are no worse at providing information to the public than the health funds. Their service is far better than that of local authorities.

But the banks are still among the most hated service providers in the country, and now they are the only sector in the entire economy that finds itself the subject of a parliamentary investigative committee.

You can find a huge number of psychological reasons for why we hate the banks so much, and why they have such a vile image.

Start with the fact that they provide a non-physical service: "I give them my money and they have the chutzpah to charge me for it." And then comes the difficult situation of having to deal with them when we are in trouble: "Hedva from the bank called to say your check bounced."

But let's leave the psychology out of this, and concentrate on economic and business aspects.

We know how they do it

In recent years, the banks have turned into the most hated institutions because the public understands exactly how they make their money. As transparency has grown, the distortions have become clearer and the questionable fees and low levels of competition have become obvious. And that is why the public has become so disgusted with the banks.

In recent years, there have been two main changes that have made this very clear. First was the huge increases in the salaries paid to the banks' management and workers - which has lost all proportion.

Second, after years where the customers did not know how much they were charged, three years ago the new disclosure requirements on bank fees woke the public up to how much we are actually paying.

Suddenly, banking services had a price tag attached - something they never had before. Now we know how much it costs to take NIS 200 out of the ATM, and how much it costs to deposit a check - and worst of all - how much we are charged for every single transaction.

When the information on their scandalous salaries was exposed to the public, and we found out how much we were paying for everything, it was easy to do the math and see where the money was going.

Our bank fees are being used to support the enormous salaries of the best-paid executives in Israel, and the wages of bank workers, who have turned into - along with the workers of the electric company - the highest paid salaried employees in the country.

It is impossible to reach such high levels of pay without fees and high interest rates - which are worth even more to the banks than the fees.

The bankers have no one to blame but themselves for the investigation and the regulatory intervention, because they were deaf to the public.

The banks did not see that their customers had begun to wake up and see who they were; and in particular made a mistake when they decided not to do anything about the two main points of friction between them and their customers: their outrageous salaries and the strange and excessive fees.