For me personally it meant extending someone’s knowledge in such financial questions as optimal choice of a bank product, right money management, and reasonable investments.
But the recent trip to my historical motherland gave me reason to think that raising the financial culture in our country must start from almost the very beginning. And, actually, we have to talk not about raising the financial culture, but about an attempt to eradicate terrible financial illiteracy.
You can judge yourselves. One friend of mine told me the followings story. At work they are given salary cards. There are two cards in an envelop. Without any additional explanations. The staff is not very young, all the workers are in their fifties, but they easily deal with ATMs. They go to an ATM, check the balance in one card. Aha, we seem to get a salary! And they withdraw everything. Then they check the balance in the second card. Wow, another couple of thousand hryvnyas. It must be some kind of holiday! And they withdraw everything as well.
I have to note at once that in this case there is no intentional cheating from the bank’s side. As it turned out, the bank had tried to tell the workers of an enterprise that one card is for salary, and another one is a credit card. But the fact remains: some time later my friend’s colleagues are greatly surprised to find out that not only do they have to return the withdrawn couple of thousand, but they also have to add significant commission of the bank. The bank doesn’t accept the claims: not knowing the laws, as usual, doesn’t take off responsibility.
Here is another story. An acquaintance takes a credit. For the first time in her life. She takes a large credit. The girl is not silly, she has higher education, life experience, etc. she signs the agreements and all associated papers. Somewhere in an attachment she glances at paying off schedule, nods her head thoughtfully, and agrees to everything. Now she is drinking valerian in liters having found out that 12% pointed in advertisement – it is not 12% totally (for the whole credit paying off term), but 12% annually. E.g., 12% of the amount she has to pay off within 7 years.
And I have a couple more of such stories, one better than the precious. It seems to be the time to let Zadornov appear on the stage with his crowning phrase ‘Oh, stuuuuupid!’ But the point is not in the much talked-about Americans, but about our people. The thing is often not in stupidity, but in the fact that nobody taught us to use financial tools. There was no economics at school (and there isn’t nowadays). At the universities during the lectures on economics the teachers told at the best about the Smith’s theory, and at the worst – about the Marx’s one (and the situation is no different now). I can imagine a disturbed banker who will say, ‘What can one teach here? Nobody teaches to use the coffee-maker’. But I will answer, ‘There is a detailed manual for a coffee-maker, containing many pictures in order to ease the comprehension’. And where is the manual for credit? May be, you mean the contract?
It is even worse: bank workers whose job is not only to talk a customer to sign a contract, but also to tell and explain all conditions, often turn out to be even less literate than the customers. Or absolutely not interested in explain in details to the creditor all nuances of the service, and get them familiar with all commissions.
I hear from that imaginary banker the following arguments, ‘It is all your fault. If they don’t get it – let them pay then’. But wait, you can lie, telling not truth, and you can lie not telling the truth. And it is one of the best kinds of the cheat: you just don’t inform in the full form. If a customer is illiterate so far that they don’t understand the point of a credit card, or annual interest rate, they give the money which they would never part with having clear understanding of how financial instruments work.
Here, in epilogue, we can as usual accuse the bankers of all mortal sins, incriminate them evil origin in its purest form, and organizing the world conspiracy against common people. Alas, the situation is that financial illiteracy sometimes goes fine with credit sellers (it concerns credit unions not less, but even more). It is OK with insufficient awareness: the customers shouldn’t know about the efficient rate of 200%, or deal with an insurance company having the highest tariffs in the city. But the bankers don’t do anything illegal. They act exceptionally logically. By the highest standards, teaching the customers is not their trouble. Especially if there is no clear profit, no one will make them provide a financial literacy campaign.
In my opinion, in the situation like this, serious development of financial consultancy is inevitable. It becomes clear to me why financial advisors became millionaires in Europe. The European people are ready to go for advice, and to pay a middleman some reasonable commission in order to avoid the immense money waste having tried to stop the bank gap.
If financial institutions’ intrusion into life of society is coming faster than increase in people’s literacy in financial matters, the middlemen’s existence is necessary. And such consultants are not the parasites feeding from one or another side. They are legal market players the presence of whom is good for the both sides. A customer benefits from it as they allow them to use the services of financial consultants perfectly acquainted with financial instruments, and representing the client’s interests. And it is useful for a bank (and a credit union), in its turn, as they allow to attract new customers. The customers who more actively and bravely use bank products. Because now they have their financial advisors behind them.
For the meantime, while financial consultancy in our country is getting strength, I suggest that the future (and current) bank customers use the services of our sites www.prostobank.ua and www.prostobiz.ua. The first one is already interactive – you can ask us any question at the forum:
http://www.prostobank.com.ua/forumy/bankovskie_uslugi
http://www.prostobank.com.ua/forumy/strahovanie
