Public vex with banks

The questioning took place during the third sitting of Parliament’s Joint Select Committee (JSC) on Finance and Legal Affairs, Tower D, Wrightson Road, Port-of- Spain.

Ramadhar asked Baptiste, “Do you appreciate the level of animosity in the general public towards banks, generally, in relation to the fees, whether applied recently or in the past? Are you aware of a high level of animosity in relation to bank fees?” Saying he was not, Baptiste said he did however know about “some significant concern among the general public and certainly among our own clients.” This, he explained, was why RBL has introduced new services to address “pain points” identified in its customer surveys.

This did not seem to satisfy Ramadhar, who repeated his question.

To which the banker replied, “I would say there’s concern, which is the word I used previously.” Apparently still seeking a direct response to “animosity”, Ramadhar instead asked, “Are you aware of any level of animosity?” “I would say no,” Baptiste responded.

Changing the question to the public’s “anger” about bank fees, Ramadhar sought an answer for the fourth time.

“Those are very strong words that are being used; animosity and anger,” Baptiste pointed out.

“We (RBL) are very aware that our clients remain concerned over the level of fees. We do everything that we can possibly do to redirect our clients, to show them the options that are available; with respect to the payment of fees, and we are satisfied that once we are we able to communicate and clarify, that the clients do understand.” Baptiste had informed the JSC that in the last three years, RBL has introduced “a number of new products” in mobile and internet banking; all of which are free to use.

Saying the JSC has “no problem with profitability”, Ramadhar pointed out that it does appreciate that bank fees are discretionary.

“If you wish to lower your level of profitability, you can adjust your fees. Do you?” Ramadhar had also made mention of RBL’s corporate social responsibility (CSR) programme; The Power to Make a Difference.

Commenting on that first, Baptiste said, “RBL is renowned in TT for our CSR...We spend over $20 million annually. With respect to fees versus profitability, an analysis of the fees’ contribution to the bank’s profitability will show that the fees actually account for a very small portion of the total income earned by the bank.” “One of the main drivers of our fee structure is really the cost of providing services, and you would actually see that as we are able to redirect our clients into alternative channels or products, the fee might actually go down while the operating expenses go down a little bit more. So...your profitability might actually improve.” Speaking specifically about RBL’s Trinidad operations, Baptiste told the JSC that it’s customers are most concerned about fees related to “actual counter (in-branch) transactions on their accounts.” He added that those fees account for seven percent of total income, which would be about 10 percent of RBL’s profitability.

This prompted Ramadhar to say, “It is within your remit then, to adjust your fees way down, having regard with the small percentage that it would affect your profitability.” “Will you consider it?” “No,” was Baptiste’s answer, to which Ramadhar immediately asked “Why?” “Because as I was telling you,” Baptiste stated, “there are a number of variables that go into the determination of a fee, the most important of which is the operating cost associated with providing the service.” “We look at the cost associated with providing the service and we seek to see whether there is a balance between what we can recover from the cost of that service and what we can offer in terms of alternative channels.” Baptiste cautioned that if banks were to remove all service fees, the most expensive services and products offered by the bank could end up earning “the same revenue as the least expensive”.

While customers would no longer have to worry about which service is most affordable or free, Baptiste seemed to argue that RBL would not be able to continue evolving it’s operations to meet customers’ needs in an increasingly digital world.

“From the bank’s perspective, having invested all this technology and capital into mobile and internet banking solutions, you end up with a situation where; as a country and as an organisation, you’re not moving forward because from a client’s perspective, it’s the same cost,” Baptiste stated.