Is there an alternative approach? Do we need to have fewer and larger banks to compete internationally? Is it beneficial for banks to get bigger?
Here are the negative impacts of the consolidation of banks in recent years:
- concentration of risks
- overcharging of fees for banking services, i.e abuse of pricing power
- selling of bad structured products to earn commission
- impact of massive IT failure on cash withdrawals, i.e. the DBS event
Is there an alternative? America had a system of community banks that are connected by national banks. Perhaps, this is the answer. We should encourage a large number of community banks to serve the retail customers on basic banking services. They can be linked a few national banks who handle the commercial banking, foreign exchange, international trade and other services.
If there is a serious computer hiccup in a community bank, it will only affect their customers, and not a large segment of the population. This is an example of decentralising the risks.
Tan Kin Lian
On that day, I was at Redhill MRT to top up my ezlink card. I top the card up weekly as I see no real benefits for putting too much cash in it. A message which said "no reply fr the bank" appeared. I thought this was real funny. I tried again at Changi Airport MRT, the station where I alighted; a similar message appeared. So I looked for a dbs atm to withdraw cash to top up at the station control. Finally I found 2 dbs atm at the airport but both were out of order.
ReplyDeleteOk, blame that I am poor!
It should be 5 July 2010.
ReplyDeleteThere is conflict of interest between "customer satisfaction" and corporate survival where a "national" bank is involved.
ReplyDeleteI don't think being "BIG" would improve "productivity" or "service", perhaps even longer Q at counters.
Just assess, you could enjoy coffee on OCBC's account while the DBS could suffered a major IT failure.
I thought customer satisfaction is always No. 1.
If we have only one big bank such that it can completely globally with the likes of Citibank, HSBC, ICBC, UBS, JP Morgan, etc this bank would tend to concentrate on its foreign operations where profit is greatest. Chances are that it would concentrate on its foreign operations and paying lip service to its local operations penalising the small man in the street.
ReplyDeleteFurthermore when it competes globally to maximise its profit the bank may take extraordinary risks. This may subject the banks to super-normal risk and if not manage properly may follow the likes of Lehman Brothers, Citibank or UBS. The whole Singapore economy would then be dragged down. Would the Govt bail out the bank with taxpayers' money? This may not happen in the immediate future, but who can fortell 20 years down the road.
I thought the recent financial crisis has taught us the danger of "too big to fail". Why would anybody still want to consolidate the banking industry? Am I living in an alternate universe.
ReplyDelete"Too big to fail" simply means massive failure and inconvenience from the point of view of bank customers. Over the years I have "diversified" and now hold accounts in 6 banks. Incidentally I keep the least amount in DBS/POSB because I find they have become less and less competitive and poorer in service since the late 1990s. I empathise with the lower income folks who probably only have accounts in 1 or 2 local banks because once again they are the ones who will bear the brunt of such inconvenience and risk of failure.
ReplyDeleterex comments as follows,
ReplyDeleteFrankly speaking this matter is most probably nothing to do with Development Bank of Singapore per se. As noted, it appears to be either hardware or software issue, and the vendor is world famous IBM USA. For once i believe that goverhment statement: blame the vendor. Simply because no singaporean company will be able to design the complex systems like IBM do, both hardware and software. We don;t have the expereince/knowledge, or should we say, those with the knowledge will keep it to themselves for commercial competitive advantage.
Now i am sure there are numerous systems also managed by IBM everyweher else in singapore too and the whole world for that matter. I wouldn't worry too much about it, nor make any comments positive or negative. Because IBM after is world reknown, what else do you want DBS or any other bank to do, other bank prime hardware-software vendors could well be IBM as well...
rex
IBM produce Hardware and Software tools. Solution not by another vendor? Your weapon jam, you blame weapon manufacturer?...hmmm
ReplyDeleteI had my first bank account with POSB 20 over years ago, but I also closed it more than 10 years ago.
ReplyDeleteI recently opened accounts with OCBC and Citibank, besides my UOB account, because I saw that the two were really making effort to cater to the consumers. Even though UOB was disappointing, I kept my account for the sake of its wide ATM network.
There is always a long line at DBS/POSB ATMs, while the OCBC/UOB ATMs beside them are idle. I never saw a need to go back to POSB/DBS.