The answer to the question of whether Malta needs a new banking model depends on the thinking in decision-makers’ minds about what, or who, banks are there for. 

There were times when banking was seen as a public service, both in bankers’ own minds and in the minds of the public. Even new entrants to the profession would have it clearly drummed into them that they were there “to serve the people”. 

Today, there is much to suggest that this type of thinking is no longer prevalent. It seems that much more is now made of selling “products”.

An ever greater obsession has come to dominate with new notions, not the least among which is that of “protecting shareholders’ interests”. The bias in what banks do is evident in their body language (to use a term from psychology), which has clearly swung in a different direction.

There is no denying the general feeling among the vast majority of people that banks in Malta are now essentially pro-business but not necessarily also pro-people.

One sees the justification for this general feeling in a lot of the on-the-ground actions that most of Malta’s banks take. They continue to fail abysmally on the whole question of service, wanting people to be served not according to what these people need but according to what the banks’ top brass want.

For example, if long queues gather in banking halls or outside a branch’s front door, rain or shine, then this is attributed to people’s “ignorance and refusal” to make use of ATMs or IT and not to the hard-headedness of top brass. 

Or, if a simple shopkeeper needs a small overnight overdraft, his request will never be clearly answered “yes” or “no” by a smart and efficient branch manager on the spot but it will have to go through some credit-scoring, algorithmic, deep thinker at some centralised business control office.

Even opening a small bank account is today a tale of effort, red tape and much economically damaging waste of good time, to individuals and the nation.

Denying the truth of all this will not help one iota in getting the vast majority of people to believe anything other than that today’s Maltese banks are there for the business class and not for the citizenry.

Research has been carried out in the University of Malta’s Department of Banking and Finance about the big question of why people, especially older people, become “adopters” or “non adopters” of new financial services technology.

The continued closing down of branches and ATMs, and reduction of tellers in branch banking halls, certainly do nothing to endear the banks to the people. It is pointless to cite an increased take-up of technology among young people or immigrants because these figures do not reflect the feelings of the grumbling masses.

It is pointless to cite an increased take-up of technology among young people or immigrants because these figures do not reflect the feelings of the grumbling masses- John Consiglio

Of course, the banks will defend themselves with possibly justified reasoning: that, today, they are forced to dedicate much more time and money to what the regulators continuously insist upon rather than to what “the people” really need. This is very true.

But is all the increase in regulatory pressure affecting all the banks in the same way? This brings us round full circle to our original question: can the structures and forms present in Malta’s banking models satisfy all the needs of the people?

The answer is clearly no. There is, for example, a real need for an institution that would put a stop to the oft-asked questions of: Do our banks want customers at all? Or do they only want to discriminate between people they are amenable to serving and those which they are not? Denying the simple right to have a bank account to so many people must simply stop.

Assuming the answer to whether we need an alternative banking model is yes, one possible direction would be the resuscitation of the idea of savings banks. These would however also be empowered to provide the simpler banking services that simple people need: efficient encashing of pension and pay cheques; savings and fixed deposit accounts; small borrowings; small fund transfers and so on.

Allowing such banks to charge slightly higher interest rates for borrowings, to be in better position to give more attractive rates for credit balances, should not be excluded. When such banks accumulate sufficiently high liabilities from the balances of many small savers, they will, of course, be in a better position on the interests payable and receivable fronts.

The purer form of savings bank is of course not new in Malta’s banking history. The old Malta Government Savings Bank ceased to carry out business in 1984 but the model being here posited would be a different one. It could, for example, again have government participation in its ownership , but also have a spread of both institutional and public ownership.

But the most important thing is the way it would be required to operate. It would have to be a “people’s bank”, such as still exist and operate successfully in many European countries.

The rumour mill has it that some serious developments are to be expected in Malta’s present crop of big commercial banks, such as APS Bank’s present ownership, HSBC’s presence in its current format, BOV’s ownership and range of activities, etc.

So, yes, the time may indeed be right for some serious policy decisions on the question of whether the country needs a new banking model – for its citizens not its capitalists.

John Consiglio, lecturer in banking and finance