Retail banking and bankers in India have transformed over the past couple of decades. It is literally a new era of banking.
The previous era was all about your banker being the ultimate guide when it came to making good financial decisions. A banker would never do (or let you do) things that could harm your financial wellness.
Fast forward to today and it is a different retail banking world.
Every other day you come across stories of people who have been sold insurance policies they don’t need, investment products they don’t understand or loans they can’t afford.
All this is sold to them by their banker who they blindly trusted to do the right thing. As a result consumers feel cheated and end up branding all bankers as evil.
Things are not what they seem though.
It is time to get some perspective about what is going on because bankers are not evil.
Bankers Are Not Evil and Neither Are Lions
During the early part of my career I spent a few years working in Africa. There are few better places in the world to see the laws of nature playing out in front of you.
The below message from Africa is a good analogy for the banking world as it stands today:
Every morning in the jungle a deer wakes up.
It knows it must run faster than the fastest lion or it will be killed.
That same morning a lion wakes up too.
It knows it must run faster that the slowest deer or it will starve to death.
It does not matter whether you are the deer or the lion.
When the sun comes up, you’d better be running.
In the message above is the lion evil? Of course not, since the lion is merely following the laws of the natural world.
While we may sympathise with the deer who might lose its life but the alternative outcome would be a lion that loses its life.
Nature in all its wisdom has left to the individual animals to decide who lives and who perishes that morning.
Both the deer and the lion have an equal chance at survival depending on how fast they can run to serve their own survival interests.
There is nothing good or evil about it.
The Law of the Business World
Now let us take the above analogy to our daily lives and the world we live or work in. It is not too different from the law of nature on display in the jungle.
Your banker is the lion and we as consumers are the deer.
The Banker as the Lion
The titles can be varied – Banker, Relationship Manager, Client Manager or something else.
No matter what the official title is, behind each title is a human being going about their daily job as a banker to earn a living.
The bank has set the role of the banker as the lion of this business jungle.
The banker has to go out daily to hunt for deer (i.e. customers) so that the bank and the banker do not starve and die.
The banker therefore needs to sell financial products to consumers that earn the highest income for the bank – be it insurance, loans, credit cards, complex investments or anything else.
It is a question of his or her own survival. The lion can’t be working towards the well-being of the deer. If it does, then it starves to death.
The Customer as the Deer
Knowing this law of the business jungle, we as consumers have to run faster than the banker lion.
So if you feel you have been cheated by a banker then it is time to stop blaming the banker for it.
Bankers are not evil. They are just playing the game of their own survival. It is us who forgot the law of the business jungle.
The banker is not here to protect us – We have to protect ourselves.
As a consumer we make fatal finance mistakes because of our ignorance:
Ignorance about realising the role of the banker.
Ignorance about learning basic finance and having a financial plan.
Ignorance about blindly leaving our financial future in the hands of someone else.
Ignorance about whose duty it is to protect our financial interests.
Now think about it – Don’t we share some of the blame for others hurting our financial well-being?
We forget that it is only us (and no one else) that can be trusted to do what is best for us. We can develop the ability to outrun the banker and survive if we are willing to spend some time getting wise on basic money matters.
The more we can learn about what is good for our financial well-being, the faster we can run and survive in the business jungle.
Banking is the Problem, Not the Banker
The vast majority of retail bankers are ethical professionals who are trying hard to balance the well-being of their employer and their customer.
Of course we can debate if the change in banking from what it was 20 years ago to what it is today has been a good thing.
The very fact that the new world of Indian retail banking that puts bankers and customers as predator and prey is not ideal.
There should have been a better way to go about it.
However, that debate is not going to do anything to prepare you for what is coming your way today or tomorrow.
So let us not spend any more time reminiscing about the good old days of banking and how easy it was to blindly trust your banker to look after your financial interests.
Let us instead accept this as a reality of the present day business jungle and take the required steps to deal with it as a consumer.
There is no point blaming others if we ourselves are not doing enough to protect our financial interests.
The majority of bankers are indeed good people who if given a choice would always put your interest first.
However, over the past couple of decades the nature of banking (and what bankers have to do to thrive) in India has changed.
Profitability of the bank is the primary driver now for the banks.
Therefore your banker has little choice to play the game otherwise even if he or she wanted to.
Knowing this fact we too need to adapt our behaviour to this changed reality. We can no longer blindly accept whatever is being sold to us as a suitable financial product.
The responsibility is on us to get educated about basic finance stuff to make smarter money decisions. It is not an impossible task but will require some active effort on our part.
Otherwise our ignorance about basic financial education will continue to be the weakest link in our defence.
Bankers are not evil. Our ignorance is.
Dushyant Choudhary is the founder of dushyantnomics, an early retirement blog for professionals. Dushyant retired early from his 9-5 corporate life after a successful international career. He brings his knowledge and experience to his current role where he’s dedicated to helping professionals achieve a fulfilling retirement.