BETHESDA, MD / ACCESSWIRE / June 10, 2019 / Although banks do not always command the public’s trust, it is nearly impossible to imagine a society functioning properly without these pivotal institutions. Confidence in the banking system plunged after the 2008 financial crisis and regaining it continues to be a challenge. According to survey data compiled by the American Enterprise Institute, around 30% of respondents declared “a great deal” or “quite a lot” of confidence in financial institutions in 2018 as opposed to almost 50% stating so before the housing market crash. Waning trust also transpired in the seventh annual poll conducted by the Federal Deposit Insurance Corporation on underbanked US households, with approximately 20% found to have no recent credit history and to prefer alternative financial services despite having bank accounts. With innovative fintech projects expanding the choice for consumers and offering greater convenience, traditional institutions need to double their efforts to rebuild public trust, but some deeply rooted practices are impeding progress, especially when it comes to transparency. Jim Plack, a financial industry executive with extensive experience at the highest corporate levels, highlights several aspects of banking that remain unknown to consumers, so they often lack the necessary information to select the most advantageous offer.
“Explaining what the banks do not want people to know may shatter most of their entrenched assumptions about money and banking. The general public’s knowledge is largely based upon a collection of canards gleaned from TV, radio, newspapers, and personal, casual experiences. For example, many people learned the hard way how checks they deposit are held for three days before the money is available for use,” Jim Plack notes. One thing consumers need to be aware of is that banks routinely make mistakes in calculating interest on both loans and deposits, so clients should check their statements for such errors. Moreover, borrowers should not rely on bankers to provide the best offer possible – unless they do most of the work themselves, customers are likely to end up paying higher fees and rates. When it comes to costs, people will also benefit from knowing that they are all negotiable – the broader the full banking relationship, the higher the probability of getting the fees waived. Those interested in deposits should keep in mind that credit unions pay higher interest than banks.
Consumers also lack sufficient information on certain types of money transfers. When funds are received via direct deposit from a company or the government, they are sent through an electronic network known as an automated clearing house (ACH). However, some banks categorize these and all other transfers as PPD (prearranged payment and deposits), which means that a monthly fee is not applicable. Cross default is another issue bank customers should heed, Jim Plack says, going on to explain that missing a car payment on one account could create a domino effect and allow the same bank to charge higher interest on a mortgage or a student loan. As regards to online banking, clients need to bear in mind that it is not as safe as it appears: over 70% of lenders have detected security flaws within their online infrastructure. Banks should also make it a standard practice to warn their clients about ATM use abroad since the highest occurrence of identity theft is reported in foreign territories. Full disclosure on these and similar issues is the only way financial institutions can reclaim the levels of public trust they enjoyed in the decades before 2008.
Having served as president and CEO of American Bank for 11 years, strategically focused leader and turnaround specialist Jim Plack transitioned to Sports Capital Lending in 2015 and a year later also assumed the CEO responsibilities at South River Capital. Jim Plack holds a bachelor’s degree from the University of Baltimore and an MBA from University of Maryland’s Robert H. Smith School of Business.
Jim Plack – CEO of South River Capital: http://jimplacknews.com
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SOURCE: Jim Plack