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Wounds that hurt the banks

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Wounds that hurt the banks

Two things to look for when selecting yours. This basic rule also applies to banks, but the reality is that when crises like the one the banking system went through in 2013, everyone hurts and our wounds follow for years: Customers see their deposits being cut and loans cut to make them non-serviceable and the staff to cut their positions with “voluntary exit packages”. The sale of the remaining non-performing loans and the reduction of staff go hand in hand all these years. Will we see the same now that we are nearing the end of this painful journey? Probably yes and that is why now, more than ever, the introduction of technology is necessary.

The two big banks, Hellenic Bank and Bank of Cyprus, are a breath away from the sale of a portfolio that will throw the percentage of non-performing people below the psychological threshold of 10%. These loans will certainly continue to be non-performing, but outside the banking system. With the sale of the loans, the bank is relieved of the supervisory pressure, but in return for the assumption that it has lost money or did not gain what it would expect from the specific loan and that it may lose forever its relationship with a customer who in other times , was a significant source of income.

However, no matter how painful it is to “sell” a customer, we must not forget that he has not paid you for years and in fact showing him the way out is the normal result. After all, “banks, like all businesses, are not charities, but organizations that work to make the most of those who have invested in them,” as a retired bank executive has repeatedly said.

Bank employees know this. That is, the organization does not work primarily to maintain them, but they work there to earn investors and maintain them. In other words, as long as we do not reach the level where the shareholder receives a dividend and sees the value of his investment increase, the wage cost will be in the spotlight.

Even with the “gilded pill” through tax-free voluntary exit plans. However, this is another process that hurts the banks and their micro-society. How do you choose who leaves and who stays and who has more needs. I know friends who happened to go through such a process (not from the banking sector) and have not spoken since. Especially when it comes to a recurring process or a threat that hangs over the heads of employees and does not say it has been over for almost nine years. Even in the “state” KEDIPES, the employees have “digested” that we are going for reductions in jobs, as this is included in the recent renewal of the collective agreement.

The counterweight to the reduction of staff for bank customers and for the remaining employees who will have to cover a larger workload, will be the digitization and development of technological skills. In other words, it is not the technology that will “cut” the jobs but the one that will support the banking industry that will have to continue to cut costs, including staff costs. This is also realized by the management of the banks and that is why they insist on repeating their commitment to the technological upgrade of their staff almost every time. Digitization investments that have accelerated in the pandemic, but also that are a window that can ultimately guarantee the smooth operation of banks and consequently the economy, even if things do not go as we would have liked, with Covid -19.

Source: politis.com.cy

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