The banks make profits on you and that is natural and right. Banks are not non-profits, they are entities that work for their shareholders, they are entities whose goal is to maximize profit. The problem is not with the banks, the problem is…with you.
We, a rather indifferent public, can save hundreds of shekels a year, in many cases even more, and we don’t. We are used to the investment advisor at the branch, used to Bank X, and even though we complain non-stop about the bank, about the service, we stay with him.
And that’s fine too. The problem is that we do not negotiate smartly about the fees. So how do we do that? Today, thanks to the supervision of the banks, there is the possibility of an online, fast, digital transition. All you have to do as smart consumers is to contact two other banks and get an offer, that’s all In digital, everything is simple. You get a better offer than what you pay today – in current fees, in interest on loans, in interest on deposits, in more complex fees (each with its own types of activities, for example, securities fees). With this offer, contact your bank. There is a situation , there’s even a good chance that he will compare the terms. Don’t compare, move on. There is a great chance, according to the information from the Bank of Israel, that your bank will return and offer a good offer. If not – you won at another bank with better terms.
True, it’s time, and who has the energy for several conversations about it, but it’s worth a lot of money. One way or another, from data from the Bank of Israel, it appears that the digital system for moving between banks is starting to work. But it is still on the margins – half of the people are not aware of the digital transition. And in practice only 67 thousand accounts were transferred. This is 1.5% of the existing private accounts. Still a drop in the ocean, but behind this number, there are tens of thousands more who have improved conditions. And here is the great importance.
Bank of Israel – what has happened since the launch of the reform?
The supervision of banks updates what has happened since the reform began one year and three months ago. So in September 2021, under the leadership of the Bank of Israel and the Ministry of Finance, an amendment to the banking law came into force which required the banking system to allow bank customers to switch from bank to bank, in an easy, fast, safe and free way.
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The goals of the reform are to increase competition between banks; allow new players to offer financial services; facilitate the ability to switch between banks; and allow customers to improve their terms of engagement, either through the existing bank or through the new bank, by strengthening the bargaining power of the customers.
The advancement of the reform required a complete commitment on the part of the banks and credit card companies to find a suitable technological solution (hereafter – an online system), through the company MSAB, which led to the fact that today the banks’ customers can transfer most of their financial activities – which includes the transfer of right and obligation balances, standing orders, Authorizations for debiting an account, debiting a credit card, securities, checks and more – from one bank account to another bank account, in a synchronized manner and in a friendly and fast manner. Also, the reform implemented an innovative solution of a “follow me” service in the transfer of activity between banks, which significantly improves the transition experience, since as a result, any debit or credit that reaches the old account is automatically routed to the new account. In this way, the customer is also spared the hassle that would have involved having to deal with debits and credits returned by the “closed account” party and contacting those entities to update the details of the new bank account.
A year and a few months after the launch of the reform, the banking supervision publishes additional information about the bank-to-bank transition reform, which includes: data received while using the online system; Control actions carried out by the supervision of banks and the findings of a customer satisfaction survey carried out one year after the launch of the system.
The breakdown of the data received while using the online system:
The total number of applications submitted in the online system and the total number of applications that were actually completed – from the launch of the online system until 30.11.22 a total of about 96,000 applications were submitted to switch from bank to bank, when in practice about 67,000 customers switched banks through the online system. Probably in December the number will reach 75 A thousand more or less. Is it a success? There are over 5 million active bank accounts of the public (not accounting for firms). In other words, we are talking about less than 2% of the public that moves from bank to bank.
In addition to transitions through the online system, there are transitions between banks that take place outside of the online system, following the closing of accounts, when in the first half of 2022, approximately 125,000 customers closed current accounts.
Cancellation of roaming at the customer’s initiative – out of approximately 28,000 roaming requests that were submitted but not actually completed (as of 9/30/22) – 35% were canceled at the customer’s initiative. These cancellations resulted mainly from the banks’ retention actions and proposals to improve the account management conditions that led the customers to cancel the transfer request on their own initiative.
Main reasons for cancellation of mobility at the initiative of the banks – with reference to 65% of the requests for mobility that were canceled at the initiative of the banks, about 47% of them were rejected for various technical reasons (such as no identity of the owner, an account number does not exist or an account is inactive, etc.), about 38% More were rejected because the customer did not settle his obligations at the bank he wishes to leave, and about 11% more are cases where there is a legal impediment or complexity to carrying out the transfer through the online system.
“Follow” service (routes in the online system) – as part of the “Follow” service, which enables automatic routing of debits and credits after the transfer of activity, from the old bank to the new bank, approximately 1,000,000 transactions were made, of which approximately 425,000 credits were automatically transferred (salaries , money transfers, etc.), about 540,000 charges (bank credit card charges, account debit instructions, etc.) and about 37,000 checks.
Want to switch banks – pay off your loans
Requests to transfer from bank to bank which involve repayment of a loan at the original bank – from the banks’ reports to the supervision regarding the reasons for the refusal to carry out an online transfer, it emerged that in some of the requests to transfer that were refused, the reason for the refusal relating to the existence of credit at the original bank is a prominent reason.
As mentioned, a prominent reason is also typing errors in the mobility request and entering incorrect details in the online mobility request – the banks were asked to examine the improvement of the online system, so that it detects the typing of incorrect details even before the submission of the transfer request is completed, in contrast to the situation today where the checking of the incorrect details is carried out after 1-2 days business This improvement may significantly reduce the rate of refusals to pass, since the error detection and correction procedure will be immediate, without
Need to wait for an answer, receive a denial of mobility and submit an application.
Satisfaction? The Bank of Israel says that the public is satisfied
A survey conducted by the Bank of Israel shows that satisfaction with the handling of the transfer of the account by the bank to which they switched is higher among those who move online; most users of the online system did not experience difficulties when switching from bank to bank; the average recommendation score for switching between banks is higher among those who switched Bank through the online system than those who banked not through the online system.
The big problem – about half of the public is still unaware of the existence of the online system. Most respondents to the survey agree that switching through the online system is faster; Most of the customers who switched banks did so for proactive and active reasons. The main reasons that motivated customers to switch banks were an improvement in commercial conditions and an improvement in service.