The Fault in our Financial Institutions (Attempt # 1)
(You might be wondering why I placed attempt numbers. My thoughts and opinions about things, over time, could change. I am more than open to learning from others. Enjoy!)
I hate mathematics, but I love learning about how stakeholders of different financial institutions behave. I could talk about it all day, like how I could spend more than 24 hours discussing why Heartstopper is a book that I would carry with me for the rest of my life.
For this post, I will be talking about The Fault in our Financial Institutions. Our financial institutions in the Philippines have so much growth potential, given the emergence of Financial Technologies. Apart from the fact that we are still gradually transitioning to digital financial transactions, mobile ownership and internet usage are also high. Despite the growth of FinTech, there is still so much room for improvement in terms of financial inclusivity.
I'll start with a mini introduction.
If there is something that I personally am tired of hearing from up-and-coming FinTech companies in the Philippines, it is this:
"Here in [Insert Name Here], we came up with this business/application to promote financial inclusion in the Philippines."
For some financial institutions, I would agree--But for some? Not so much. Problems with financial inclusion in the Philippines are more than what is seen on the surface. The problem is that there are more problems underneath these surface problems. More often than not, the remedy to these problems could be solved already by existing solutions.
I listed down some of the problems of financial institutions in the Philippines. Some problems are already common sense, but these problems are those that are rarely addressed, thinking that it is normal. Here are some of those problems:
#1) Transparency is not enough. Financial institutions should make a conscious effort to explain the fine print before a consumer avails of a financial product.
Yes, and by explaining the fine print, it means having to explain every word or detail in written agreements. This is one thing that most businesses from Big Tech fail to do. I am not quite sure if it was designed this way for these companies to take advantage of their users, but I would like to believe otherwise for now.
Contracts could be lengthy and incomprehensible, and even people like me dislike reading them at times. There could be a jargon that is difficult to understand, a sentence that is unclear, or an agreement that one half-heartedly agrees with. However, users and customers are forced to agree with the business either way, which is why they choose to not read these contracts. Furthermore, the inability of most Filipinos to fully understand the texts in black and white right away leaves them at a disadvantage more often than not. This information asymmetry then becomes a source of concern in the long run. Service fees are not explicitly mentioned, and penalties for violations are not thoroughly explained.
It is about time that financial institutions take a step back and look at agreements from an average person's perspective. They must be able to answer the following questions:
Can a person without financial background understand the agreement?
Do customers have any resources that they could check to read about it more?
Would anyone be available to answer their queries shortly?
#2) No customer should be begging for active and responsive customer support.
Let us address the elephant in the room: Customer services for most companies are inefficient. No, they are not because of the employees that work in this part of the business. Instead, customer service inefficiencies are often caused by businesses that put customers at the bottom of their priorities.
This applies to all industries, but I would like to specifically call out financial services businesses. They are all so quick keeping deposited money. Financial institutions have to make sure that the speed of their customer service is at par. They should not just shove people away without providing them an answer and be responsible for addressing queries.
Yes, customer services also have costs. This is why financial institutions should explain financial products and services in detail. It avoids several issues, which include:
Angry customers screaming at your phones for not knowing about what was supposed to be explained in the agreement;
Confused customers inquiring about the different fees and charges applied to their accounts; and
Unaware customers who are not knowledgeable about some terms in the agreement.
Fewer costs and better customer service? Yes, please!
#3) Lastly, no one should be taken advantage of because of emotional distress.
Yes, I am talking about you, Payday Loan Providers. Providing people with instant loans with astronomically high-interest rates. I am bad at Calculus, but I know my Economics, and I am aware that the rates should cover the risks and the costs of doing business. However, some of these high rates are becoming unreasonable and unjustifiable.
If you are a decent person with empathy and consideration in mind, you would understand that charging high on loans taken out of emergency are those who are left with no more choice but to resort to borrowing. While high profits are the goals of most businesses, empathy is equally just as important.
A bit of storytime, the most out-of-touch comment I have heard from a borrower in my entire existence has to be this one: "If they could not afford to pay their loans, then they do not have every right to bring their parents to a hospital." From then on, I blocked that person from all my social media accounts. I did not need toxic people like that in my life. I do not need those types of people in my life.
Okay, I suddenly am mentally drained after all this typing. I also have schoolwork to do for now. I will probably continue writing and commenting about this tomorrow.