Commercial banks who were once lord and master over the local financial landscape now find themselves deep in the financial sea surrounded by hungry sharks that are biting off big chunks of their market share.  

Historically, local consumers were made to labour long and hard to enjoy the services offered by local commercial banks.  With their high interest rates, dominant attitudes and repugnant personalities, they ruled the industry with a rod of iron, subjecting all comers to a barrage of questions similar to that of a criminal investigation.  

But today, this is no more, as the emergence of non-traditional players have entered the market bringing relief to the consuming public by offering new services, lower rates of interest and longer repayment periods, thereby forcing the once dominant commercial banking sector to change its modus operandi.

Banks are not sharks but they are swimming in very hostile waters, surrounded by aggressive sharks, admits Mr. Deon Moses, Senior Manager-Commercial Banking and Business Development at RBTT Bank, Grenada Ltd., in an exclusive interview with the Barnacle.

No longer can bank operators sit on their backside in the comfort of their air-conditioned offices and wait for consumers to come crawling and begging for assistance.  But they too must become aggressive, creative and innovative as they seek to find new business while holding on tightly to what they already have.
 
Moses noted that the need for the banking sector to diversify has never been so urgent because banks can’t keep spreading interest rates.

“If you look at North America and Europe, the more developed economies, banks have been looking at a lot of non-traditional ways of making profit,” says Moses, “so they have moved away from the traditional spread on interest rates to ancillary services, services that they can charge fees for”.

The days of armchair banking are over, declared Mr. Moses as he acknowledged that those attacks are coming from just about anywhere and everywhere.

He said, “Those days are over, long gone. As a matter of fact banks have to consistently review who really the competitors are. It is easy to sit and say that our competitors are the other banks here, the credit unions and the NIS but we would be fooling ourselves if we do that.

“Our competition is much, more than that. You sit and you compete with people abroad for example. You meet a man on the street and he has a credit card from a bank in Australia, the US, England wherever. You have to see it as competition because you are in the credit card business also.

“In the US supermarkets compete with banks. Just about everybody who has serious cash flow compete with you. The commercial houses in Grenada compete with the banks because some of them offer fixed deposit to their customers, they offer hire purchase on cars for example and we give vehicle loans so when you look at the competition, that is increasing. He explained.

The fierce fight taking place within the financial sector for market share will translate into serious benefits for the consumer, says Moses who believes competition benefits everyone since It makes the system that much more efficient and causes us to conduct our business with competition in mind.

He admits that some of the newcomers such as the National Insurance Scheme (NIS), whose cost to raise money for the purpose of lending to the consuming public is zero, as compared to those of commercial banks who must spend large sums to raise money to lend, are already making the fight for the banking sector all the much harder.

Already consumers are benefiting big time from banks’ creativity and innovation as they respond to the competition. At RBTT Bank the benefits are longer repayment periods and lower interest rates.

Nadia Sandy is the manager of Commercial Banking at RBTT and she is convinced that now is as good a time as any to take out a loan because of their attractive rates.

She said, “We have become more innovative over the last few years in terms of the way in which we package our mortgage product. Traditionally it was just the standard; we would finance a certain percent of the cost of construction but we would not have looked in-depth at equity financing.

“Today however, we are now dealing with more home equity loans, the terms are much longer. Years ago you would tell yourself that a mortgage is a fifteen or twenty year loan; today we have cases where mortgages are as long as thirty years.

“The rates are good, our services are much better than it has ever been. That is something we have to be constantly reviewing just to be able to survive in this increasingly competitive industry. So now is a good time for your mortgage.” she assured.

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