What comes to mind when you think of financial growth?

Probably working hard and dealing with banks.

Rightly so. Although sadly, at this rate, banks will soon come to be the very antithesis of financial growth.

What was once traditionally known as the pillar supporting financial growth, has now become a troubling contradiction. Whilst banks are relentlessly increasing the prices for their services, the quality of these services is plummeting.

This is a crisis that is causing the very customers that banks aim to serve feel like they want to cut ties. The problem is they can’t. Unless, of course, they choose to go down the road of banking with a foreign entity. These offshore bank accounts are bad news for our local economy. Local banks are supposed to be prioritising the local community through loans to small businesses, loans, and other financial products. This reinvestment helps stimulate our local economic growth, which in turn will support job creation, and will fund all sorts of local projects.

I could go on about why we should be keeping our workers’ hard-earned cash here in Malta, but I would be dappling too comfortably with the obvious. The reality is that our local banks are being viewed as entities that are primarily focused on upping their profits at the expense of providing genuine value to genuine people.

The banking environment, which our fathers and grandfathers would remember as being defined by a personal touch and services tailored to individual needs, has now been overtaken by a cold, impersonal system, characterised by exaggerated (or hidden) fees and declining customer satisfaction. Our very own fathers and grandfathers will now face the same sort of scrutiny as a businessman running transactions into millions.

No wonder many citizens feel a certain sense of dread when it comes to dealing with their bank. It’s a very sad situation, when you consider that these are the very institutions that we are supposed to trust with the fruit of our honest labour. Without a significant shift in priorities, within the context of an increasingly disillusioned market, local banks stand on the brink of completely losing the trust of the Maltese public and business communities.

Citizens and businesses are finding themselves caught in a complex web of procedures that appears more designed to hinder than to help. Let’s say you want to engage in the simplest of transactions: opening a bank account. The processes you will need to go through are either outdated, or else re-invented to make things harder, but disguised as prudence.

Now on a national level, if businesses and start-ups are faced with such bureaucracy at the very start of their company’s journey here in Malta, I wouldn’t blame them if they opt to wave goodbye at the local banking scene.

There’s another valid reason why they would want to do that. Our banks are completely risk averse. Whilst nobody is expecting them to throw caution to the wind, an excessive amount of caution towards risk means that innovative ideas must sit pretty on metaphoric shelves, because our banks just won’t believe in them, let alone invest in them. On an island where our brainpower is possibly one of our only remaining resource after the sun and the sea, we really should be doing better than stifling ideas.

I fully understand that a sudden increase in account activity or incoming cash from a suspicious source can trigger a freeze, as banks have legal obligations to monitor and report suspicious activities to prevent fraud and money laundering. But I am appalled by the amount of people who are reaching out to tell me how their bank accounts are stalling after receiving donations, inheritance, remuneration for specific tasks carried out, or larger payments for perfectly legitimate and routine business transactions. 

How can businesses operate in this environment? How can ordinary people place their confidence in banks for significant life events? How can a grandmother who wants to pass on a small something to her grandchildren be asked questions akin to a criminal investigation?

The process to obtain basic client information has turned overly invasive, bordering on the ridiculous, irrelevant, and demeaning. There’s also an issue with the way the information is organised by our local banks. It feels like data is constantly being hoarded in isolated compartments. This refusal or inability to streamline and organise customer information undermines operational efficiency. People often find themselves having to repeatedly provide the same information, or being shuffled between departments that operate in silos.

It's fair to say that banks in Malta are adopting a holier-than-thou stance, using regulations as a pretext for enforcing overly strict policies that go beyond even what the European Central Bank (ECB) mandates. Even in contexts where the ECB actually fined other European banks for not observing their obligations accurately, clients were not made to bear the brunt.

What is happening on a local level is a tactic that veils a reluctance to engage meaningfully within the spirit of regulation, opting instead for a display of caution that benefits the banks’ interests more than ours.

Maltese citizens and businesses alike are not being served at all by institutions that are more concerned with self-protection than with meeting the needs of their customers, and this is a concern that I will take on should I gain the electorate’s trust as a candidate for the upcoming MEP elections.

 

Marija Sara Vella Gafà is a Labour Party candidate for EP election