Last week, the head of the National Consumer Agency – Ann Fitzgerald – stated in an interview in the Sunday Business Post that falling competition in the Irish banking sector was a great concern.   Whilst this seems to have passed off in the press without note, when you actually revisit what has happened in the banking sector in Ireland, the whole financial and investment landscape has indeed radically changed for the consumer. 

With Halifax closing its Irish branch network and Postbank also winding down, consumers have fewer options for day-to-day retail banking.   Investec Private Bank’s recent survey revealed an additional lack of consistency in competitive rates for medium- to high-level investments.  Fees and charges are still lacking transparency across the board.   ‘We did an evaluation of the banks’ websites.  It takes quite a few clicks to get real information’, said Ann, chief executive of the NCA.  

While banks have been recapitalized and vast swathes of Irish real estate are being transferred to NAMA, a sense of new economic reality has set in.  Consumers and investors –– are left feeling confused and misguided. Many are suffering the effects of poor investment and lending choices, others are reeling from the effects of volatile stock markets, often resulting in large CFD losses. 

It has emerged that it is not so much that there is a lack of money in circulation but more that consumers have now decided to keep this in cash due to their decreased confidence in the banking market.  The European Central Bank revealed in April this year that we, in Europe, are hoarding a whopping €40 billion resulting from savings accounts being turned to cash.  The ECB report added: “The additional bank notes in circulation had not been returned by the end of 2009, suggesting that they are being hoarded both inside and outside the euro area.”

Jerry Purcell, Marketing Director of Augusta, an asset management company in Ireland, increasing evidence of the Irish consumer starting to think outside the box.  Augusta’s recent launch of Returns Plus, an income-generating fund, has evidenced this trend.  ‘ With the main banks offering unattractive and inconsistent savings rates, people who want to see a return for their money need to look outside the banks to get a real return.’

Jerry has noticed that the Irish consumer is looking, post-recession, to do something a little bit more interesting with their money whilst at the same time are eager to secure a regular income from that capital.  ‘At Augusta , we see that Irish people are beginning to make strides, post-recession to invest their money in alternative vehicles.  They need to see a more compelling rate of return and one that pays back a regular income stream to support their cash needs.   Building trust and understanding are key, as the Irish consumer has been badly let down.’

Jerry Purcell,
Marketing Director,
Augusta,
Longford House
Longford Place
Monkstown
Co. Dublin

http://www.augusta.ie/