Finance
The Financial sector has constantly been in the spotlight in recent years. As partner to many leading organisations in this sector, Ordina follows developments in this sector very closely.
Recent developments
Customers hold the power
Since the economic crisis, power has shifted to the customer. Banks, pension funds and insurers have seen the necessity of focussing on their customers. This means complete transparency in the costs and returns earned by products. Customer intimacy and regaining trust are issues that define the success of financial institutions in the future.
Consumers are empowering themselves
Consumers are joining and following consumer interest groups, consumer programmes or social – and virtual networks to a greater extent and gaining power in doing so. Financial institutions giving inaccurate advice to customers run the inevitable risk of irreparable damage to their image or reputation.
Increased and sharpened supervision
Aside from the traditional supervisory bodies, DNB (the Dutch National Bank) and AFM (Netherlands Authority for the Financial Markets), other parties have begun influencing and pressuring the Dutch economy in the interest of consumers. The government has offered its financial support and as a result the Minister of Finance and the Dutch Parliament hold a critical eye over developments. As a result of the European Financial crisis, political interest from as high as the European Commissioners and the European Parliament has increased dramatically into all matters regarding government finances and the banking sector. The immediate future will see increased public scrutiny and sharpened public opinion in efforts to regain control of the situation. An urgent need has arisen for simple and uncomplicated products, where the goal of the product, the returns earned and the costs are clearly indicated.
Financial education: duty of the bank
The financial crisis cannot be attributed to the irresponsible risks taken by the financiers only, but also lies with consumers who might have been too eager. Financial advisors need to be daring enough to say ‘no’ if a product does not suit a client´s profile. This brings up the issue of financial education.
The gap in expectations
Consumers are shocked when confronted with their pension accumulation, their future liabilities and the income needed to cover these expenses. A gaping hole exists between what is necessary and what will be available. It is quite fair to say that there is gap in expectations. This begs the question: how are financial institutions going to address this situation and can they help consumers to turn the tide.