I have had for a long time that the noble function of Banking is financial intermediation.
What happens with many banks is that they are unable to generate sufficient income in this margin, or in their complementarity, until they reach the banking product, due to the poor quality of their credit. And in order to have a quality credit, you cannot commit dislikes. That is, whoever accepts and decides credit risks, must be competent enough not to accept what should not be accepted.
Often, risk analysis and management will not be done using sufficiently advanced models in this area (Markowitz Model, CAPM - Capital Asset Pricing Model, VaR - Value at Risk, Historical and Monte Carlo Simulations, etc.), also and because there are no professionals capable of understanding and applying them. Then, as a consequence of a credit that should not have been granted, impairments and defaults begin to appear, which implies the constitution of provisions, as this will irrevocably affect the results of the year.
In order for the “disaster” not to be so great, the Bank about seven, eight years ago began to fire with commissions on everything and everyone. Some even cry out to the skies, they are so absurd that they compel each other.
Any economic agent who takes out a loan from a bank, who is paying it on the contractually agreed date, ends up paying a commission which the banks pompously call the "payment collection management commission". But many others exist and that make absolutely no sense.
The initiative taken a few days ago by the Government (will only come into force in January / 21), to put order in many bank commissions, should have been taken a long time ago.
The Bank has to look at the way it grants its credit and minimize its losses, especially in doubtful loans. Here you must follow that very old postulate: “in case of doubt, it is not allowed”.
Then, one should also turn to disintermediation. Create desirable products for your clients (investment funds), as a way of diversifying your profits and finding alternatives to increase your results. But it is easier to charge the commissions of those who have nowhere to turn, as they all act in the same way.
I believe that the main problem of Banking today is in the way it grants credit!
Banking has already advanced a lot in digitalization, it is here on the right track. All that remains is to discipline the credit acceptance and decision process, so that it is not necessary to apply so many commissions to the various economic agents. With the cost of deposits at zero (0), and although the lending rates may be low, there is always the spread that helps to compose the premium to receive for each active transaction.
This proves that good management can be carried out, without commissions, but with the utmost attention to the credit that is granted, because that is where the root of the negative results of these Institutions lies.
The author writes according to the old spelling.