They work for us: why do the banks throw us into old age?

The banking system in Israel is turning its back on the older population, which has difficulty coping with the rapid change that has made banks online.

This deprives them of the opportunity to manage their money, not to mention their lives, with dignity

Shlomo Ma'oz

07/10/2022

Friday, 07 October 2022, 08:05 Updated: 08:23

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Analog seniors in a digital world (illustration).

It pays for banks to know as little as possible (Photo: ShutterStock)

The Israeli population is aging, as in other Western countries, and bank profits are rising as a result.

As the people get older and the life expectancy increases, their ability to deal with the financial banks is decreasing.

In 2021 there were 1.163 million elderly people in Israel who already made up 12.3% of the total population, until a few years ago they made up about 10.3%, with the establishment of the state the old people made up only 4%.

In 2035, according to the calculations of the Central Bureau of Statistics, the percentage of elderly people in Israel will reach 14%. The percentage of elderly people in Israel (according to the international definition, an elderly person is someone over 65 years old), is similar to that of China, but lower than that of the United States, 16.9% , France 20.5%, Germany 22.9% and of course Japan with the world record 28.5%.

The percentage of old women among all women in Israel is 14%, the percentage of old men among all men in Israel is 11%.

The proportion of old women among the total elderly population in Israel is 55%.

At the age of over 75, the time when they need increasing help to manage life and the household, the share of women among all the elderly already rises to 58%.

Over the age of 85, the share of women among all the elderly climbs to 62%, according to the data of the Central Bureau of Statistics.

Analogues in a digital world

As people get older, their cognitive ability declines and accordingly their ability to deal with the sophisticated banks also decreases. The elderly lose Simple financial rights and opportunities that could improve their standard of living, make them need less favors from a person or government. The trap for the elderly, sometimes also for a population younger than 65, stems from a cruel scissor movement.

The first blade of the scissors is that life has become digital and online, with tremendous speed, within a few years.

This includes rapid changes, sometimes within every few months where everything is done digitally with accompanying passwords.

The activity in the bank accounts and public assets in the banking system, performing operations, transferring funds, changing the structure of the real estate portfolio and searching for alternatives, the majority is done by the customer and not through the bank clerks who have become a rare commodity. Most of the elderly lack digital literacy

, naturally.

They did not learn and were not exposed to them enough during their economic activity. Not only this: according to the Central Bureau of Statistics, two thirds of the elderly were born abroad, which means that their ability to access the digital Israeli existence is even lower.

They simply have a low and not exhaustive digital literacy compared to young Israelis, the children of the country.

The second blade of the scissors cutting through their financial flesh is the continued reduction of the number of branches, officials and hours of operation and services for the general public and especially for the weak who cannot deal with the complicated world of operations via the computer, the Internet or the mobile phone.

Although the Bank of Israel demands to make sure that the services will not be affected due to the closing of dozens of bank branches, and also that attention should be paid mainly to the elderly and the weak, but in practice hundreds of thousands of Israelis are de facto excluded from its usual banking system.

In an article I published here at the beginning of September this year, I came out against the Bank of Israel which does not impose on the banks a dynamic system for comparing the credit interest rates, the right interest that the banks in Israel offer to their customers.

I proposed that each bank would be required to publish publicly and in a given system the interest rate it grants to the public's deposits.

I detailed how it is possible to act to make it easier for the public to make comparisons between banks and to maximize the interest and income on their savings.

To the credit of the Bank of Israel, and especially to the supervisor of the banks, it can be said that he took into account the extensive claims made in the article in the column published here and immediately told the banks already on the seventh of September, that he would require the banking system to publish the right interest rates actually paid by each of the banking corporations.

This week, the inspector has already published a comparison table, as I requested, by the hour with a monthly frequency, so that the public's eyes can see what he can get during a period of higher interest on his deposits.

The Supervisor of Banks Yair Avidan believes that his activities will strengthen the customers to make informed decisions in a simply accessible and convenient way.

It doesn't matter which bank you are in, there are no righteous people in Sodom (Photo: ShutterStock)

How much do we (not) get?

I have been following the Bank of Israel for decades, such rapid changes have never been made by the Bank of Israel, whose high-paid officials are firmly stuck in the ivory tower and whose attention to the poor and the common people has never been serious, until the recent action of the supervisor of banks Avidan.

You can go to the Bank of Israel website today and see the interest rate variations on deposits;

Up to three months, the Bank of Jerusalem leads with an interest rate of 1.36%, underestimating Bank Masad from the International Group, a bank mainly for the public of female teachers, with an interest rate of 0.35%, perhaps he assumes that the female teachers do not understand interest rates.

For a period of three months to a year, Mercantile Bank leads with 2.31% and Mizrahi-Tefahot Bank understates with a low interest rate of only 0.87%, perhaps in the surplus it has left compared to the other banks, it finances advertisements that are a song of praise for its human capital.

From one to two years Bank Tefahot moves to first place with an interest rate of 2.81% and the understatement is Discount Bank with an extremely low interest rate of 0.34%.

From two to five years, the maximum at Bank Mizrahi Tefahot is 2.44%, and the minimum interest rate is Discount Bank with only 0.65% (near the time of writing this column, the digital bank, One-Zero, also published its interest rates, which exceed all of its competitors).

The right interest rate became even more critical this week after the Bank of Israel raised the annual interest rate by another 75 basis points to 2.75% and it predicts that the interest rate will reach 3.5% in a year, in my estimation the interest rate will be even higher than that.

What is clear is that the urgency of the public to carry out pricing, shopping in the vernacular, between the banks regarding the interest rate they can receive - has increased, this is a lot of money for the coming year.

Perhaps an amount that will allow you, the readers, and the rest to finance a trip abroad (after shopping around among the airlines regarding the cost of the next trip abroad, of course).

In the coming year, inflation will decrease compared to the levels it reached in the last year, while the interest rate will continue to rise. This means that after a long period, the public will receive a realistic interest rate, not immediately, realistically, that is, the interest rate that is higher than the inflation rate that will prevail in a year.

According to an inspection by the CBS according to international standards, there has been an increase among the elderly in recent years in access to a computer, but the relative part that has paid off is still lower than the population under the age of 65. In a survey regarding indicators for optimal aging by the CBS, for 2020, it was found that in using the Internet mainly thanks to the mobile phone. Note, for example, that the rate of men using online government services was twice as high as women, which means that as women age, they suffer more from digital literacy difficulties and thus also in accessing banking services, one can assume.

The Jews use the Internet for online government services four times more than the Arabs, another weak population that will be trampled under the wheels of rising interest rates and tailings inflation due to the purchasing power of the public.

Let's go back to women, the number of years old women live with disabilities is greater than among men, 11.5 years compared to 7.7 years.

For this reason, the delivery of digital literacy courses by the government, yes the government, is extremely essential, so that they can enjoy a good life in their last years, while bringing a good return on their money. The employment rate among men aged 65 and over is 21% - twice the employment rate of old women, The gap has been maintained over the years.

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Your bank told you how much money you can get on a foreign exchange deposit. What, no? (Photo: ShutterStock)

Information is worth money

Among all those aged 65 and over, the use of the Internet increased from 32% in 2015 to 67% in 2020. It is to be hoped that the use of the Internet will improve the condition of the old women and men to receive a return for their money in foreign currency placed in the banking system, an issue that the supervisor of banks did not allow according to The hour of wisdom.

At the end of June, the public holds foreign currency deposits amounting to approximately NIS 373 billion, including in this amount approximately NIS 6 billion in foreign currency of compensation deposits from Germany.

Until a few months ago the interest rates on foreign currency were zero, on the euro the interest rate was actually negative and the interest rate on dollar deposits was almost zero.

But today, after the massive interest rate hikes in the US to about 3.05%, you can get excellent interest on a dollar deposit.

Tens of thousands of Israelis, mostly old women and men, must not have heard that it is now possible to get a handsome interest on these deposits.

Even assuming that holders of foreign currency in deposits will receive 3% per year, it is possible to receive even higher interest on large amounts. This means interest for the public from foreign currency deposits in the amount of NIS 11.2 billion per year.

Just to give you an idea, a US government bond, the safest asset in the world, yields an annual return of approximately 3.3% for three months, and an annual return of approximately 4% for six months, one year, and two years.

Naturally, there are daily changes in returns that should be a reference point for you.

Have your bankers offered these alternatives for investing in foreign currency in the dollars you hold in your accounts?

My feeling is that the bankers have become scumbags who are not interested in their customers and certainly not in the old customers.

The Supervisor of Banks Yair Avidan should embark on a new path of due diligence for bank customers, this time in the field of foreign currency.

It is true that the war against the banks is complete and Sisyphean, but there is no choice.

State Comptroller Mateniho Engelman should immediately examine the issue of "the public's right to know" about the possibilities for savings and interest in the Israeli banking system.

The banks' profitability is important, their efficiency is necessary, their stability is essential, should it be on the backs of the weak who will now become even weaker because price stability has been damaged and interest rates are soaring?

Maybe the banks can think of other ways to stabilize the system, freeze the wages of their employees who are no longer dealing with "annoying" customers but with friendly computers and software, maybe reduce the bonuses, maybe reduce the training days for the employees, maybe reduce the dividends for the shareholders?

Maybe look at Israel's back yard and ask for forgiveness for the new year.

• Of money

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