Get ready to embrace banking’s ‘new normal’ as all is changing rapidly

IT is certainly true to say that the banking and financial services environment has had some real change since I’ve last put pen to paper.

Within our readership of The Southern Star, and the geographical area it represents, we have seen significant announcements from many of our leading retails banks across almost all of our towns, seeing a real impact of the evolving banking world, less doors open to do business with, and certainly less people to talk to within this sector to meet our needs.

We have had some real and final decisions made by institutions to close doors in towns, while others have reverted to full-automated banking, removing the banking counter as we know it, together with some institutions capping the level of funds that one can hold on deposit within.

Despite this, our geographical patch has hit many media headlines for all the right reasons, where it is far more likely that a family can live within our beautiful hinterland of West Cork, but yet work for a corporate, based almost anywhere. One might say – ‘but everything is automated nowadays and you can do it all online’ – and that is true in part to meet the basic needs.

However, when it comes to making more significant financial decisions, we are far more likely to revert to a real person to sit across from, virtually or physically if safe to do so, but know that we can one day again sit across the desk from this person to discuss our business.

The pace of change impacts on all of us in a real way. I see it very evident amongst all age profiles – but in particular, our youth, as typically we all began by having a relationship with someone in our local bank. The need for advice has never been greater – while I read an email that I received overnight – where the lady alludes to having opened her bank statement for the deposit account, and has received ‘I think €1 interest over the year.’ This leads her to ask ‘What else can I do with this to try and yield something?’

But we all know, time moves on despite everything going on, and time together with compound interest (like we all learnt in the classroom) are the real contributors to growth and wealth.

I had the very pleasant experience of confirming with a lady this week, the maturity value of a monthly saver she commenced in 1981, yes 40 years ago, with a minimal monthly payment of less than €15 into a multi-asset type fund and yielding the handsome sum north of €75,000 now, on its maturity looming.

It equates to a yield of 9.6% per annum approx and hence we can see the real evidence of compounding. If in doubt – that teacher was correct!

So, you might ask – what are multi-asset funds? These typically incorporate deposit, fixed interest equities, property and alternative-type assets in varying proportions to meet one’s preferences and typically yield decent levels of growth over time.

Availability to such funds is available for nominal sums of €100 per month in the marketplace, with the advice being, to allow a reasonable level of time for the investment term, however with access to funds throughout.

It is incumbent on us now as consumers to seek out advice for ourselves, despite doors closing in our midst. We must accept and face the evolving financial world with fewer people to discuss our affairs with, while taking the leap ourselves to reach out for advice where available, and together with time and compound interest – we hope you, too, can yield some decent returns. In the meantime – stay safe!

FDC Financial Services Ltd is regulated by the Central Bank of Ireland.

• Seamus O’Mahony is a financial consultant with FDC Financial Services in Bandon.