No customer tells the bank the truth

August 23, 2021
by Noriyuki Morimoto

Suppose you have a small sum of money on deposit, and the bank asks whether you have a particular purpose for it, no one will give a straight answer. If you say you haven’t decided how to use the money, you are bound to be offered investment trusts or insurance anyway. The bank’s sales policy emphasizes the importance of confirming the customer’s intentions, but straight-out asking only exposes the motive for asking and makes the customer wary.

It must be said that the position of the bank is very peculiar. By handling the privileged product of deposits, they not only know their customers’ financial situation and the ins and outs of money, but also have a natural superiority as creditors over their debtor customers through loans.

Therefore, as the bank cannot be equal in its relationship with the customer, if it asks the customer a question, the customer will always try to guess its intention. So, for example, if customers are asked why they keep their money in a deposit, they interpret it as being told to purchase a mutual fund.

The FSA will probably say that banks should know in advance the customers’ asset status, experience and knowledge in investment, and objectives of investment when selling investment trusts. However, it is unlikely that the bank can ask questions and get the right answers. In particular, there is no way for anyone to reveal their asset status to a financial institution. In the first place, asking customers for their highly private information is itself contrary to commercial common sense.

However, as common sense of the bank runs contrary to common sense of the world, the bank makes a questionnaire with great seriousness and forces the customer to fill it in without any question, without realizing that it is abnormal. The banks have a serious disease.


[Category /Deconstruction of Finance]

Noriyuki Morimoto
Noriyuki Morimoto

Chief Executive Officer, HC Asset Management Co.,Ltd. Noriyuki Morimoto founded HC Asset Management in November 2002. As a pioneer investment consultant in Japan, he established the investment consulting business of Watson Wyatt K.K. (now Willis Towers Watson) in 1990.