Why do financial institutions leave so much on the table! When opportunity knocks answer the door. Awareness to exercise leadership is here and financial institutions retreat into the statistics while overlooking the obvious. The economy is taking a nose dive most of the banking and financial institutions are unaware of the massive opportunity available. Though financial success has to do with being at the right time and in the right place one has to also be aware that it is the right time and the right place.
Banks and other institutions are not aware that they are in position to blast off like a rocket. To exercise this type of leadership it will take guts and insight to the overall effect the economy is having on everyday people.
In the midst of uncertain times, where the economy is tanking on most fronts, opportunity is ringing loudly and yet it is not being heard. What am I taking about? I am talking about leadership and awareness.
Credit is being tightened up, people are upside down on their homes, and oil is starting to restrict mobility of most Americans. Yet the win win attitude has not come forth from the financial sectors. They are just worried how they will come out of this economic mess. Everyone affected by this downturn is worried about the same thing.
Being an optimist I see the most incredible opportunity for these institutions. The opportunity is to help families and small businesses figure out what they need to do to weather this economic storm. Let us look at some background then I can take you through the opportunity portion of this leadership idea.
During the last prosperous movement in the markets and housing industries from the mid 1990’s up to around the summer of 2006, many things have come to past. More people got into homes, started new business, had job stability, and people were filling up their 401Ks and IRAs. Money was easy to find, private investors had seen little risk even in the sub prime markets.
Life was good. Our banking institutions were our financial partners for these new homes or new business etc. But, when things go south, where are these partners? They were readily available to finance people when things are going well, but how about when things are not going well? The bean counters are now abandoning the very source of their prior prosperity and that is the very people they originally financed.
When this occurs, social responsibility is out the window. Oh, yes they may have some projects to help rebuild some areas or give to a charity. They now see many savings accounts start to dwindle, foreclosures start to increase and new businesses close down. Yet let us take a closer look at the core of this dilemma.
The core of this is people. People who may have hit on hard times, maybe just need more cash to pay for the elevated prices on food, utilities and gas for the family car. The families affected have solutions that may be limited by what they already know. Families may take the route of drawing down their savings accounts, 401ks, IRAs or stop any savings altogether.
There are groups out there working on improving family credit worthiness and saving homes from the foreclosure markets, which is a good thing to do. My next question is where are the banking and financial institutions on all this? What are they doing to help their customer base weather the financial uncertainties being faced today?
Let me illustrate the problem especially in the housing market. A banker calls me and says they have a solution to my problem. How can that be? My house is now worth 56% less than what it was in 2006. My estimation is that the housing market will continue to roll back another 10 to 15% over the next 6 months. It will take approximately 7 to 10 years to recover that loss in value and equity. What will they do for me? Another loan maybe based on what?
You see there is no provision for this type of problem. This devaluation happened only once before that I can remember, back in the 1980s. I don’t believe that a provision for such an occurrence has been added to any mortgage contract.
The other situation is the drawing down on savings and other financial instruments. A year ago it use to cost $ 50.00 to commute to work and now it costs $ 150.00. Food prices have been affected as well, my average cost on food was $ 30.00 a week, now the same items cost me $ 48.00 dollars a week.
So if one was saving let us say $ 100.00 per month and placing it toward a child’s future education or toward retirement that discretionary income has been wiped out. Well most financial institutions will leave it at that. The question is why? I will say this it is due to lack of leadership and awareness; they are leaving the future on the table at this point of the game.
The truth is that there are other ways in which any institution can help individuals save money. All that is necessary is the will to do it. It may cost the institution a little bit of money but the relationship and loyalty that will come out of it will be incredible.
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