Why Bank always says ” Save Money in the Bank”? If this question is asked in mass, then we get to know How bank plays with the mind of people.
Mind 1: Saving=Investment which is only possible if we save money in bank.
Mind 2: As more savings are generated in the bank it will be possible for them to create or manufacture credit. Credit is created on the foundation of high-powered money (cash).
Mind 3: Saving money is imbedded more depositors that increases the number of clients.
Mind 4: Banks saying ” Save Money in the Bank” is basically a marketing of its fundamental function, of accepting deposits from public.
Mind 5: Bank collects scattered idle money so as to fund and perform its another function of lending. With adjustments in interest income and interest cost, banks always seek to earn positive spread income. We save in exchange of higher returns, on the other hand it is regarded as a source of income, liquidity and a fund for commercial loan, consortium financing, for purchasing securities. The banks are also required by law to meet the reserve requirements imposed by the Central Bank.
Mind 6: Banks are guided by profit motive. In order to cater the cut-throat competition, sustain and grow in the industry, they need to apply every possible measures. Regular flow of cash is indispensable for banking business that deals mainly with money. Besides, saving serves to be the major source of fund for banks. It is also important to avoid assets liability mismatch. For that they come up with attractive deposit schemes and innovative promotional activities.
Mind 7: To support government planning and accounting. To increase their raw material. To avoid unnecessary expense. To bridge the gap between surplus and deficit sector in term of money. Wider flow of money
Bank now have a powerful tool — behavioural science — to figure that out. Lenders are of the opinion that by knowing short-term private dreams of their customers and giving personalised attention to achieve them, the stickiness of customers will improve. Psychologists say there is a science behind it. “Most people tend to choose short-term goals over long-term objectives, and the propensity for immediate gratification is very powerful in human psyche,” Behavioural science is already being used for selling a variety of products, but using it for financial products is an extension of a wealth-management practice, where managers define ‘goals’ for the customer rather than returns, said a senior executive of a large private bank. “If I say you need to save Rs 8 crore for your retirement, you will give up immediately. But if I can show you through a game that you have enough resources right now to ensure that amount is accumulated at retirement, your expenditure and saving pattern will change,” Interestingly though, by simulating the sacrifices to be made to reach one particular objective and offering other interesting side objectives, the ‘games’ tend to bring out the hidden desire of a person. These are typically 20-30 minutes’ game, but every time, the gamer tends to come up with a different conclusion about her life than what was there in her mind always. It is the right thing to say you are saving for your daughter’s education, but it turns out you really want that Ferrari. In developed markets, banks take these games and offer them to their customers through their own application. When the customers play the game and agree to share their data with the bank, the wealth manager steps in.