Investment products as an antidote to high inflation

By Leonidas Stergiou

Apart from the absolute zero in deposit rates, the returns have been negative for quite some time due to inflation. Especially this year, when the average annual inflation is expected to reach 3%, the real returns, for all deposits, are estimated at -2.6%.

This percentage, in absolute terms, corresponds to a loss of purchasing power or a decrease in the value of household deposits by 4 billion euros in 2022 alone.

Banking strategy

The banks’ strategy now focuses on moving part of the stagnant deposits. In that way:

1. Banks will reduce stagnant liquidity losses so that they can cut interest rates on loans without losing profitability. The revenue from this move is estimated at around 150 million euros.

2. They will increase revenue from investment management and commissions. Total revenue from management and procurement is estimated for 2022 at around 4-6 billion euros.

3. Information, restoration of trust and consolidation of investment culture in the customers of the banks, with the benefit of the positive returns.

Speaking to the banks, they all stressed that their goal is to move part of the deposits, with information as the main vehicle, responsible banking and the restoration of trust. According to officials, despite the large increase in deposits, there is a large inequality.

Dealing with distrust

The big challenge for banks is tackling depositors’ distrust, which has justifiably stemmed from unfavorable stock market developments since 1999 and the crisis that followed in 2008.

According to Mr. George Vareltzidis, Deputy General Manager of Eurobank and Head of the General Directorate of Individuals of the Bank, this distrust is mainly due to two reasons:

1. The accumulation of savings and wealth is observed at older ages, ie over 65-70 years. These ages still have the fresh memories of the collapse of the Greek Stock Exchange in 1999 and the 10-year crisis that followed from 2008 onwards. That is, the loss of confidence when they hear about shares, bonds, mutual funds, etc. is justified.

2. The average Greek depositor judges based on experiences and data in Greece, ignoring the prospects or positive developments and high returns in other markets.

As Mr. Vareltzidis explains, restoring trust requires responsible banking, information and professional approach, protecting the interests of the client, reducing his risk, taking into account the financial situation, family, work, needs, goals and much more. other clues.

New approach

The banking policy for 85% of depositors who can invest in alternative forms, ie those who have more than 60,000 euros, is based on the following:

1. Creating personalized solutions with a combination of mutual funds and bank insurance products.

The solutions take into account the family situation, needs, goals, etc.

2. Not all deposit money in alternative forms, but only part.

3. Creation of savings and investment products of low, medium and high risk, depending on the profile and the level of risk tolerated by each client.

4. Creating products where a gradual payment for the investment is possible.

5. Long-term planning.

6. Continuous information and training of the clientele.

The campaigns

The campaigns and the information campaign of the banks have already started and will be escalated by the middle of the year, when new bank insurance and investment products will have been designed and launched.

For example, Eurobank, one of the first banks to start raising awareness of the need for alternative forms of investment, continues with the slogan “I share Knowledge”, while creating long-term, low-risk, gradual solutions. The products include group mutual funds and co-insurance products with Eurolife.

Alpha Bank continues the message “We Give Value to Property”, with information vehicles and investment solutions from Alpha Finance and Alpha Asset Management as key vehicles, providing 24 mutual funds and other professional solutions, depending on the profile.

Also, Alpha Bank has already prepared and is proceeding with the creation of new bank insurance products as a result of the strategic deal with Generali.

Piraeus Bank recently communicates the need to look at other alternatives for making money through Optimum investment portfolios, providing personalized solutions from 13 different portfolios that invest in all markets and create combinations for low-, medium- and high-profile savers. risk.

At the same time, other solutions are offered from the asset management platform and in collaboration with the insurance company Ergo.

In the same line, ie in the creation of new products, simultaneously with continuous information and promotion campaigns of the existing ones, with various personalized combinations, the National Bank proceeds. After Capital Plus, which includes deposit and investment solutions of guaranteed initial capital, it also offers the Psilos mutual funds, foreign mutual funds of third parties and mutual funds of NBG Asset Management Luxembourg, as well as access to shares and bonds of Cyprus.

And, of course, bank insurance of National Insurance.