Banks to turn tellers into tutors

Experts back financials as they launch initiative to help customers budget better.

Clare Woodcraft, chief executive of Emirates Foundation, and Hussain Al Balooshi, programme manager for Esref Sah, are all for the initiative to increase financial literacy. Mona Al Marzooqi / The NatShow more

ABU DHABI // An initiative to transform bank employees into financial advisers is under way in the UAE.

As part of its Esref Sah (“spend right” in Arabic) programme, the Emirates Foundation teamed up with the UAE Banks Federation to raise awareness by training banking staff as financial literacy counsellors.

Clare Woodcraft, chief executive of Emirates Foundation, said the programme would benefit banks as well as customers.

“We want to help the banks understand that if you have a financially well-educated customer who understands your products they are more likely to engage in your services and you’ll keep them around longer,” she said.

With one – as yet unnamed – major bank on board, a pilot is to take place this summer when a handful of employees of one branch will be trained to provide customers with guidance.

Two Emirates Foundation employees will go to America to be trained by Operation Hope, a non-profit organisation that provides economic education to youths and adults, before returning to the Emirates to train bank employees.

“People think they don’t have enough money to save, but if we just sit with someone and show them how to save they can improve their financial situation quickly,” said Hussain Al Balooshi, programme manager for Esref Sah.

Having fallen in debt himself a year ago when he got married and began supporting his wife’s education, the 30-year-old said basic knowledge learnt through the programme helped turn around his financial position.

Monitoring his spending, shopping smartly and looking for discounts were some of the small steps that made a big difference. “I don’t care if people are talking about what I am driving any more,” said Mr Al Balooshi, who commutes in his 2004 Toyota Lexus sedan.

Although he initially felt peer pressure to upgrade, he said: “When you prioritise what is important, such as education and property, then those things don’t get to you as much.”

Ms Woodcraft said providing bank employees with the tools to help their customers would boost business.

“Banks don’t have an interest in high non-performing loans, bad debt is not of interest for any bank,” she said.

Not all are in agreement. A former Emirati bank employee said that all banks profited heavily from bad debt.

“The bigger the loan given out the bigger a bank employee’s rating and profit, ” said Ahmed N, who worked as head of collection in a major bank for 10 years, before leaving the industry three years ago.

“It doesn’t matter if it is bad or good debt.”

Despite working in finance, Ahmed managed to accumulate a debt he is still paying off. “If you dangle a sweet in front of someone he’s going to take it, even if he knows it is bad for him,” he said.

His colleagues, he said, routinely pushed Emiratis to take more than they asked for and he found it hard to picture banks taking the initiative seriously.

Salah Al Halyan, managing director of Baizat, a financial consultancy, disagreed with Ahmed’s view.

He said with the central bank putting strict guidelines on the loans banks offered it would be difficult to oversell. He said the establishment of a credit bureau, which monitors people’s banking activities, would also deter banks from providing loans that were out of line with the customer’s capability to repay.

“Such a programme is there because you want banks to be more financially responsible and care about their employees and the interest of their clients,” said Mr Al Halyan.

In a global economic climate where organisations and governments are trying to be more financially sound and think long term, individuals had to do the same said Ms Woodcraft.

“The economic crisis in 2007 was, in part, caused by numerous individuals making bad economic decisions, so in the current environment we need to put financial literacy at the top of the agenda,” she said.