On understanding the motives of bankers and customers in the banking business using knowledge of psychology…
With the financial markets going through rapid changes and considerable turmoil, I thought I’d do a psychology of banking. I’m going to get away from all economics and just focus on what it means to be a banker or an investor from a psychological perspective. Of course, the driving force of banking is money, and banks thrive in a consumer culture. Banks have various functions, from stabilizing an economy to stabilizing a person’s credit history, and banks can have a business, investment, savings, retail, private, or mortgage focus. There are two ways in which banking psychology could be framed. One way is to understand the psychology of the banker and the other is to get into the mind of the client or client/investor. Banking is like any other business, but the only difference between banking and other businesses is that in the case of banking, bankers and customers deal directly and only with money and this can have a significant impact on the importance that they give to your banking. Money is something primitive and raw, it is almost like an object that stimulates some kind of basic need, and the prospect of dealing with raw money is exciting and intimidating.
The banker:
The psychology of the banker is based on his personal, social and political need for money. The banker is primarily concerned about his own earnings, about how much more he adds to his account and it is almost an addiction. Just as a merchant or shop owner is obsessed with the goods available, the banker will be obsessed with the money that he can lend, borrow or do business with. The dire need to make more money is what drives bankers in the first place. This could be seen as a ‘personal’ need and craving for money to largely satisfy personal desires. Presumably any commercial or investment banker or broker or anyone in the financial industry will have a healthy or unhealthy personal need for money. Of course, we all need and love money, but bankers focus more on money.
Second, the banker, being in love with money, focuses not only on his money but also on other people’s money. It is essential to understand that money is still a banker’s main object of attention and that the smell of money can make them quite altruistic in their approach, so there is a general or “social” need to protect and nurture money as well. others.
Third, the banker has a greater political need, whether he manipulates/controls his money or other people’s money, and this ‘political’ need would stem from understanding the economic condition of the country and realizing that he has a role to play. asset to play in stabilizing the economy. .
While the first personal need for money satisfies the basic drives of individuals, the social need to protect other people’s money is rather altruistic, and the political need to stabilize a nation’s economy is largely a need for power. Money for a banker thus serves his altruistic desires, his needs for power and his personal desires. This can almost be explained psychologically with Maslow’s hierarchical model in which basic desires come first, followed by power needs, and then altruistic needs. Considering this, any banker would be interested in his own profits first, in the economy and stability of the nation second, and only last concerned about his clients and investors.
The clients:
The second aspect of the discussion is about how banking could help derive the psychology of customers, clients or investors. There are different types of customers and people have different priorities or expectations of banks and bankers. Customers may need a loan, need an investment or need savings depending on their age or the stage of life they are in. For example, young students and people with lower incomes are interested in obtaining credit facilities through credit cards and loans and consider banks as a support to cling to for their financial problems. Borrowing is of course equally important for entrepreneurs and professionals, but the motivation may be different. The need for ‘indebtedness’ derived in turn from personal or professional needs would be the most important reason for banking among young people and young people, students, graduates or people who are between jobs or new jobs will be propelled to banking for your borrowing needs. In general, people between the ages of 18 and 30 tend to be less interested in interest rates and more interested in the loan facilities they can obtain with their credit cards or loans during this phase of their life.
Young professionals and middle-aged people are often more banking savvy and would look to increase their already earned money through investments. This is the group focused on better interest rates and better investment returns rather than direct loans unless absolutely necessary. The ‘investment’ needs of young and middle-aged professionals can overlap with loan needs when buying a home or setting up a new business becomes a priority. However, it’s all about investments again, which is why 30-55 year olds are primarily looking for investments and banking aids to meet their investment needs during the crucial ‘building’ phase of their life. Late middle age to old age is marked by heightened fear of life’s losses and the need to save for the future. We are tuned to worry about the future and mainly about old age and dependency. With the decline in physical strength and a productive work life all too real, we want to save for old age, which begins after age 50 and continues at least into our 70s. Although this realization should come to us sooner, we usually don’t seem to manifest it. our savings needs until at least we reach middle age. During late middle age, banking needs are motivated primarily by a need to “save” and customers in their late middle age are looking to save their earnings and are not overly concerned with investments. This is a time when people begin to consciously withdraw from social and professional life, albeit very gradually. Older men and women simply want their money to be there when they need it during this ‘moving out’ phase of life.
Of course, during old age, the need to borrow, invest or save gradually decreases. The psychological phases described above are general and do not consider individual differences. Many people develop savings or investment needs early in life, and there may be social and cultural patterns in people’s banking and financial behavior. Considering a more subjective/individualistic point of view, the borrowing, saving and investment needs of any individual can be interestingly explained with the help of psychoanalysis. Freud suggests that we all go through oral, anal, phallic, latency, and genital phases of sexuality in our childhood and that our personality patterns are largely determined by whether we have effectively resolved conflicts during this period or simply become fixated. at a certain stage. Thus, anal retentive personalities are those who have an excessive need for control or precision, so these individuals are more likely to save from a very young age and even show extreme parsimony in matters of money or banking behavior. The anal expulsive personality is one who wastes too much, so these individuals will be interested in taking on too much debt and can turn their credit history into a mess. Oral aggressive personalities are those who are ambitious and have extreme investment needs and while this can be a positive aspect, bankers need to be aware of the more psychological aspects of people before lending too soon. Perhaps banks should psychologically test people before lending to understand which customers are likely to pay and which customers are likely to default and then perhaps we can avoid banking disasters in the future.
