On understanding the motives of bankers and clients in the banking business using knowledge of psychology …
As financial markets are going through rapid change and great turmoil, I thought I should do a banking psychology. I will steer clear of all economics and simply focus on what it means to be a banker or an investor from a psychological perspective. Of course, the driving force behind banking is money, and banks thrive on 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 to frame the psychology of banking. 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 of it. give to your banking operations. Money is primordial and raw, it’s 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, first and foremost, cares about his own profits, how much more he is adding to his account and it is almost an addiction. Just as a merchant or shop owner is obsessed with available goods, the banker will be obsessed with money he can lend, borrow, or do business. The pressing need to earn more money is what drives bankers in the first place. This could be seen as a “personal” need and a craving for money to largely satisfy personal desires. Any investment or business banker or broker, or anyone in the financial industry, will presumably 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, who is 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 the main object of a banker’s attention and the smell of money could make it quite an altruistic approach, so there is a general or ‘social’ need to protect and nurture other people’s money as well.
Third, the banker has a greater political need, whether he manipulates / controls his money or other people’s money, and this ‘political’ need would derive from understanding the economic situation of the country and understanding that he has an active role to play in stabilizing the economy. .
While the first personal need for money satisfies the basic urges of individuals, the social need to protect other people’s money is quite altruistic, and the political need to stabilize a nation’s economy is largely a need for power. Money for a banker thus satisfies his altruistic desires, his needs for power and his personal desires. This can almost be explained psychologically with a hierarchical Maslow model in which basic desires come first, followed by power needs and then altruistic needs. With this in mind, any banker would be interested first in his own profits, second in the economy and the stability of the nation, and lastly concerned about his clients and investors.
The clients:
The second aspect of the discussion is how banking could help to derive the psychology of clients, clients or investors. There are different types of customers and people have different priorities or expectations of banks and bankers. Clients may have a borrowing need, an investment need, or a savings need depending on their age or stage of life. For example, young students and people with lower incomes are interested in obtaining credit facilities through credit cards and loans and see banks as a support to hold onto for their financial problems. Of course, borrowing is equally important for entrepreneurs and professionals, but the motivation may be different. The need for ‘indebtedness’ arising in turn from personal or professional needs would be the most important reason why banking among youth and youth, students, graduates or people who are between jobs or newly employed will be boosted to banks due to their borrowing needs. . So, in general, young people between the ages of 18 and 30 tend to be less interested in interest rates and more interested in the loan facilities that they can obtain with their credit cards or loans during this stage of their life. .
Young professionals and middle-aged people are often more banking savvy and would seek to increase their already earned money through investments. This is the group focused on better interest rates and better returns on investments rather than direct loans unless absolutely necessary. The “investment” need of young and middle-aged professionals can coincide with loan needs when buying a home or starting a new business becomes a priority. However, these are investments again, so 30-55 year olds are primarily looking for investments and banking helps meet their investment needs during the crucial “build” phase of their life. The end of middle age to old age is marked by an increased fear of loss in life 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 being very real, we want to save for old age, which begins after 50 and continues until at least 70. Although this understanding should come to us sooner, it usually does not seem to manifest itself. . our savings needs until we at least reach middle age. During late middle age, banking needs are primarily motivated by a need for “savings” and middle-aged customers seek 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 “move-in” phase of life.
Of course, during old age, the need to borrow, invest, or save progressively 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 the oral, anal, phallic, latency, and genital phases of sexuality in our childhoods and our personality patterns are largely shaped by whether we have effectively resolved conflicts during this period or simply obsess over a period of time. certain stage. Therefore, anal retentive personalities are those that have an inordinate need for control or precision, making these people more likely to save from a very young age and even show extreme parsimony in monetary matters or banking behavior. The expulsion anal personality is the one that wastes too much, so these people will be interested in an excessive loan and can turn your credit history into a disaster. Oral aggressive personalities are those who are ambitious and have extreme investment needs, and while this can be a positive aspect, bankers must be aware of the more psychological aspects of individuals before lending too early. Perhaps banks should conduct psychological tests on people before granting loans to understand which clients are likely to pay and which clients are not likely to meet their obligations and perhaps we can warn of banking disasters in the future.