Remarks by Supervisor of Banks Yair Avidan at the LongeviTech TLV 2023 conference
Supervisor of Banks Yair Avidan spoke at the LongeviTech TLV 2023 conference. The following are his remarks:
I am pleased to be here, and I thank you for the invitation to deliver remarks at this conference, dealing with this important population group. The fact that you chose this conference to shine a spotlight on senior citizens is very welcome, and it corresponds with the Banking Supervision Department’s agenda – protecting customers’ rights and providing banking services that are available, accessible, and convenient for a wide variety of bank customers, especially senior citizens.
In banking, just like in other fields, the use of digital systems is increasing. This is due to changes in public preferences, as people prefer to interact with the bank digitally, and because of the many advantages in doing so – availability, convenience, and reduced transaction fees.
Between 2019 and the first half of 2022, there was an increase in the rate of transactions made using direct channels – the bank’s website, cellular application, and automatic machines at the branches. In 2019, just 65% of households’ banking transactions were through digital means, while in 2022 that rate had risen to 88%.
The data also shows that among customers over the age of 71, 93% of banking transactions are through direct channels, including 45% through the website, 35% through a cellular application, 7% through telephone call centers, and 6% through self-service machines at the branches.
Despite the significant increase, and the fact that many senior citizens have adopted the use of digital banking, some are still having acclimating. These are basically our parents and grandparents – the Founders who built up this land or who immigrated to it from the Diaspora. At this stage of their lives, they must deal with new situations in a variety of areas, and must get used to a world that is developing rapidly – and for them perhaps too rapidly.
The difficulties they experience in their interactions with the bank, particularly in dealing with digital banking, have the full attention of the Banking Supervision Department’s employees, and of myself personally. We examine their complaints in order to understand their difficulties, and we constantly challenge ourselves to new thinking so that we can advance more solutions that will make it easier for this important population group. I would like to provide a few details about what the Banking Supervision Department has done so far in this regard.
Alongside the transition to digital bank transactions, there is a process of reducing the number of bank branches. We are involved in this process, working to minimize the impact on customers as much as possible, with an emphasis on senior citizens. According to the law, closing a branch requires approval from the Supervisor of Banks. To the best of our knowledge, Israel is currently the only country in which banks are required to get approval from the regulator in order to close branches.
In order to reduce the number of branches responsibly, the Banking Supervision Department uses a proper methodology to examine the banks’ requests and their impact on customers, and has published a dedicated Proper Conduct of Banking Business directive on this matter. According to the methodology and the directive, the banks must take into account the needs of customers, especially the rate of senior citizens, and appropriate alternative methods that are offered to them for continued service.
Based on the findings of these examinations, we approve or reject requests to close branches, or we approve a closure provided that a number of conditions are met in order to minimize the impact to customers in general, and to senior citizens in particular. For instance, we may require the bank to install an ATM at the location in order to provide cash withdrawal services, or that a bank provide a mobile branch or partial bank services at the location. We may also require the bank to make personal phone calls to customers over the age of 70 to notify them that the branch will close and to offer explanations and assistance regarding the available alternatives.
At the same time, we help guide senior citizens as they adjust to digital banking. In order to understand the barriers they face, we conducted a comprehensive user survey that included in-depth interviews, observations at branches, and discussions with senior citizens and with banking system employees. These generated a number of interesting insights, based on which we advanced broad actions to empower customers in digital banking. These actions were led by the Banking Supervision Department through the Association of Banks in Israel and the banking system, following a uniform program and implemented country-wide.
As part of this, lectures were held on “digital banking empowerment” in dozens of localities across the country, providing broad information on digital banking, its advantages, and how to use it. Seniors were then invited to personal training sessions at the bank branches on the digital banking services that exist at the bank, including practical trials.
The COVID-19 pandemic had a significant impact on the lives on senior citizens, due to physical distance from family and from their natural environment, and difficulty in obtaining various essential services. We helped seniors cope with the challenges they faced in obtaining banking services, and together with the Ministry for Social Equality, the Association of Banks in Israel, and the banking system, we formulated a voluntary covenant to make banking services accessible to seniors during the pandemic. As part of the covenant, the banks improved their telephone response to seniors. Customers over the age of 70 were given preference in service lines at bank branches (while the existing law gives such preferences only from the age of 80), and the banks provided additional alternatives to make banking services more accessible, including mobile branches at locations with high elderly populations.
We are also working to help seniors by regulating the matter of reverse mortgages at banks. These allow people to obtain financing against a lien on a dwelling alone, without the need for additional sources to repay the loan.
These loans are generally taken out by seniors who live in their own home and who are interested in liquid funds for various purposes. They allow borrowers to maintain a proper standard of living, provide a one-time amount for moving to an assisted living facility, provide money to help their children, etc. Currently, reverse mortgages are mainly offered by insurance companies and other nonbank entities, with a few offered by banks. We are currently working to regulate them in order to expand the financing possibilities open to senior citizens.
These actions came in addition to many steps that each bank takes to benefit senior citizens, such as training sessions, lectures, and personal guidance, and in addition to a variety of tools being developed by the banks, due to the tremendous importance they attribute to the senior population and their acclimation to digital banking.
The Banking Supervision Department remains sensitive to the needs of senior citizens, and will continue responding to the various challenges they face. I would like to take this opportunity to call on the banking system to continue thinking of the well-being of senior citizens in their interactions with the bank, and to develop more tools that will help them conduct their banking activity digitally in a more convenient and friendly manner, while continuing to guide and help those who have difficulty getting used to it.
The banking system has an important role to play in designing the social fabric of our country, and it must continue to devote special attention to various population groups, some of which have difficulty consuming its services. For our part, we will support them and work to remove barriers as much as necessary.
Thank you, and may you continue to have a successful conference.