The More The Merrier

In the Name of Competition: Joe Issa Welcomes JN Bank

On the heels of comments made by award-winning businessman Joe Issa in an interview, that costly bank fees can only be lowered, not by regulation but through increased competition, a new bank has emerged to do just that �" provide competitive rates to customers.

“I welcome JN Bank to the banking community and wish its members every success. It has pushed the barriers as a building society and now it’s time to transform itself into what the market demands.

“With no limit to the number of banks which the system can accommodate and no impediments to entry except the requirements of the Banking and Bank of Jamaica Acts, I hope more banks will come on stream, not simply to make up numbers but to become competitive and charge lower fees than currently obtains,” says Issa, executive chairman of Cool Group and former bank director.

A former student of the renowned London School of Economics in the United Kingdom, Issa had posited that “when there are few banks there is a tendency for them to act as oligopolists and, therefore, compete not by lowering prices, but by differentiating their products and services which does not benefit consumers.”

Issa had argued that rather than creating a differential advantage, commercial banks should try to develop a comparative advantage, or cost advantage, by producing at a lower cost than their competitors, which gives them the ability to sell at a lower price for the benefit of customers.

Chief Executive Officer of JN Bank, Maureen Hayden-Cater, may prove Issa right in his assertion that more banks could lower service fees, after she promised competitive rates for consumers on the basis that the bank “does not follow a model of high profits based on fees, but instead, operates on a policy of low fees and increasing access to credit.”

After some eight years working towards meeting the requirements of the relevant legislations, Jamaica National Building Society which has existed for 153 years has now opened its doors as JN Bank; and according to her, “it will expand banking options and increase the competitiveness of financial services in Jamaica, including new features and special packages,” The Gleaner reported.

Last year, Jamaica’s two largest banks, the National Commercial Bank and Scotiabank earned a combined total of $17.9 billion from fees and commissions sparking public outcry, with calls for the fees to be regulated. There was also the issue of dormant accounts which JN Bank has also addressed, stating that an account becomes dormant after five years of inactivity with all dormancy fees refunded once the account is reactivated.

With a membership of over half a million JN Bank is the only one to be owned by its members, who are said to have been requesting banking services for years. It is the country’s seventh commercial bank and the third largest with assets of $180 billion and savings of $101 billion.

“We are ready. We are really anxious to serve our members and to be able to provide the services that they have been asking us for many years…We are doing our best to get the staff as equipped as possible because we expect that we will have quite a lot of persons coming through…We are really quite excited and enthusiastic to start serving our members to the fullest,” Hayden-Cater said.