by independent Fund Manager and adviser Oscar Ramírez

Are you interested in finding a better bank? Don’t beat yourself up. Even the locals find it a daunting task. Here are a few tips from me, someone who knows the industry from the inside.

Setting the scene

A few months ago, one of my clients went to her local high-street bank to make a transfer. Because she has special needs, she is not comfortable with online banking. That small trip to the branch set her back 600€. For a simple transfer.

“We’re here to help,” one can almost hear them say – to help themselves to your hard-earned money.

Small wonder that, according to HelpMyCash’s latest survey of Spanish bank customers, nearly 80% are considering switching banks.

Another recent survey by Morningstar, the independent fund research house, ranked Europe’s biggest banks by the quality of their investment products: 1 for the best, 100 for the worst. The top three Spanish banks came in at 65, 81 and – cue the drumroll – 100! You could hardly make it up.

So here are 5 tips to bear in mind when choosing:

1. Know the incentives

Always keep in mind the incentives of the person sitting across from you. It has become common practice to move branch managers around from office to office. Presumably, the idea is to stop them becoming too attached to their customers, lest they lose sight of their true purpose: maximising profits for the bank, and doing so quickly.

Reliable official statistics are not always easy to come by, but a 2023 survey by CCOO, the Spanish trade union, found that 81.6% of bank employees described commercial pressure as “unbearable”, often leading to anxiety, depression and sick leave. Unsurprisingly, the same survey found that 86.8% were not proud to tell people what they do for a living. And that’s what you’re up against.

2. Shop around

Free market logic tells you that as companies get bigger, they can offer cheaper and better products and services, simply because of economies of scale. In the strange world of Spain’s big banks, however, that logic often seems to go into reverse: the bigger they are, the harder they fall on you.

If you are looking for a new bank, or thinking of switching, there are a couple of routes you can take.

If you can manage without someone on the other side of the table – whether adviser or salesperson – the obvious option is online banking. It is generally far cheaper than the high-street alternative, though you will largely be left to fend for yourself (with an automated phone system or an AI assistant to keep you company).

If you do want a human being to help you, it is worth adding smaller banks, independent advisers and independent wealth managers to your shortlist. As a professional investor, I have always steered clear of the largest financial institutions. It has probably saved me a small fortune in therapy bills. There’s no reason the same principle shouldn’t serve you well.

That said, smaller does not automatically mean better. A boutique outfit is no guarantee of honest service or reasonable fees. It simply improves your odds.

3. A little help from your artificial friend

The current technological revolution has brought with it an extraordinary tool: large language models – ChatGPT, Claude, Gemini and the like. For a few euros a month, you can have something remarkably close to a very capable assistant on call.

Gather as much information as you can about the products and services you are being offered – brochures, contracts, terms and conditions, fee schedules – and ask your AI of choice to analyse them for you. It can help compare proposals, simplify jargon, spot obvious red flags and translate complexity into something a normal human being can actually understand.

A couple of caveats are in order. First, some models tend to be cautious when it comes to giving financial advice, often for regulatory reasons. Second, they are still imperfect: they make mistakes, and from time to time they make things up (technically known as ‘hallucinations’). Even so, they are an excellent first line of defence. Use them to sharpen your questions, then take those questions back to the banks you are considering.

4. Skin in the game

Banks, in Spain and elsewhere, are treated as systemically important institutions – the classic too-big-to-fail sort. If one collapses, the fear is that it may drag much of the wider economy down with it.

That creates a glaring moral hazard: in good times, the profits are private; in bad times, the losses are becoming public. Remember the subprime crisis? Never mind if you don’t, you still helped pay for it. Heads they win, tails the rest of us lose.

Nassim Taleb, the essayist and investor, has long argued for the importance of skin in the game. Civilisations before us had a cruder but highly effective way of enforcing it: Hammurabi’s Code, or more broadly the principle of an eye for an eye. If a house collapsed and killed the owner’s son, the builder has to pay with his son’s. Brutal, certainly. But also rather effective at concentrating the mind.

When it comes to your nest egg, how can you know whether the person recommending a product is truly acting in your interest? In most cases, you cannot know for certain. But there is one simple question worth asking:

“Are you investing your own money in the product you are recommending to me?”

The answer may not tell you everything, but it will be informative (no need to spill any blood).

5. All you need is all you need

Finally, you walk into your local branch to make a deposit and walk out with an insurance policy, a home alarm and a gleaming new set of cooking pots. Again, you are not alone. Look on the bright side: somewhere, someone may just have secured Employee of the Month.

You are dealing with the Big Bank Wolf, often in a language that is not your own. I do not envy you. But I hope the above makes the process a little easier and perhaps a little less intimidating.

Good luck.