The Hidden Costs of Banking

Banks could easily charge for services if they actually delivered services that warranted it.  The issue is that Bank A offers the same boring services as Bank B.  If Bank A charged for it, everyone would jump to Bank B.  Banks need to take a long hard look in the mirror, realise that banking is not just about deposits and lending and start to focus on a quality customer experience.  People are willing to pay if they get something of value in return.

Just because petrol from BP, Shell, Aral and other petroleum companies is more or less the same as one another, I won't expect them to be given away for free. Likewise, basic banking service - boring or not - doesn't have to be free. Differentiated features command premium but are not required to justify a basic fee. That banks have kept them free reflects a legacy problem: Having started off by giving away toasters and other gifts for opening checking accounts, it's too much of a stretch for them to think of levying fees for such basic banking products. That explains why most of them give away traditional, but costlier, 'products' like branch, cheques and cash for free but are able to charge fees for newer, but cheaper, 'products' like EFT, debit and credit cards. On the other hand, banks have a solution about which they smartly maintain a low profile: It's called Net Interest Margin.

We 'feed' the banks our money so they can exist and be useful to us (like a cow we can milk).   Should we pay the bank also? No.  The Bank needs our money to function and prosper.  They should look good and produce good stuff for us to feed them rather than the one in the next field.

Now if you work in a bank, you might think of yourselves as 'Lions' not cows. Maybe that's a problem.