Call to boycott NATWEST

kevin.philips

Surely a level of pure economics would come into force here, banks already make an extortionate amount of money (they are making huge super normal profits), what is there stopping another entrant to the market who wishes to pick off a slice of this extra profit and offer banking services but without the feared per transaction charge. There is still going to be a profit for them and we should not forget that those reclaiming their unlawful bak charges will not put these corporations out of business.!!!

Equally we have heard nothing for a while from the big supermarkets' finanacial wings and it wouldn't surprise me if they were sitting on the fence waiting until all of this dies down before re-assessing whether efforts on entering the current account market would be worthwhile.

I can not think of a better marketing opportunity for them to enter the volatile current account scene than if the big 4 financial institutions collude (Which again raises a legal issue) and attempt to price fix with similar charging structures.

I did not mean to offend anyone with my previous statement but I get fed up with hearing lines like

"manage your finances better and it wouldn't have happened blah blah yadda yadda"

Let people run their own financial lives, deal with the two clear situations seperately and as a group stand together in a hope of having enough of a voice to drive this forward.

Plutos_2

Er, have you tried setting up a national bank with branches in every town, the infrastructure to process payments and debits and customer service.

Pure economics does play a role here - it suggests that barriers to entry create market conditions in which a oligopoly can thrive and make massive profits, and it suggests that switching costs mean once an individual is with a bank, they are unlikley to leave as the cost is too high. Both suggest that competition will be minimal, profits high, and innovation and customer service low (an oligopoly has no interest in innovation or customer service because these cost valuable profit - profit that will remain because innovative entrants find it too costly to enter the market).

Some oligopoly theory suggests the higher the switching costs (think about those who are poor and therefore find it difficult to obtain another account), the higher the price can be charged (bank fees).

Now look at our retail banking market.... for once, econonomic theory seems to describe reality pretty damn well.

Plutos

Take a look at the UK banking market

kevin.philips wrote:

Surely a level of pure economics would come into force here, banks already make an extortionate amount of money (they are making huge super normal profits), what is there stopping another entrant to the market who wishes to pick off a slice of this extra profit and offer banking services but without the feared per transaction charge. There is still going to be a profit for them and we should not forget that those reclaiming their unlawful bak charges will not put these corporations out of business.!!!

Equally we have heard nothing for a while from the big supermarkets' finanacial wings and it wouldn't surprise me if they were sitting on the fence waiting until all of this dies down before re-assessing whether efforts on entering the current account market would be worthwhile.

I can not think of a better marketing opportunity for them to enter the volatile current account scene than if the big 4 financial institutions collude (Which again raises a legal issue) and attempt to price fix with similar charging structures.

I did not mean to offend anyone with my previous statement but I get fed up with hearing lines like

"manage your finances better and it wouldn't have happened blah blah yadda yadda"

Let people run their own financial lives, deal with the two clear situations seperately and as a group stand together in a hope of having enough of a voice to drive this forward.

westernpromise

kevin.philips wrote:

Surely a level of pure economics would come into force here, banks already make an extortionate amount of money (they are making huge super normal profits)

I'm not sure that's true - the absolute cash amounts are large because banking is such big business, but the overall returns on capital are not especially high.

Banks do this because they can get away with it and because it is a very easy way to make money compared, say, to running a very efficient organisation.