Debate House Prices


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The Banking Sector

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Comments

  • Most of my accounts aren’t free.

    Revolut, Natwest HSBC and SocGen all charge for my main current account.

    Coutts doesn’t, but that’s because they require that you lodge a huge chunk of money with them at effectively zero interest so they make the money that way instead.

    I think it’d be pretty healthy for banks to start charging everyone; it’d stop people thinking that they are a free service or that the foregone interest on people’s £300 average balance actually covers all that the banks provide.

    There'd be a bit of a first mover disadvantage for those banks who start charging.
    I know some banks charge monthly fees on their accounts. But mostly because they offer some kind of Premium service - or other such bumph..
  • jonnygee2
    jonnygee2 Posts: 2,086 Forumite
    1,000 Posts Second Anniversary Name Dropper Combo Breaker
    . As regulators squeeze excessive overdraft charges etc. Then the likelihood of monthly charging increases. As free banking isn't free. As banks recoup costs from someone.

    I think, more likely, banks will be cutting costs and incentives, as opposed to starting charges.

    To illustrate, the average high street bank spends something like £60 per year on maintaining each customer (that's not including 'incentives' like interest, switching fees, cashback etc, or fixed costs). This amount is still easily recoverable, but due to competition they are also splurging on incentives, and they have huge infrastructure costs thanks to clunky tech and 'bloated' management structures.

    The newer tech banks are spending something closer to £20 per customer. At this level, interchange fees alone are likely to cover 25%+ of the per-customer cost. Add in a few revenue generating products (loans, overdrafts, premium accounts, market places) and it should be easy to get to a positive per-customer margin. They have much leaner business structures, too, and efficient, scaleable technology.
  • jonnygee2 wrote: »
    I think, more likely, banks will be cutting costs and incentives, as opposed to starting charges.

    To illustrate, the average high street bank spends something like £60 per year on maintaining each customer (that's not including 'incentives' like interest, switching fees, cashback etc, or fixed costs). This amount is still easily recoverable, but due to competition they are also splurging on incentives, and they have huge infrastructure costs thanks to clunky tech and 'bloated' management structures.

    The newer tech banks are spending something closer to £20 per customer. At this level, interchange fees alone are likely to cover 25%+ of the per-customer cost. Add in a few revenue generating products (loans, overdrafts, premium accounts, market places) and it should be easy to get to a positive per-customer margin. They have much leaner business structures, too, and efficient, scaleable technology.

    What are these?
  • jonnygee2
    jonnygee2 Posts: 2,086 Forumite
    1,000 Posts Second Anniversary Name Dropper Combo Breaker
    What are these?

    Visa/Mastercard charge merchants every time a card is used, some of this goes back to the bank.
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