Bank On This

25 01 2011

I remember when my father took me to the local bank to open a savings account. Back then everything was done with “passbooks,” which the teller inserted into a special machine to type every deposit and withdrawal, as well as interest (“Interest,” he says…as if that’s something they’re still doing these days).

But banking has changed significantly since the early 1970s. I cannot remember the last time I actually had a passbook for a savings account. And thanks to deregulation of the banking industry at both state and national levels, I cannot remember a time when I didn’t have an account with at least a regional bank, if not a national bank.

Today, thanks to online banking and EFT, I hardly ever walk into a brick-and-mortar bank at all. My paycheck. My tax refund. My bills. Just about everything occurs without my having to touch anything, or reach out and touch someone.

Now what, you ask, would cause me to even consider this a pressing issue? Simple. I noticed the television ads a local bank has been running lately. They tout their 18 locations and 100 ATMs as reasons why we should avoid competitors (some national, some regional). It’s all about convenience.

OK. But how many people still prefer BAM banking vs. online? Might banks (any banks still focusing on physical presence be committing too many dollars to an asset that may no longer be wanted or needed?

According to the American Bankers Association, Americans now prefer online banking almost as much as they prefer ATMs and branch banking combined. In other words, that coffee you smell may very well be indicative of the scent of another dying business model.

That’s not to say that BAM banking will ever go away. We will always have need for bankers, like when we wish to purchase houses and cars, establish lines of credit, start a savings program, or tinker with the contents of our safe deposit box.

But much of the banking we do during the course of our normal lives can be done online. Electronic billpay is a snap, and saves time and postage. You never have to worry about payments arriving in time. And balancing your account is a piece of cake. If you need a bank at all, most of the time you can do everything at a drive-up window. If you even need that much service.

Which is too bad considering how much money has been spent on building banks the last 20 years. As new neighborhoods have sprung up around Amarillo, I have seen no fewer than six banks line up almost next door to each other, tripping over themselves to be able to provide a convenient, secure haven for people’s money. But now that we hardly ever actually see that money in the first place, either coming or going, raises questions of the viability of this business model.

It’s almost like building a new Blockbuster when the neighbors are streaming Netflix.

Wait. That was another blog.

I will never forget my father taking me to the bank. Those memories are forever etched on my brain. So profound are they that we took our kids to the bank about 5 years ago to start their own accounts. But as digital natives, they just don’t have the same attachment to BAM institutions as my generation did. They know they have some money stashed away, but they can see it online. And it looks the same as it would if you asked a teller to give you a printout.

Maybe it’s time for banks to quit talking about buildings, and instead be developing more and better mobile apps to allow us to do our banking from anywhere. Maybe it’s time to consider that ATMs were very cool in the 1980s, but they may have exceeded their relevance. And maybe it’s time to redefine banker’s hours as 24/7.

When that happens, they’ll have my interest.

Dr “In The Balance” Gerlich

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