Wednesday, 10 November 2010

Banking Greed

I volunteer a few hours a week to a local soup kitchen / community centre here in Toronto.

The clients are, to put it mildly, poor. Some are living on disability cheques, old age pensions, some on welfare and a few are living by means unknown but they all have one thing in common. The need for a bank account.

A client at the centre recently asked me why he was being charged a monthly $5.00 fee on his account and having been a former banker, I had no good reason to offer him.

Let's see...

  • The bank gets his money direct deposited electronically so no teller is involved
  • I'm pretty sure that even as an account holder, he wouldn't be allowed to enter a bank let alone deal directly with the teller in person so no he's not a "high maintenance" client
  • The client has no credit cards, no line of credit, no loans, mortgages and no overdraft protection so he's not a potential credit risk
  • His account balance is never high enough to get any interest paid 
  • He is not likely to be writing many cheques and I doubt does more than 2-3 ATM debits a month
  • Of the ATM withdrawls he does, he can only do them in $20.00 increments so at the end of the month, there's likely some amount < $20.00 remaining in his account which rolls over monthly and the bank pools this with the rest of it's deposits
To put it bluntly, this guy is a LOW net worth individual but every month, like clockwork, he gets ding'd with a $5.00 fee for the privilege of banking with XXXX. Considering his gross income, that $5 is a fair chunk of change. That represents what he may spend on food for a day yet he has to pay it out to a corporation that last quarter made in excess of $1.28 Billion in profit.

I know all the arguments in favor of the fees. Hell, I used to spout them off when friends of mine bitched to me when I was in banking. This guy's money is safe, he's got convenient and secure access to his funds anytime he wants it through ATMs or Debit Card purchasing. The bank's invested huge amounts of money in the infrastructure to set up the network of ATMs. Etc..etc..etc..

But wouldn't it be possible for the banks in general to set up some kind of "Fee Waiver" program for anyone receiving Social Assistance ? I know the bank can tell where his monthly stipend is coming from. Just flag his account and the fee gets waived.

Let's do a little experiment. We're going to focus on just the homeless for this experiment, not the poor, the disabled, those on old age pensions, the underemployed or those just living below the poverty line. Just the homeless ok ?.............In Canada there are estimated to be somewhere around 150,000 - 300,000 homeless people.
Despite the visibility of homelessness in Canada, there are no accurate national statistics on the size of the homeless population.13 Canada's National Secretariat on Homelessness has estimated that the problem affects approximately 150,000 people,14 although other reports identify as many as 300,000 homeless in Canada.15
Lets say that the XXXX bank mentioned above was the ONLY bank that the homeless can deal with and they waive the $5.00/month fee for them all. Worst case scenario is that the bank would be out $1.5 Million a month in revenue ($5 x 300,000) or $4.5 Million a Quarter. The bank's Profit would drop by 3/10ths of a percent.

Read this sentence over carefully and then let it sink in.

If bank XXXX waived it's monthly banking fees for every homeless person in Canada, their profit would drop by 0.03%

While it may not be sexy imagery on Bay St. I would think a few posters showing a homeless person holding a mug of hot soup on a cold wet and snowy winter night or something like this would go a long way to guilting the shareholders out of 3/10 of a percent in profit................

(short notice and I'm not an artist)



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