Banks: New tech, old processes

a) "Immediate Credit for Cash Deposits" says a big sign in red at the new Bank of America ATMs.

Huh - what's the big deal? Well, I guess there is the risk of counterfeit notes so immediate credit is a step forward. But it also draws attention to the fact that other 99% of deposits - checks - do not get immediate credit. In fact, the bank can put holds for up to 2 weeks. So they can make money on what they call "Interest on Uncollected Balances". And even more punitive in-bound wire charges if you get an electronic payment to your account.

Banks spend 3-4 times more on technology than the average manufacturer or retailer. In this day and age of 24x7 electronic banking, you think we would be able to do better. With all the data mining available they can see patterns of accounts where deposited checks are more vulnerable to problems.

b) Like most, I toss the countless credit card applications we get in the mail. But I do scan for what I call 0/0/0 offers - 0 annual fee, 0% interest on cash transfer, 0 transfer fee and will take advantage of those. Recently I got one from Capital One. Even better it has an invitation reference number and a web site where you apply. Great so far, except the web interface just will not accept data in certain fields. Reluctantly I call the toll free number. The agent wants all kinds of information - you know what I mean by all kinds. 2 weeks later I get a letter in the mail. No card, they want my address. Well, duh - you just sent me that form at my address. Curious beyond belief now, I sent the form back.

I just want to see just how convoluted they have made the application process - so far they have made me use the web, the phone, the post. Guess SMS is next? Next an in-person visit?

c) Wells Fargo just introduced vSafe - a "personal online safe that lets you safeguard, organize, and access electronic copies of the things that matter to you most - from wills and trusts to insurance policies and immunization records." Ok, you got my attention. Then you start to lose my attention when you remind me "For certain kinds of signed paper documents - such as wills, deeds, trusts, stock certificates, passports and powers of attorney, for example - an electronic copy often does not have the same legal effect as the paper original.". You also have physical safes to offer - how about something innovative which scans, take pictures, and otherwise digitizes what I put into the safety box and then store those digits in the vSafe.

If not, tell me why exactly, I would pay you $ 4.95 a gb a month when a number of cloud providers offer storage at 25c a gb a month, and services like Google at zero cost? Oh, for the 256 bit encryption?

Comments

[Vamsee]

Hi Vinnie,
I doubt if it is because of technology they charge us? Banks seem hell bent on making money through fees. HSBC makes enough of money to run it's operating expenses. Though I understand the motive, I still don't agree with most bank's policies. You get charged whether you wire money or whether you get money wired to your account. They penalize to for takign money out, makes sense, then shouldn't they reward you for getting money into the account?

[vinnie mirchandani]

I have actually moved many of my personal (not corporate) funds to a relatively low-tech, high-touch smaller bank. They pay more for deposits, and charge much less for every service - and it is pleasure to go in and not find a line or a different trainee each time.

[Vamsee]

This is a riveting article how banks are making money these days, inspite of technology and not because of it

http://www.smartmoney.com/10things/index.cfm?story=august2008-10-things-banks-will-not-tell-you