BAC-WT - Bank of America Warrants

[bargainman]

I tend to agree with Eric.  Banks have overhead and they do provide a service which costs money.  How much does a customer get?  ATM access anywhere in the country and probably a lot of the world,  monthly statements, secure web access, teller service at actual brick and mortar bank locations throughout the country, safety of storage of the cash, among other things I'm sure.  Try to get those things storing the case under your mattress.  Of course there is a delicate balance here between having enough of a deposit base and making sure every single one of those customers is profitable. 

 

In an odd way it reminds me of the internet age 'freemium' 'model.  Most web services have probably 100+ free users for every paid user.  That can work if the cost of each incremental user is minimal.  Then they work at conversion of those free users into paid users.  Similar to the Wellsfargo cross sell model I think.  Get an unprofitable small time checking account user, sell them a credit card..  get them to open a brokerage account, get them to do a home mortgage loan, home line of equity etc.  You need the 'free user' base to sell into, up to a point.  The question with the banks is, what are their big fixed costs?  Probably the branches for one.  What is the incremental cost of each 'free' customer?  And how many 'free' customers do you need to drive enough traffic to the 'paid/higher value' services?

 

I'm sure they model this all the time..

[ERICOPOLY]

I might be more inclined to bank with BofA if their lines are empty at the tellers.  Getting rid of unprofitable customers might add to my convenience and increase the experience of the paying customers.  But I'm happy with Wells right now.

 

Anyhow cutting staff of 30,000 (New-BAC initiative) might mean that the mix of customers needs to shift as well.

 

There might also exist a class of customers that keeps an account open at a few different banks just to avoid ATM fees -- he can have a Wells, BofA, and Chase account with $500 in each.  This way he can always find an ATM without getting charged.

 

I also wonder if they had to issue those 400m shares in December as a result of the $5 debit fee falling through -- the fee might have been a way of filling in a hole before submitting to the new stress test. 

[Guest misterstockwell]

I've been with the same local bank for 8 years and have never paid a single fee. Before that, I went through 6 banks that got gobbled up, with the new(bigger) owners contacting me to introduce me to their new fees, and me moving my deposits. Two of the six I owned stock in. One was a mutual company that IPO'd. Totally painless to move banks. They are not doing anyone a favor by taking your money. They take it in, pay you little to none, loan it out 10X with a net interest margin. Fees are icing on the cake for them. If higher fees are the only way they can grow profits, then they suck. If they don't want small accounts, then get rid of them. Set a limit on account size vs. attacking them with fees until they leave. How could BAC possibly think this is a good move? Is there anyone there with any common sense?

[ERICOPOLY]

And the idea that small accounts should be charged because they are just too small to be profitable is short-term thinking.  I have a Wells Fargo account because my parents banked there and I opened my first account with my birthday money.  I probably had sub $750  in my account for a decade.

 

If they had charged me money, I would have gone elsewhere.  And they wouldn't have my much larger account today including credit cards and CDs.  They wouldn't have my fiance's account. 

 

I double dare the first bank to make that move.

 

 

— Since November, Wells Fargo has charged $15 a month for some checking accounts unless customers have three accounts with the bank, maintain a minimum balance of $7,500 or have a Wells Fargo mortgage.

 

http://finance.yahoo.com/news/even-backlash-banks-quietly-pursuing-225535347.html

[ERICOPOLY]

I've been with the same local bank for 8 years and have never paid a single fee.

 

Alright, now is there a Wells Fargo in your area with customers walking in and out the door? 

 

If there is, then we are settled that there is in fact pricing power in banking.  You have a zero-fee bank in your area, yet Wells Fargo's customers would rather keep paying fees than move their relationship.

 

[Uccmal]

No offense to anyone, but this argument is sort of meaningless.

 

I only need BAC stock to return to value.  Say, about $20 by January 2014 to be my biggest all time hit.  It will easily make it into the mid teens soon enough.  For the long term I can only exercise a small number of the calls I have.

[Guest misterstockwell]

I've been with the same local bank for 8 years and have never paid a single fee.

 

Alright, now is there a Wells Fargo in your area with customers walking in and out the door? 

 

If there is, then we are settled that there is in fact pricing power in banking.  You have a zero-fee bank in your area, yet Wells Fargo's customers would rather keep paying fees than move their relationship.

 

Nope. Nearest Wells Fargo is an hour away. They must not be able to compete.

[JSArbitrage]

Sen. Richard Durbin (D. IL) sounds none too pleased to pick up this morning’s Wall Street Journal and read that Bank of America is nearing the end of tests that might implement new fee structures for many checking-account customers.

 

Durbin, an important senator for the banking world and critic of the biggest banks, took issues with the bank’s efforts to restructure the basic checking account relationship.

 

“Here we go again,” Durbin said in a statement. “Four months to the day after Bank of America rolled back plans to squeeze their customers instead of serving them, they are at it again. This brazen return to new monthly fees is a challenge that cannot go unanswered.”

 

http://blogs.wsj.com/deals/2012/03/01/bofas-fee-plan-durbin-will-have-none-of-it/

 

 

The strange thing about this is we're talking about accounts that actually cost the bank money.  It's like they (Durbin and others) are trying to argue that banking is an essential utility, yet if you don't pay your water bill the municipality shuts it off.  If you don't pay your electric bill you are shut off.  So is it a utility or isn't it, and why can't BofA behave like one and ask people to pay for their service?

 

Bank of America customers are doing BoA a favor.  They are technically creditors; they have loaned the bank money.  Are you suggesting we should actually PAY for the "privilege" of loaning a bank money? The first bank to charge people fees just to have an account will lose big time. 

 

It's so dumb.  Just like the $5 fee was dumb. If a bank can't make money borrowing for free then they don't belong in business. 

 

And the idea that small accounts should be charged because they are just too small to be profitable is short-term thinking.  I have a Wells Fargo account because my parents banked there and I opened my first account with my birthday money.  I probably had sub $750  in my account for a decade.

 

If they had charged me money, I would have gone elsewhere.  And they wouldn't have my much larger account today including credit cards and CDs.  They wouldn't have my fiance's account. 

 

I double dare the first bank to make that move.

 

Might I ask if you are in your 20s?  The term "free checking" is used because there was a time when it wasn't free.

 

You really think they are going to make money on an account balance of $100 when you use their ATM for free, take up time at the teller window, and get all those statements mailed to you?

 

First there were upfront fees, then "hidden fees" replaced them (the dawn of free checking), and now hidden fees are being reigned in by government.  So a new era of upfront fees is born.

 

My account with Wells Fargo initially had a fee for my checking account -- then it was eliminated when I added more services, like direct deposit, or perhaps it was a larger account balance.  I don't remember when.  But yes there was a time in the 1980s/1990s when my monthly fee was eliminated for my checking account.

 

Yes, I am 29.  May I ask how old you are? Because I think like most young people, I haven't been to my bank's ATM, teller window or had a statement mailed to me in easily over a year.  I do cash bank at the grocery store so I don't have to pay fees.

 

Firm down analysis is bad anaylsis IMO.  You simply say, "well, they used to charge fees, so they can do it again."  You think the music industry can go back to putting one good single on an album and then charging $20 for it? They wish they could.

 

Banks do not have pricing power because there are too many substitutes.  I have a broker account with Fidelity and they are FDIC-insured, have debit cards, credit cards (with 2% cash bank too), I can deposit checks by taking a picture on my phone, etc.  Tell me again why I should pay for Wells Fargo?

 

It doesn't matter if they used to charge fees in the 1980's.  That's irrelevant.  It doesn't matter if they have overhead or have to pay for a physical location every 2 blocks.  That's irrelevant too and, quite frankly, that's not my problem.  It's theirs.

 

Between FDIC-insured brokerage accounts, internet banks, and credit unions, I'll never have to pay a fee.  But these banks aren't dumb; they'll test fees here and there but they won't roll out anything significant.  They have the ability to do so unless they want to go the way of Borders v. Amazon.

 

Consumers of my age group of vicious.  I was looking for a computer monitor recently and I was able to read reviews, mind my model number I wanted and get it for the lowest possible price.  I have no loyalty other than to the lowest possible price.

 

Banks wants to try to impose fees on my generation? Good luck with that. 

 

[ERICOPOLY]

Tell me again why I should pay for Wells Fargo?

 

Wells Fargo is already charging for checking if you have no meaningful relationship with them.  Just like they did before when I was watching movies on VHS.

 

I'm 39 in a bit over a month.

 

 

 

[Guest misterstockwell]

 

Yes, I am 29.  May I ask how old you are? Because I think like most young people, I haven't been to my bank's ATM, teller window or had a statement mailed to me in easily over a year.  I do cash bank at the grocery store so I don't have to pay fees.

 

Firm down analysis is bad anaylsis IMO.  You simply say, "well, they used to charge fees, so they can do it again."  You think the music industry can go back to putting one good single on an album and then charging $20 for it? They wish they could.

 

Banks do not have pricing power because there are too many substitutes.  I have a broker account with Fidelity and they are FDIC-insured, have debit cards, credit cards (with 2% cash bank too), I can deposit checks by taking a picture on my phone, etc.  Tell me again why I should pay for Wells Fargo?

 

It doesn't matter if they used to charge fees in the 1980's.  That's irrelevant.  It doesn't matter if they have overhead or have to pay for a physical location every 2 blocks.  That's irrelevant too and, quite frankly, that's not my problem.  It's theirs.

 

Between FDIC-insured brokerage accounts, internet banks, and credit unions, I'll never have to pay a fee.  But these banks aren't dumb; they'll test fees here and there but they won't roll out anything significant.  They have the ability to do so unless they want to go the way of Borders v. Amazon.

 

Consumers of my age group of vicious.  I was looking for a computer monitor recently and I was able to read reviews, mind my model number I wanted and get it for the lowest possible price.  I have no loyalty other than to the lowest possible price.

 

Banks wants to try to impose fees on my generation? Good luck with that.

 

I'm 48 JS, and my story is the same as yours.  It's not just your generation that has all these options, and utilizes them!

[moore_capital54]

Sen. Richard Durbin (D. IL) sounds none too pleased to pick up this morning’s Wall Street Journal and read that Bank of America is nearing the end of tests that might implement new fee structures for many checking-account customers.

 

Durbin, an important senator for the banking world and critic of the biggest banks, took issues with the bank’s efforts to restructure the basic checking account relationship.

 

“Here we go again,” Durbin said in a statement. “Four months to the day after Bank of America rolled back plans to squeeze their customers instead of serving them, they are at it again. This brazen return to new monthly fees is a challenge that cannot go unanswered.”

 

http://blogs.wsj.com/deals/2012/03/01/bofas-fee-plan-durbin-will-have-none-of-it/

 

 

The strange thing about this is we're talking about accounts that actually cost the bank money.  It's like they (Durbin and others) are trying to argue that banking is an essential utility, yet if you don't pay your water bill the municipality shuts it off.  If you don't pay your electric bill you are shut off.  So is it a utility or isn't it, and why can't BofA behave like one and ask people to pay for their service?

 

Bank of America customers are doing BoA a favor.  They are technically creditors; they have loaned the bank money.  Are you suggesting we should actually PAY for the "privilege" of loaning a bank money? The first bank to charge people fees just to have an account will lose big time. 

 

It's so dumb.  Just like the $5 fee was dumb. If a bank can't make money borrowing for free then they don't belong in business. 

 

And the idea that small accounts should be charged because they are just too small to be profitable is short-term thinking.  I have a Wells Fargo account because my parents banked there and I opened my first account with my birthday money.  I probably had sub $750  in my account for a decade.

 

If they had charged me money, I would have gone elsewhere.  And they wouldn't have my much larger account today including credit cards and CDs.  They wouldn't have my fiance's account. 

 

I double dare the first bank to make that move.

 

Might I ask if you are in your 20s?  The term "free checking" is used because there was a time when it wasn't free.

 

You really think they are going to make money on an account balance of $100 when you use their ATM for free, take up time at the teller window, and get all those statements mailed to you?

 

First there were upfront fees, then "hidden fees" replaced them (the dawn of free checking), and now hidden fees are being reigned in by government.  So a new era of upfront fees is born.

 

My account with Wells Fargo initially had a fee for my checking account -- then it was eliminated when I added more services, like direct deposit, or perhaps it was a larger account balance.  I don't remember when.  But yes there was a time in the 1980s/1990s when my monthly fee was eliminated for my checking account.

 

Yes, I am 29.  May I ask how old you are? Because I think like most young people, I haven't been to my bank's ATM, teller window or had a statement mailed to me in easily over a year.  I do cash bank at the grocery store so I don't have to pay fees.

 

Firm down analysis is bad anaylsis IMO.  You simply say, "well, they used to charge fees, so they can do it again."  You think the music industry can go back to putting one good single on an album and then charging $20 for it? They wish they could.

 

Banks do not have pricing power because there are too many substitutes.  I have a broker account with Fidelity and they are FDIC-insured, have debit cards, credit cards (with 2% cash bank too), I can deposit checks by taking a picture on my phone, etc.  Tell me again why I should pay for Wells Fargo?

 

It doesn't matter if they used to charge fees in the 1980's.  That's irrelevant.  It doesn't matter if they have overhead or have to pay for a physical location every 2 blocks.  That's irrelevant too and, quite frankly, that's not my problem.  It's theirs.

 

Between FDIC-insured brokerage accounts, internet banks, and credit unions, I'll never have to pay a fee.  But these banks aren't dumb; they'll test fees here and there but they won't roll out anything significant.  They have the ability to do so unless they want to go the way of Borders v. Amazon.

 

Consumers of my age group of vicious.  I was looking for a computer monitor recently and I was able to read reviews, mind my model number I wanted and get it for the lowest possible price.  I have no loyalty other than to the lowest possible price.

 

Banks wants to try to impose fees on my generation? Good luck with that.

 

JS, One thing you may be overlooking with your viewpoint is that everyone in your generation has a service-industry based job. You are obviously well educated and have a career where you most likely provide a service from an office environment and then get paid electronically. As you mentioned, you in fact have no need for a physical bank but you represent the minority in the economy and it has nothing to do with your age group.

 

The reason banks like Wells and BAC have branches every few blocks is that they were borne out of necessity and they provide invaluable services to their customers who have non-service jobs. Most of the economy that is. And even the youngest generation will require a way to physically deposit their checks, cash, withdraw funds, and speak to their local banker about refinancing their home, or business.

 

The banking model works and is very profitable, these branches have dual mandates as marketing centres in addition to the actual services they provide.

 

Your post indicates some disruptive trend on the cusp of banking. Personally, I don't see it. When it comes to people's pocketbooks they will always act the same. I have yet to meet a wealthy individual who does not own at least 1 Safety deposit box for example....

 

The only fundamental difference I see in banking moving forward is the amount of regulatory oversight and whether these banks are allowed to become profit machines again, or are simply led towards being utility type businesses. Time will tell...

 

 

[PlanMaestro]

For those of you that think that there is a disruption on the making in banking. That branches are obsolete. That shadow banks, like mutual funds and discounting brokerages, are anything new (how fast people forget "breaking the buck" and eTrade problems). You might want to watch this excellent presentation by the unique Richard Davis from US Bancorp.

 

http://variantperceptions.wordpress.com/2010/09/14/charting-banking-xx-short-history-of-the-last-25-years/

 

 

[onyx1]

Banks have overhead and they do provide a service which costs money.  How much does a customer get?  ATM access anywhere in the country and probably a lot of the world,  monthly statements, secure web access, teller service at actual brick and mortar bank locations throughout the country, safety of storage of the cash, among other things I'm sure. 

 

+1

 

For me, I would also add:

Notary Service.

Customer parking in a great location in my home town.  (I use it even when I don't go into the branch)

Most critically though is online banking.  I took me hours to load in all my regular payee's and I have no desire to do that again. 

 

They could raise fees on me and I still wouldn't switch. (Psst...don't tell them!)

[JSArbitrage]

Sen. Richard Durbin (D. IL) sounds none too pleased to pick up this morning’s Wall Street Journal and read that Bank of America is nearing the end of tests that might implement new fee structures for many checking-account customers.

 

Durbin, an important senator for the banking world and critic of the biggest banks, took issues with the bank’s efforts to restructure the basic checking account relationship.

 

“Here we go again,” Durbin said in a statement. “Four months to the day after Bank of America rolled back plans to squeeze their customers instead of serving them, they are at it again. This brazen return to new monthly fees is a challenge that cannot go unanswered.”

 

http://blogs.wsj.com/deals/2012/03/01/bofas-fee-plan-durbin-will-have-none-of-it/

 

 

The strange thing about this is we're talking about accounts that actually cost the bank money.  It's like they (Durbin and others) are trying to argue that banking is an essential utility, yet if you don't pay your water bill the municipality shuts it off.  If you don't pay your electric bill you are shut off.  So is it a utility or isn't it, and why can't BofA behave like one and ask people to pay for their service?

 

Bank of America customers are doing BoA a favor.  They are technically creditors; they have loaned the bank money.  Are you suggesting we should actually PAY for the "privilege" of loaning a bank money? The first bank to charge people fees just to have an account will lose big time. 

 

It's so dumb.  Just like the $5 fee was dumb. If a bank can't make money borrowing for free then they don't belong in business. 

 

And the idea that small accounts should be charged because they are just too small to be profitable is short-term thinking.  I have a Wells Fargo account because my parents banked there and I opened my first account with my birthday money.  I probably had sub $750  in my account for a decade.

 

If they had charged me money, I would have gone elsewhere.  And they wouldn't have my much larger account today including credit cards and CDs.  They wouldn't have my fiance's account. 

 

I double dare the first bank to make that move.

 

Might I ask if you are in your 20s?  The term "free checking" is used because there was a time when it wasn't free.

 

You really think they are going to make money on an account balance of $100 when you use their ATM for free, take up time at the teller window, and get all those statements mailed to you?

 

First there were upfront fees, then "hidden fees" replaced them (the dawn of free checking), and now hidden fees are being reigned in by government.  So a new era of upfront fees is born.

 

My account with Wells Fargo initially had a fee for my checking account -- then it was eliminated when I added more services, like direct deposit, or perhaps it was a larger account balance.  I don't remember when.  But yes there was a time in the 1980s/1990s when my monthly fee was eliminated for my checking account.

 

Yes, I am 29.  May I ask how old you are? Because I think like most young people, I haven't been to my bank's ATM, teller window or had a statement mailed to me in easily over a year.  I do cash bank at the grocery store so I don't have to pay fees.

 

Firm down analysis is bad anaylsis IMO.  You simply say, "well, they used to charge fees, so they can do it again."  You think the music industry can go back to putting one good single on an album and then charging $20 for it? They wish they could.

 

Banks do not have pricing power because there are too many substitutes.  I have a broker account with Fidelity and they are FDIC-insured, have debit cards, credit cards (with 2% cash bank too), I can deposit checks by taking a picture on my phone, etc.  Tell me again why I should pay for Wells Fargo?

 

It doesn't matter if they used to charge fees in the 1980's.  That's irrelevant.  It doesn't matter if they have overhead or have to pay for a physical location every 2 blocks.  That's irrelevant too and, quite frankly, that's not my problem.  It's theirs.

 

Between FDIC-insured brokerage accounts, internet banks, and credit unions, I'll never have to pay a fee.  But these banks aren't dumb; they'll test fees here and there but they won't roll out anything significant.  They have the ability to do so unless they want to go the way of Borders v. Amazon.

 

Consumers of my age group of vicious.  I was looking for a computer monitor recently and I was able to read reviews, mind my model number I wanted and get it for the lowest possible price.  I have no loyalty other than to the lowest possible price.

 

Banks wants to try to impose fees on my generation? Good luck with that.

 

JS, One thing you may be overlooking with your viewpoint is that everyone in your generation has a service-industry based job. You are obviously well educated and have a career where you most likely provide a service from an office environment and then get paid electronically. As you mentioned, you in fact have no need for a physical bank but you represent the minority in the economy and it has nothing to do with your age group.

 

The reason banks like Wells and BAC have branches every few blocks is that they were borne out of necessity and they provide invaluable services to their customers who have non-service jobs. Most of the economy that is. And even the youngest generation will require a way to physically deposit their checks, cash, withdraw funds, and speak to their local banker about refinancing their home, or business.

 

The banking model works and is very profitable, these branches have dual mandates as marketing centres in addition to the actual services they provide.

 

Your post indicates some disruptive trend on the cusp of banking. Personally, I don't see it. When it comes to people's pocketbooks they will always act the same. I have yet to meet a wealthy individual who does not own at least 1 Safety deposit box for example....

 

The only fundamental difference I see in banking moving forward is the amount of regulatory oversight and whether these banks are allowed to become profit machines again, or are simply led towards being utility type businesses. Time will tell...

 

I think you misunderstand what I am saying.  I think banking will do just fine; I just don't think they'll be imposing fees for using their checking account.  Why would they?  It's dumb.  Banking is a razor/blade model.  Hold and protect their money for free and make your money on fees from people who take out mortgages, student loans, don't pay off their credit card balance every month, etc.

 

What everyone else seems to be saying is that they will go away from the razor/blade model and start outright charging people just to have an account.  I do not think that will happen in any meaningful way or for any real length of time.  They'll offer all kinds of reasons not to charge people (free checking accounts, student accounts, etc.)  They might charge fees on other items (like using the teller more than 4 times a month or something) but for just having an account? I doubt it.  There are way too many free substitutes out there.

 

It would be a stupid strategic move.  That's my point.  And Wells, Chase, BofA know that or will figure it out very quickly.  They aren't dumb.

[JSArbitrage]

Sen. Richard Durbin (D. IL) sounds none too pleased to pick up this morning’s Wall Street Journal and read that Bank of America is nearing the end of tests that might implement new fee structures for many checking-account customers.

 

Durbin, an important senator for the banking world and critic of the biggest banks, took issues with the bank’s efforts to restructure the basic checking account relationship.

 

“Here we go again,” Durbin said in a statement. “Four months to the day after Bank of America rolled back plans to squeeze their customers instead of serving them, they are at it again. This brazen return to new monthly fees is a challenge that cannot go unanswered.”

 

http://blogs.wsj.com/deals/2012/03/01/bofas-fee-plan-durbin-will-have-none-of-it/

 

 

The strange thing about this is we're talking about accounts that actually cost the bank money.  It's like they (Durbin and others) are trying to argue that banking is an essential utility, yet if you don't pay your water bill the municipality shuts it off.  If you don't pay your electric bill you are shut off.  So is it a utility or isn't it, and why can't BofA behave like one and ask people to pay for their service?

 

Bank of America customers are doing BoA a favor.  They are technically creditors; they have loaned the bank money.  Are you suggesting we should actually PAY for the "privilege" of loaning a bank money? The first bank to charge people fees just to have an account will lose big time. 

 

It's so dumb.  Just like the $5 fee was dumb. If a bank can't make money borrowing for free then they don't belong in business. 

 

And the idea that small accounts should be charged because they are just too small to be profitable is short-term thinking.  I have a Wells Fargo account because my parents banked there and I opened my first account with my birthday money.  I probably had sub $750  in my account for a decade.

 

If they had charged me money, I would have gone elsewhere.  And they wouldn't have my much larger account today including credit cards and CDs.  They wouldn't have my fiance's account. 

 

I double dare the first bank to make that move.

 

Might I ask if you are in your 20s?  The term "free checking" is used because there was a time when it wasn't free.

 

You really think they are going to make money on an account balance of $100 when you use their ATM for free, take up time at the teller window, and get all those statements mailed to you?

 

First there were upfront fees, then "hidden fees" replaced them (the dawn of free checking), and now hidden fees are being reigned in by government.  So a new era of upfront fees is born.

 

My account with Wells Fargo initially had a fee for my checking account -- then it was eliminated when I added more services, like direct deposit, or perhaps it was a larger account balance.  I don't remember when.  But yes there was a time in the 1980s/1990s when my monthly fee was eliminated for my checking account.

 

Yes, I am 29.  May I ask how old you are? Because I think like most young people, I haven't been to my bank's ATM, teller window or had a statement mailed to me in easily over a year.  I do cash bank at the grocery store so I don't have to pay fees.

 

Firm down analysis is bad anaylsis IMO.  You simply say, "well, they used to charge fees, so they can do it again."  You think the music industry can go back to putting one good single on an album and then charging $20 for it? They wish they could.

 

Banks do not have pricing power because there are too many substitutes.  I have a broker account with Fidelity and they are FDIC-insured, have debit cards, credit cards (with 2% cash bank too), I can deposit checks by taking a picture on my phone, etc.  Tell me again why I should pay for Wells Fargo?

 

It doesn't matter if they used to charge fees in the 1980's.  That's irrelevant.  It doesn't matter if they have overhead or have to pay for a physical location every 2 blocks.  That's irrelevant too and, quite frankly, that's not my problem.  It's theirs.

 

Between FDIC-insured brokerage accounts, internet banks, and credit unions, I'll never have to pay a fee.  But these banks aren't dumb; they'll test fees here and there but they won't roll out anything significant.  They have the ability to do so unless they want to go the way of Borders v. Amazon.

 

Consumers of my age group of vicious.  I was looking for a computer monitor recently and I was able to read reviews, mind my model number I wanted and get it for the lowest possible price.  I have no loyalty other than to the lowest possible price.

 

Banks wants to try to impose fees on my generation? Good luck with that.

 

JS, One thing you may be overlooking with your viewpoint is that everyone in your generation has a service-industry based job. You are obviously well educated and have a career where you most likely provide a service from an office environment and then get paid electronically. As you mentioned, you in fact have no need for a physical bank but you represent the minority in the economy and it has nothing to do with your age group.

 

The reason banks like Wells and BAC have branches every few blocks is that they were borne out of necessity and they provide invaluable services to their customers who have non-service jobs. Most of the economy that is. And even the youngest generation will require a way to physically deposit their checks, cash, withdraw funds, and speak to their local banker about refinancing their home, or business.

 

The banking model works and is very profitable, these branches have dual mandates as marketing centres in addition to the actual services they provide.

 

Your post indicates some disruptive trend on the cusp of banking. Personally, I don't see it. When it comes to people's pocketbooks they will always act the same. I have yet to meet a wealthy individual who does not own at least 1 Safety deposit box for example....

 

The only fundamental difference I see in banking moving forward is the amount of regulatory oversight and whether these banks are allowed to become profit machines again, or are simply led towards being utility type businesses. Time will tell...

 

This seems contradictory to what the others are saying.  The thesis being put forth is that small accounts aren't profitable and only large accounts are profitable.  Therefore, they will charge fees to make up for the unprofitable activity of holding small accounts for free. 

 

Then you seem to be saying that there are tons of people that don't get paid electronically, which is true.  But these people tend to use pawn shops and checking cashing institutions (they are referred to as an "underbanked" demographic.)

 

I'd be willing to wager that easily 90%+ of all the large personal account holders get paid electronically.  Business accounts are different because so many businesses deal with cash.  But for personal accounts, I don't think there are that many wealthy people that get paid in cash (legally at least.)

[ERICOPOLY]

This seems contradictory to what the others are saying.  The thesis being put forth is that small accounts aren't profitable and only large accounts are profitable.  Therefore, they will charge fees to make up for the unprofitable activity of holding small accounts for free. 

 

They are merely putting the free bathroom key behind the counter.  You want to use the bathroom for free, then buy some product.

 

They are not charging profitable customers for the bathroom.

 

 

[rmitz]

This seems contradictory to what the others are saying.  The thesis being put forth is that small accounts aren't profitable and only large accounts are profitable.  Therefore, they will charge fees to make up for the unprofitable activity of holding small accounts for free. 

 

Then you seem to be saying that there are tons of people that don't get paid electronically, which is true.  But these people tend to use pawn shops and checking cashing institutions (they are referred to as an "underbanked" demographic.)

 

I'd be willing to wager that easily 90%+ of all the large personal account holders get paid electronically.  Business accounts are different because so many businesses deal with cash.  But for personal accounts, I don't think there are that many wealthy people that get paid in cash (legally at least.)

 

I would just note that more and more institutions are dropping payment by paper checks altogether.  For members of the community at my company who don't have bank accounts or don't want direct deposit, for example, we have switched to giving out prepaid debit cards which recharge on the pay period.  This is not a small trend--paper checks are expensive to deal with, on both the generating and receiving ends!

[SharperDingaan]

A good bank looks at the lifetime earnings potential of the client. Give away a few hundred $ on the young & make it back from them as they advance through life’s various stages.

 

Bricks & Mortar exists to 1)advertise the brand 2)service commercial 3)sell product. If you buy jeans you try them on first at a bricks & mortar store – then you search for the brand/size on-line. And the more sophisticated the product (computer, phone, major appliances, etc) the more you HAVE to do it. They have corner locations so that you can’t ignore the signage – something you CAN do, & easily, in the on-line space.

 

The number of branches reflects technology & demographics. Before Netflix you needed a store to get your VCR/Blue Ray (Blockbuster), now it is obsolete. Population & life stage business was growing, now it is flat &/or declining. Less brick & mortar because you don’t need as many, & the go forward demographic availability of new entry level staff is rapidly declining.

 

[onyx1]

For those of you that think that there is a disruption on the making in banking. That branches are obsolete. That shadow banks, like mutual funds and discounting brokerages, are anything new (how fast people forget "breaking the buck" and eTrade problems). You might want to watch this excellent presentation by the unique Richard Davis from US Bancorp.

 

http://variantperceptions.wordpress.com/2010/09/14/charting-banking-xx-short-history-of-the-last-25-years/

 

Thanks Plan, enjoyed that video. 

[ERICOPOLY]

They are not doing anyone a favor by taking your money. They take it in, pay you little to none, loan it out 10X with a net interest margin. Fees are icing on the cake for them.

 

BofA has $1 trillion in deposits.  You are saying they can make $10 trillion in loans with a net interest margin?

 

[Guest misterstockwell]

No, BofA is a giant black box. I couldn't say with confidence what they could loan, nor could anyone else.

[ERICOPOLY]

No, BofA is a giant black box. I couldn't say with confidence what they could loan, nor could anyone else.

 

You said with confidence that a deposit can be loaned 10x.  That would imply $10T of loans.

 

Let's say you had confidence that their books were clean.  You are willing to stand behind the claim that their capital ratios will be acceptable with $10trillion in loans?

 

To the best of MY knowledge, a deposit that BAC (or any other bank) takes in can be lent out 1x.  To loan out more money beyond that they have to take on debt, retain earnings or raise more equity, or take in more deposits which in turn can be lent out once. 

 

[PlanMaestro]

No, BofA is a giant black box. I couldn't say with confidence what they could loan, nor could anyone else.

 

Mr Bayes could be of help for you MisterStockwell. That is a very strange comment you just made considering all the information about BAC's loan portfolio that is publicly available from the regulatory overlords.

 

http://en.wikipedia.org/wiki/Bayesian_statistics

 

[Guest misterstockwell]

No, BofA is a giant black box. I couldn't say with confidence what they could loan, nor could anyone else.

 

You said with confidence that a deposit can be loaned 10x.  That would imply $10T of loans.

 

Let's say you had confidence that their books were clean.  You are willing to stand behind the claim that their capital ratios will be acceptable with $10trillion in loans?

 

To the best of MY knowledge, a deposit that BAC (or any other bank) takes in can be lent out 1x.  To loan out more money beyond that they have to take on debt, retain earnings or raise more equity, or take in more deposits which in turn can be lent out once.

 

I had to go back and see what the hell you were talking about. Nitpicking on a typo? You're a dick.

[Uccmal]

No, BofA is a giant black box. I couldn't say with confidence what they could loan, nor could anyone else.

 

mrstockwell, Dont take this the wrong way, but this statement drives me nuts.  As an outside passive minority investor ALL your investments are black boxes.  BAC, is no more, or no less, a black box, than any other financial, oil company, miner, manufacturer, etc.  In fact I contend it is easier and safer to analyze than oil companies, tech companies, and miners.