The costs no bank can ask customers to cover and why they matter

The costs no bank can ask customers to cover and why they matter

The first wave of cost cutting at banks was straight-forward: layoffs, bonus reductions, curbing employee travel, renegotiating vendor contracts etc.. These days it’s increasingly difficult to find fat to trim! Brian Moynihan (CEO BoA) recently told investors that the bank spends “about $1 billion a year just moving cash around the bank”. A cost that is hard to get rid of.

Stiff costs go beyond employees. Each lost, stolen or corrupted debit or credit card costs 20 cents to replace, according to A.T. Kearney. Sending out paper checking account statements for one customer costs $9 a year. ATM maintenance runs $165 a month, according to Deloitte. And each new ATM costs $15,000 to $65,000, depending on how sophisticated the technology, says Diebold Inc (DBD.N), which sells the machines to banks and other businesses. Those costs may seem insubstantial, but with millions of customers and tens of thousands of ATMs, they add up.

It is looking like those little costs banks cannot ask customers to pay directly is adding up.

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