Banks etc

I was on BBC Breakfast News this morning talking about what the banks might do next - i.e. are we going to see the end of (relatively) free banking so that they can make more than the paltry £40 billion they made last year that they can barely surive on, poor lambs?

Frankly I think it could go either way. On the one hand pretty much every other country in the world has chargeable banking so there will be a big temptation simply to follow suit. On the other hand - £40 billion?! - they're doing pretty well with this business model so why change? Giving stuff away for free so that you can charge for add-ons is working well with the internet too so lets stick with it. Maybe banks in other countries will look at the British model and decide to follow what we're doing. London is not the financial centre of the world (sorry New York) for nothing.

If our banks did start charging they would have to do it multilaterally. If just the big high street banks started to charge then some of the smaller banks like Nationwide, Abbey National or Co-op might decide not to follow suit in order to tempt in new customers. That could work, so long as we don't continue to be as apathetic as we have been and just stick with the old bank because it's easy.

If just a few start charging though, they could suffer in the short-term at least. First Direct saw last year what a PR nightmare it can be to start charging for current accounts, even with get-out clauses. It would be interesting to know just how many people closed their accounts with them after their announcement.

The thing is, banks are there to make money for themselves - in particular for their shareholders - they are not Government-run establishments that have our best interests at heart. If they are stopped from making money out of us in one way, they will definitely come up with cleverer ways to replace that money. Also, the Government (including Government-funded agencies like the FSA) is not ever going to rush in and stop them making money out of us in sneaky ways because they are far too important to our economy.

So basically, we're on our own. It's up to us to wise up to what each bank is doing, and play the system to our own advantage. We should complain more often and more effectively, move if we don't like what our bank does (even if that means moving once a year) and pretend we're not British and really campaign vociferously for improvements to the financial services sector.