You're welcome, and thank you! I should have highlighted that article. I referenced it in the first note. I can't imagine a world where we go back to having fees, can you? I think the shift is inevitable.
Hi Adam, I fully agree. I can understand that the bank is incurring some cost from people being in the red, but this got really out of control... And yes, once competitors start to remove those fees, it's difficult to keep them. Ally was already aware of the shift and simply anticipated them trying to attract more customers
I've worked at a number of banks. Extend that to things like wire fees, which are so arbitrary. $25 or $40 for a wire fee is absurd. Yes they sometimes require branch staff/back office to complete, but those are largely fixed costs to the bank. It's 100% marginal profit. And you're right, charged-off accounts are few.
Also, It seems to me for banks, Quality of underwriting the loans(be it credit or personal or business or what not) should be primary focus along with operational efficiency ( I don't have to say this because it is basis of every business)
Hello Adam,
thank you for the nice article.
I think that the competition is already moving. Just yesterday, Ally Bank decided to eliminate all overdraft fees. Here's the link to the press release: https://media.ally.com/2021-06-02-Ally-Bank-eliminates-all-overdraft-fees,-ending-centuries-old-industry-practice-and-lifting-consumer-burden
Best, Nicola
You're welcome, and thank you! I should have highlighted that article. I referenced it in the first note. I can't imagine a world where we go back to having fees, can you? I think the shift is inevitable.
Hi Adam, I fully agree. I can understand that the bank is incurring some cost from people being in the red, but this got really out of control... And yes, once competitors start to remove those fees, it's difficult to keep them. Ally was already aware of the shift and simply anticipated them trying to attract more customers
I've worked at a number of banks. Extend that to things like wire fees, which are so arbitrary. $25 or $40 for a wire fee is absurd. Yes they sometimes require branch staff/back office to complete, but those are largely fixed costs to the bank. It's 100% marginal profit. And you're right, charged-off accounts are few.
So would you mind sharing banking checklist?
Also, It seems to me for banks, Quality of underwriting the loans(be it credit or personal or business or what not) should be primary focus along with operational efficiency ( I don't have to say this because it is basis of every business)