Competition ends an unpopular bank fee
- The impending arrival of virtual banks not only provides more choice for customers but is believed to have prompted at least one existing player to scrap its minimum balance charge
Many small depositors have long complained about being charged by banks because they have too little money in their account. The lack of competition in the industry means people have no choice but to put up with fees that eat into their meagre savings. The situation sits oddly with publicity presenting our banks as trustworthy and caring.
The fees have long been criticised as unreasonable, and for good reason. It makes no sense to charge the less affluent when HSBC is making huge profits. The virtual banks provide the way out for those who do not want their limited savings dried up by punitive fees.
With reduced overheads and staff counts, the new form of banking is in a better position to cater to less affluent customers and smaller companies. The virtual banks are expected to provide more attractive terms in order to win customers. The competition has not just prompted existing players to do away with unpopular practices and charges, it also provides customers with more choice.