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A Return to Old-School Banking

Editor's Note: This post is part of an ongoing series in which customers from different demographics describe what they are looking for from the financial firms they do business with.

Let me put it this way: I prefer the old-fashioned banking model. I don't care for mobile banking. I don't own an iPhone. I like my BlackBerry and I'm fine banking in a physical branch. The absence of mobile banking will not prompt me to change my bank. I live in the city. It's not a big deal for me to walk into a branch; they're all over the place. I appreciate the friendly staff and I almost never have to wait in line. If I lived in the suburbs and had to drive, then perhaps, I would use mobile banking more often.

I pay my bills online, but prefer to make deposits and withdrawals (over $500) with a person. I also need a live teller when I manage my brokerage and retirement account. My bank has assigned a person to oversee this account. Sometimes they call me to discuss my holdings, which is unnecessary because if I wanted to do something, I would've approached them myself. I think they got the message because after a while they stopped calling me, which I also appreciate. I don't like to be hustled. In short, a good bank has to be there when I need it to be, no more or no less.  

I'm generally suspicious of any banking innovations. Any creative banking is an automatic blinking red light in my book. New products and services rarely are directed at making my life easier. Instead, they are meant to improve a bank's bottom line at my expense.

The two primary functions of banking should be to take deposits and to make loans. All other services should be supplementary to these two primary activities. I wish banks would refocus more on traditional services. This is particularly true when it comes to making loans, given all that money from the Federal Reserve sitting on the banks' balance sheets

For instance, I have about 70% equity in my apartment, but I'm unemployed which automatically disqualifies me from getting a new loan. Do banks seriously expect me to become delinquent? At 70% equity, they should want me to default! If I were a bank, I'd follow me around with offers to refinance! Refi-loans to the unemployed with a lot of equity – sounds like a great new business.

Unfortunately, it seems the current-day banking model adheres to the following pattern: Interest rates are low; investment opportunities are scarce.  Profits are lower. Something must be done! Let's ramp up the fees on poor customers.

I've been privileged to be able to maintain a balance that keeps me from being charged all kinds of fees. But it's easy to forget how expensive it is to be poor. Back in my student days, I always walked a fine line paying for groceries while trying to avoid overdraft fees. My occasional single-digit overdrafts usually resulted in a $25 fee, which was devastating for a student just trying to scrape by.

Banking on the poor and the weak to make a mistake seems unethical. Banks these days are in the business of maximizing profits; serving customers comes second. In modern day banking, customers are just a means to make shareholders happy. It seems like a myopic, unsustainable business model, but, I guess, that's the new zeitgeist.

Katya Grishakova left the financial industry after spending more than a decade at various Wall Street firms. She is now a board member of ACT NOW, a New York progressive organization.


(8) Comments



Comments (8)
It's really not clear what Ms Grishakova is trying to say here. Online banking is there for those that want it, similarly teller services for those that are lucky enough to live near a branch of their bank or who are luddite minded. Deposits and loans are the main thrust of most banks with supplementary services according to customer demand. And what's this stuff about going after the equity lines held by the unemployed. Is it April already?
Posted by vancejo | Monday, January 27 2014 at 3:21PM ET
What an amazing waste of time. It wasn't until after I went back to the editor's note that I realized this piece was "..part of an ongoing series in which customers from different demographics describe what they are looking for from the financial firms they do business with." Basically, it's just a random consumer bragplaining and pontificating about her own idiosyncrasies. Not to be mistaken for genuine insight about financial innovation.
Posted by ryanlamountain | Friday, January 24 2014 at 10:05AM ET
I hope that she has signed up for all her entitlements and gets her subsidized Obamacare. If she is poor, Im an astronaut. Get a job.
Posted by rharmon | Tuesday, January 21 2014 at 9:08AM ET
I totally agree with the comments above. Apparantly, the author does not assciate the fact that she does not have to wait in line with the existence of on-line / mobile banking.
Posted by Paulina G | Tuesday, January 21 2014 at 8:29AM ET
Clearly this writer is clueless. She speaks for a small minority of folks. Surprised this article was published.
Posted by mddavis | Tuesday, January 21 2014 at 7:50AM ET
I sugges you to look at how markets like Africa are optimizing fintech innovations to reduce cost, to make new revenues and reach in to unbanked and underbanked.
Posted by FinTech-Labs | Sunday, January 19 2014 at 4:35AM ET
Branches "all over the place". "I almost never have to wait in line." "... after a while they stopped calling me." This is a banker's nightmare! Just give me lot's of branches and people... don't charge me for service... pay me high deposit rates... I have no income but lend me money... and don't ask me for anything in return. And before we jump into that "great new business", better check with the CFPB on how refis to the unemployed with high equity squares with ability-to-pay (QM) requirements.
Posted by MrPotter | Friday, January 17 2014 at 3:16PM ET
American Banker, what were you thinking when you posted this entry? I've always found the articles posted on BANKTHINK to be very interesting and provocative, but I was very disappointed when I read this. I'm not sure what this author's background is, but she sounds like she's been living under a rock for the past decade.

"I'm generally suspicious of any banking innovations"
"New products and services rarely are directed at making my life easier"
"This is particularly true when it comes to making loans, given all that money from the Federal Reserve sitting on the banks' balance sheets"

What is she talking about??? Clearly someone who's unemployed has all the time in the world to walk into banks to make deposits and withdrawals, but for the rest of us who have a job and a schedule, things like ATMs and direct deposit (to name a few) have been a game-changing benefit to us!! Listen, I've always been a critic of banks, and actually spend 100% of my time working on financial services innovations for the underserved, but I just find this post to be an absolute waste of time. I had never posted a comment to any article in my life, but when I read this I felt I had to. I could actually go on and on criticizing this article but I'll stop here.
Posted by Oscar_True | Friday, January 17 2014 at 1:09PM ET
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