Retail Banking

How can retail Banking not be profitable in Ireland. They generate enormous fees.

I have been in London and New York this year and there are bank and building societies on every corner all fully staffed, yet in Ireland bank branches are closing down all over the place and in the banks they are replacing bank tellers with DIY machines, how come its different in Ireland.

Stheno

Almost 100,000 mortgages in arrears? That has to be costing the banks a fair whack of interest.

That true, I am talking about retail banking as in the servicing of every day banking needs and the enormous fees it generates for the banks, that alone must be very profitable surly.

macraignil

mariaalice wrote: »

That true, I am talking about retail banking as in the servicing of every day banking needs and the enormous fees it generates for the banks, that alone must be very profitable surly.

London and New York have dense populations of potential bank customers in countries with economies doing far better than that of Ireland. We have a dispersed population with less people likely to use any particular bank office. If you also consider the large percentage of the Irish population who are dependant on social welfare payments and can already make most of their financial transactions through a post office and the high cost of operating any business in Ireland you will obviously have less business than a financial centre like London or New York. Also with a smaller market here the bank knows it can still get retail business even if the service is not ideal because there is no bank offering to do any better and take their customers.

AlexisM

mariaalice wrote: »

That true, I am talking about retail banking as in the servicing of every day banking needs and the enormous fees it generates for the banks, that alone must be very profitable surly.

What enormous fees are you talking about? It's relatively easy to find a free/low cost current account. I have a 'typical' bank account with salary coming in, mortgage, bills, cash going out and I really don't think the bank make much money out of me at all. Cash typically doesn't stay long enough in a current account to be much use to the bank - they can't commit it to anything.

Gumbo

mariaalice wrote: »

That true, I am talking about retail banking as in the servicing of every day banking needs and the enormous fees it generates for the banks, that alone must be very profitable surly.

I have free banking. Haven't paid for a general retail banking service in my while life since opening my account in 1997.

*ive obviously had to pay for bank drafts etc but not much. My mate works in AIB.

Stheno

AlexisM wrote: »

What enormous fees are you talking about? It's relatively easy to find a free/low cost current account. I have a 'typical' bank account with salary coming in, mortgage, bills, cash going out and I really don't think the bank make much money out of me at all. Cash typically doesn't stay long enough in a current account to be much use to the bank - they can't commit it to anything.

Compared to that legislation was required in the UK to force the banks to offer banking facilities for low paid/sw recipients with a very basic account.

kceire wrote: »

I have free banking. Haven't paid for a general retail banking service in my while life since opening my account in 1997.

*ive obviously had to pay for bank drafts etc but not much. My mate works in AIB.

Same here.

skafish

kceire wrote: »

I have free banking. Haven't paid for a general retail banking service in my while life since opening my account in 1997.

*ive obviously had to pay for bank drafts etc but not much. My mate works in AIB.

Wish I could say the same. I recently closed my BOI accounts, after 35 years because they wanted to charge me "account maintenance fees".
Great service from PTSB, though

Well the banks make very little out of me, but even though it is a tiny amount of money it is a regular tiny amount of money from a large amount of people so the banks are generating a lot of money for themselves so how are they not profitable in the retail sector of banking.

AlexisM

mariaalice wrote: »

Well the banks make very little out of me, but even though it is a tiny amount of money it is a regular tiny amount of money from a large amount of people so the banks are generating a lot of money for themselves so how are they not profitable in the retail sector of banking.

So the banks are generating enormous fees but not from you? So who are they getting the enormous fees from? Or do all the tiny amounts add up to an enormous amount? And then the enormous amount is still enormous after paying for bank staff, premises, ATM installation and maintenance, investment in technology for internet banking etc?

dlouth15

mariaalice wrote: »

How can retail Banking not be profitable in Ireland. They generate enormous fees.

I have been in London and New York this year and there are bank and building societies on every corner all fully staffed, yet in Ireland bank branches are closing down all over the place and in the banks they are replacing bank tellers with DIY machines, how come its different in Ireland.

Population density as pointed out is one factor as already pointed out. In the US, additionally, retail banking is a bit more primitive. Greater use of cheques to pay bills. Less use of debit cards to directly pay for things in shops.

My point was...I had free banking with Danska /NIB for years, until they changed it, the fees are not much, however it still a small amount of recurring money form a lots of people, they have a captive market, how can that not be profitable retail banking cant be that expensive to run,

As for the population density argument bank and building societies are every where in the UK even in small towns. Where as here bank branches are retreating from every where except large urban areas and even then they act like they don't want customers coming in to he bank its a bizarre way to treat customers.

Gumbo

skafish wrote: »

Wish I could say the same. I recently closed my BOI accounts, after 35 years because they wanted to charge me "account maintenance fees".
Great service from PTSB, though

I was the same. Closed my AIB account when rte told me about the incoming charges. The bank never even sent me a letter! Swapped to UB.

Then swapped to PTSB recently when UB brought in charges.

recedite

AlexisM wrote: »

Cash typically doesn't stay long enough in a current account to be much use to the bank - they can't commit it to anything.

Not quite......a bank's total liquidity is calculated daily, that is the difference between all the deposits and all the withdrawals.
If negative they may have to temporarily borrow inter-bank or from the ECB, but if positive they gain interest by depositing with these same entities.

Secondly, even if you have only a small amount on deposit, they can lend out a multiple of that amount on the basis of having your money on deposit.
This allows them to collect the interest on multiple loans. Its called fractional reserve banking. So the real profit for them is in lending, but they do need a certain amount of capital reserves from depositors to keep on lending. Banks don't see themselves lending much to Irish people in the forseeable future, because as a nation most of us have already maxed out our credit limit, and prospects are not great even for the solvent because our economy will be crippled for a long time by interest repayments to IMF and ECB due on goverment debt. Therefore there is no point in them hanging around here.
They will continue to harvest the interest repayments on existing loans, but they don't need a high street presence for that.