Are Banks Setting Themselves Up To Be Disrupted?

Banks these days seem to be going wild with new fees for everything. More and more, you can’t do anything without incurring a fee. Walk into a bank? Get a fee. Request an old statement? Get a fee. Close your account? Get a fee. It’s crazy.

And the latest fee announcement, the craziest of all, comes from Bank of America, which this week says it will start charging a $5 monthly fee to customers just for using ATMs.

It’s pretty infuriating for those of us who use banks–in other words all of us–but it also makes me wonder: are banks setting themselves up to be massively disrupted?

Methinks they are.

By adding all of these fees, tacking on all of this bloat, to something that people really just want to be painless and not cost them money, they’re setting the stage for someone or some group or some new way of thinking to come along and upend the whole notion of banking that we currently take for granted. The apple cart is getting so high off the ground, and so rickety, that someone could come along and turn it over before long with a new idea that catches people’s imagination in just the right way.

What would a disruption of banking look like? Could be a couple of things:

- One, it could come in the form of a new, low-end, no-frills bank that charges no fees and also offers no niceties. Think of Southwest Airlines as a bank: Peanuts for lunch instead of chicken parmesan. Rarely a direct flight anywhere. But dirt cheap. That’s what a low-end bank that could disrupt the current bank industry would look like. I would use that bank, and so would a lot of my friends. Just give me an ATM card and a good website where I can manage my accounts, and that’s all I need. Make sure there are ATMs for me all over the place. Forget about a branch entirely. Let me call in to a number when I need to speak to someone. Sure I’d miss the branch, but that’s not the point – the point is would I switch to that bank, if it was a hell of a lot cheaper than Bank of America? I think I would.

- Two, it could come in the form of a whole new type of exchange. This is fairly far-fetched, but it’s also pretty interesting. Crypto-currency, e.g. Bitcoin? New forms of local currency like Ithaca Hours? These are interesting because they disrupt not just the bank industry and who’s on top of it, but the whole idea of banks and currency altogether. This seems a lot farther off, but it also feels to me like where the world might be going in the longer run – over the next several decades. The disappearance of banking as we know it entirely. (Banking: what a 21st century idea!)

The first option is a no-brainer, and if someone with a couple billion bucks isn’t already starting a bank like that somewhere, I’d be surprised. The second option is a lot harder to see, and harder to make the case for – it’s the future, and it’s fuzzy, as always. But with movements like Occupy Wall Street popping up around the world and gaining momentum by the day, maybe the future is nearer than anyone would guess?

Anyway, if I were a bank like BofA, I’d be watching my back right now, and smiling more at my customers.

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