I like the new advertisement campaign by the Swiss bank MIGROSBANK. Among others, and that’s why I like it, it questions some of the antiquated banking practices which can hardly be “justified” in the age of e-banking, yet are still in widespread use.
For example, one of the advertisements questions why most banks charge commissions for stock market orders based on the transaction volume (or on a combination of volume and per order) instead of charging a flat fee per order.
The advertisement shows two identical pictures of someone hitting the ‘Enter’ key on the keyboard. The text below the pictures reads (IIRC, in about): “Do you see a difference? We neither. That’s why we charge the same fee for every order.”
Some people might argue that customers who potentially gain (or lose) more money (by having higher transaction volumes) should also pay more of the costs of the e-banking system. From the perspective of managerial accounting however, it makes more sense to break down these costs into costs per order rather than per volume. If no paperwork and no other per transaction costs are involved at all, it might even make sense to charge a flat rate per participating customer only (neglecting the fact however, that the software and the hardware infrastructure need to be able to absorb the peak number of transactions per time). This of course only applies to orders given using the e-banking system. For any other, more traditional services like consulting, wealth management etc. customers shall be charged for separately.
So why do most banks still charge on a per volume basis (or on a mix of per volume and per order fees)? It’s because they can. Some people might not be fully aware of how much IT changed (and will further change) banking. And most people lose their flair for “small” numbers once they deal with “big” numbers. Besides, it’s also a question of how people value their time.
Nonetheless, I hope the above mentioned bank will be able to stir up the domestic market a bit.