The value of bank services

As I mentioned a week and a bit ago, I’m presently on holidays, traveling the Nile. It is very Agatha Christie, and in fact, I have visited the two colonial style hotels (one in Aswan, the other in Luxor) where that worthy did her research for the classic book. Thankfully, noone has been murdered yet in real life, though there have been some rather testy times at the desert buffet.

Speaking of testy times, it has been eye-opening for me, speaking with various people in this tour group, at how little value people place on the banking services they rely on.

Intellectually, we all know that people don’t value banking services and can’t understand why there can be any justification for fees. But it is astonishing to watch this in action.

Let me relate one (of many) situations I’ve come across whilst here.

Earlier in the week, a group U.K. tourists  were complaining about the fact that they’d been unable to access cash (Egypt is largely a cash economy) since there are no ATM facilities on the boat, and most of the temples and tombs we’ve visited are not equipped with cash dispensing facilities. The fact that they’d be spending this cash on tourist rubbish aside (all meals and drinks are included on board), their whole holiday, it seemed, was being wrecked by the fact that they had no access to their funds.

There was evident relief when they related that the boat had been kind enough to give them a cash advance on their credit card, at a measly 5% transaction fee.

Anyway, we’ve just arrived in Luxor where there are plenty of cash facilities. And after the dash to an ATM,  I’ve heard those self-same tourists complaining about the fact that they’d been levied bank charges for the transactions they’d just completed. A whole two pounds fifty.

The boat was kind when it charged five percent. The bank was robbing them when it charged a fraction of the amount.

How have we, in the industry, failed so roundly to demonstrate the value we bring?

Note: I am reading and approving comments. However, my periodic Internet access in Egypt is preventing me from writing thoughtful replies. Please accept apologies for any delays.

6 Responses to“The value of bank services”

  1. April 5, 2007 at 10:56 pm #

    hah! James this is classic. I can picture you with G&T in one hand, computer in the other .. well anyway… enjoy!!!

  2. April 7, 2007 at 3:12 am #

    Thanks Colin. Am enjoying, and today am flying to the Red Sea for diving. Not that I dive, mind you. 🙂

  3. llyons37
    April 7, 2007 at 3:36 pm #

    I completely agree! Living in societies with developed financial systems has spoiled us. It is possible that bankers expect that the value of the service that we provide is understood. That the absence of our service is enough to have the value realized and then validated. Now that we realize this, what do we do to fix it?

  4. April 10, 2007 at 1:56 am #

    Hello James, I’m not so sure that the public do under-rate the travelling service that banks provide. My straw poll suggests that the convenience is much appreciated but it is perhaps the quantum of the fees that is questioned (the mathematical challenges of your travelling companions notwithstanding).
    I travel regularly between New Zealand and Australia and reckon that the value of the FX transaction itself (at nearly 200 points) is fair compensation for the excellent convenience and safety so an additional fee is not required. I also note that I know people who have been caught out and need just another $20 for some airport expense and thus pay a whopping percentage on the transaction.
    kind regards,
    Malcolm

  5. Jesse Haifley
    April 17, 2007 at 4:23 pm #

    Hello and thank you for this site.
    Is there any chance that customers are sophisticated enough to realize that banks benefit from their deposits, as well as from their willingness to interact with ATMs rather than clerks in branches? (There HAS been a cost savings to the ATM phenomenon, no?) Probably those customers in a position to join you on this trip are likely that sophisticated, on average?
    Also, isn’t it fair to say that clients get to define what “convenient” means? Lack of bank services on the ship is perceived as a failing of the bank, whether or not the ship is able to fill the gap. But no need to be surprised that clients were not delighted to pay another premium for the “convenience” of slogging about in unfamiliar terrain to discover an ATM. Why would that be satisfying?
    All the best.
    – Jesse

  6. April 17, 2007 at 5:28 pm #

    Dear Jesse,
    Thanks for visiting.
    By no means would I suggest that consumers aren’t sophisticated. I was merely surprised to see this particular demonstration of consumer perception at work. On the one hand, the ship charged an outrageous fee for a transaction, and the consumer was satisfied. On the other, a bank charged a much reduced fee, and the consumer wasn’t.
    My point, I think, was that the financial services industry has failed to produce consumer satisfaction.
    And that, ultimately the same service provided by a non bank, even at a much higher price, is more satisfying to consumers, simply because it hasn’t come from a banking organisation.
    That is the problem we have to fix, in my view.

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