At this time of year the banks get all hip and with it. They erect branded gazebos at the gates of colleges across the country and they populate them with trendy young things sporting savage hair and wearing bank logo t-shirts on the outside of their sweaters. Armed only with clipboards and biros, these kids are sent out by the banks to sign up customers for life.
Of course the kids flogging the bank accounts and the kids signing up to them don’t know they are starting a lifelong relationship, but the banks sure do. And they know just how lucrative a graduate customer can be over a lifetime. It’s why they get all busy and hustle hard for the freshers each year.
Freshers do actually turn into grownups eventually, and grownups turn into working people. And people with jobs make money and pay fees and pay interest and have mortgages. And although they may grumble and moan, they generally put up with whatever the banks throw at them. And the banks know this too.
Take Ulster Bank’s total meltdown last year as an example. What was called a “technical glitch” actually left most of their Irish customers without working bank accounts for weeks… and when it was all over, nearly everyone stayed put. A cynic might think it was carte blanche for the banks to do anything they wanted.
That same cynic might think that if customers were prepared to put up with bank accounts that didn’t work, they might just put up with a few fees as well. And they did. Around the time of the Ulster Bank technical glitch, the rest of the banks started charging fees to the majority of their current account customers. Then this summer they increased them. Even Ulster Bank, who had been keeping the head down on account of the meltdown, started charging fees in July… and still most people stayed put.
It’s a bizarre phenomenon, and earlier this week, bonkers.ie boss David Kerr was invited on to the Newstalk Breakfast show with Ivan Yates and Chris Donoghue to discuss it.
Can't really be bothered
Introducing the segment, Chris Donoghue said “I would have signed up to the bank I’m with on the college campus and I’m still with them. Even though at times I’ve been so frustrated by the cost, I just can’t really be bothered with trying to untangle everything and switch.”
And in a couple of sentences, Chris Donoghue summed up for the nation what the banks have known all along. We don’t switch bank accounts and it’s because we think it’s too hard. We think we have to “untangle everything” to do it.
A couple of years ago, the Central Bank did a study and found that over a nine month period, just 6,000 people switched current accounts across the four big banks. These four big banks have nearly 4 million current account customers between them. That works out at just one customer in every five hundred that switched that year.
And lets say those 4 million accounts are averaging around €50 a year in fees. That's €200 million to the banks where they weren't making it a few years ago. Or lets say the majority of those accounts is earning €100 in fees.... you get the picture. And so do they.
So back to the students. Those kids out there trying to sign up the freshers don’t have much to work with this year. They used to be able to give out free flights and actual cash money to new signups, but the freebies have dried up completely now. We used to do a “best of student bank accounts” piece on bonkers.ie each year in September. It was based on the best freebies, but we don’t do it anymore because now the only freebie left is the bank account.
Students are broke, so I guess they should count themselves lucky that they even get to bank for free nowadays. Most other broke people have to pay fees because they can’t meet the threshold to make their banking free. In the grownup world, it’s the people with all the money that don’t have to pay fees.
Alright I know, Permo’s current account is nearly free. If you’ve got a job, or you’re able to plunk €1,500 per month into it, they won’t charge you any fees. But there are no really and truly fee-free current accounts in Ireland anymore – except for the students. So enjoy them while you can kids! Oh, and make sure you take advantage of Bank of Ireland’s €2,000 free travel loan – that’s about the only decent incentive left for students these days – cash to get out of here! But do come home to pay it back y’hear?
And finally… showing signs that Irish people do have a limit to what they’re prepared to pay for, Permo said that they had signed up 30,000 new current account customers by June. That’s a lot. Then KBC have just launched themselves a shiny new current account too. It’s not free, but it’s better than some of the other accounts out there, and in tribute to Permo, they have also introduced their very own “Current Account Switching Team”. Now we’re just waiting on the others banks. You never know, we may all be banking like students again soon!