Get my 5-day email funnel that generated $400,000 from a single launch

Want an email sales funnel that's already proven to work? Get the entire word-for-word email funnel that generated $400,000 from a single launch and apply it to your own business.

Yes! Send me the funnel now
Start Here: “The Ultimate Guide to Social Skills”

Are Big Banks doomed? Look at these survey results

61 Comments- Get free updates of new posts here

13 0

In my book, I’m extremely critical of Big Banks like Bank of America and Wells Fargo, who routinely treat their customers like shit, offer terrible services, and use inscrutable fee schedules to make billions of dollars per year from worthless fees alone.

This pisses me off like you wouldn’t believe. (By the way, here’s how you can negotiate out of bank fees: Part 1 and Part 2.)

10 years ago, there weren’t many other choices for banks. Like a short, fat guy with no social skills, you took what you could get. But now, things have changed, and our short fat guy has turned into a prince with lots of options.

There are now dozens of other banks to choose from, especially from online banks that typically offer higher interest rates, better services, and fewer fees. And people are smart: They’ve been aggressively moving from some of the shittier Big Banks to online banks that offer them terrific service. For example, I use a combination of ING Direct and Schwab, pay no minimums or fees, and have automatic sub-savings accounts that I use in my automation system. I also withdraw my money from ANY ATM and get refunded 100% of ATM fees.

These choices are frightening the Big Banks, which are structurally poorly positioned for these insurgent banks. Since they have no other way to compete, what do they turn back to? Ah yes, the trusty trough of fat fees:

Starting July 1, Wells Fargo & Co. is ending its free checking account. Bank of America Corp. is testing an array of account options and fees to be rolled out later this year. Other banks are expected to follow suit. (via LA Times)

Bank of America Corp. and other banks are preparing new fees on basic banking services as they try to replace revenue lost to regulatory rules, in a push that is expected to spell an end to free checking accounts for many Americans. (via The Wall Street Journal)

Starting in July, banks will no longer be allowed to automatically enroll customers in overdraft “protection” programs—and thus slap them with hidden fees when they overdraw their accounts. Instead, banks will be forced to obtain customers’ permission (opt-in) before allowing them to overcharge their debit card. (via ING Direct, which is obviously biased, so keep that in mind)

Recently, I partnered with my friend Rob Rubin from FindABetterBank.com to get some data on how we feel about our banks. We surveyed over 1,000 people and found some surprising insights about banks and the direction of the industry.

This is an exclusive analysis from I Will Teach You To Be Rich and FindABetterBank.com.

* * *

Online Banks Spell Doom For Branch Banking

By Rob Rubin (Rob is the creator of FindABetterBank)

Online banks have been around for a long time, but they haven’t been much competition for traditional banks – until now. The early online alternatives sputtered along because traditional banks provided the same or better technology-based services, many people required a nearby branch, they offered a limited set of products beyond checking and savings accounts and online banks didn’t invest enough into customer service.

But everything has changed. We surveyed IWTYTBR concerning their feelings toward their primary banks. Sixty percent of respondents were under 30 and a whopping 22% of these young adults identified an online bank as their primary banking institution (See Figure 1).

Here’s why traditional banks are in trouble:

Young adults don’t have old habits. People under 30 use bank branches less than older adults – even if they use a traditional bank. Not surprisingly, they are also more likely to utilize mobile banking services and log onto online banking frequently (See Table 1). This generation and the one’s yet to reach adulthood are more comfortable using technology then waiting on a line for the next available teller.

Today, online banks are kicking big and regional banks’ asses. We asked a simple question that says it all: “If you could have a do-over without any cost or inconvenience, would you choose the same bank you’re currently using?” Over 35% of people using banks with 100 or more branch locations want a do-over, but only 2% of people using online banks indicate they’d like to change their bank. Wow. (Attention big bank customers: Just for fun, join my new Facebook group “1,000,000 people who hate their bank”)

Why people love online banks:

“The ATMs are free, and they have an amazing (FREE) bill pay/automatic check generator feature- so cool!”

“Refunds from ATMs, even internationally; 2% cash back; got me to open a brokerage account.”

“They aren’t out to get me. BEST web/mobile banking.”

“They have the highest quality customer service that I’ve seen for an FI. Plus, I get free investment advice!”

Why people want to switch away from big banks:

“Every time I walk in to make a deposit I am confronted by a sales person trying to up sell me.”

“They keep changing the rules, adding more and more fees and restrictions on savings and checking accounts because I have no loans etc.”

“I hate what they’ve done to this country.”

“I’ve realized that I’d rather be banking with a smaller, community bank rather than a corporate behemoth”

New features negate the need for branch banking. In the past, adoption of online banks was held back because consumers didn’t have a convenient way to make deposits and withdrawals. But now the advent remote deposit services, ATM fee rebates and easy funds transfers has leveled playing field.

“Ability to deposit checks from home using my scanner!!!!”

“Ability to use any ATM location – refunded fees.”

“With ING’s new ATM finder app I’m falling in love all over again.”

“Their Instant Line of Credit is awesome. You pay a little interest on the money you borrow but no NSF or overdraft fees and the interest they pay usually covers what you’ve borrowed.”

“Amazing online interface and mobile banking app!!!”

If you haven’t yet made the move to an online bank, here are good choices to consider:

USAA
Charles Schwab
ING Direct
PerkStreet Financial

* * *
Get my insider newsletter, sent every few days to ~200,000 people:

  • Insider techniques on psychology, negotiation, automation, and investing
  • Ready-to-use scripts that are never publicly released
  • Case studies and private Q&As

Can’t see the above form? Click here to join the list.

13 0

Related Articles

Untitled design (6)

How to pay off student loans without thinking about it

Student loans are a big kick in the face that the real world has arrived. The average graduate has $28,...

Read More
stretching

The 4 keys to finding ambition

We’re told we should just be happy with what we have… but there’s a difference between being happy ...

Read More

61 Comments

13 0
 

Leave a Reply

61 Comments on "Are Big Banks doomed? Look at these survey results"

Notify of
avatar

Meg
Meg
6 years 9 days ago

I made the switch from Bank of America to Perkstreet and have been very happy. I had some initial difficulties with my account and when I called customer service, I got a human being immediately.

Does anyone have a solution for people who dislike big banks, but need to regularly deposit cash? My parents would like to move away from BofA, but we live in a small town, there are no other local options, and the store they own does a lot of business in cash, so they need to be able to make deposits.

ann kramer
ann kramer
6 years 9 days ago

Why not deposit into BofA at the local level and then transfer through online banking into an online bank like Perkstreet. This way, they can run most of their banking online while having the local capacity to walk up to the teller and deposit cash. BofA can’t require you to keep money in the bank–at best they can charge a monthly checking service fee…but that would still be nominal.

Raquel
Raquel
6 years 9 days ago

The other great alternative to big banks is your local credit union. They offer all the same services as a “big” bank, but for free. Do a search for any local credit union, and you’ll usually find checking and savings accounts with NO monthly fees (I found this for my personal AND business accounts), direct deposit, free online bill pay, savings accounts with higher interest rates, and ATM debit cards. Credit union accounts are also federally insured, so you don’t have to worry about your money. I love my credit union, and will NEVER go back to a big bank.

Customers Revenge
6 years 9 days ago
Your post title talks about doomed banks. Why is ignoring small-time, high effort customers going to doom the bank? They still have high profit business customers, credit cards, all kinds of loans, investments, etc. We always knew banks didn’t care about customers, but they don’t make their profit from piddly account holder fees. Account holders cause expense because they need people and branches. Yes, they could offer lower rates to online only account holders, but would that allow them to close any branches? Online-only banks have lower cost structure to service the client, so they can lower fees while still… Read more »
eva
eva
6 years 9 days ago

CREDIT UNIONS. I’m surprised you don’t mention credit unions at all. My local credit union has incredible customer service, ATM refunds, a 3.5% rewards checking account, and they do manual underwriting for loans. Also? Free workshops and classes for members on financial literacy.

Credit unions kick ass any day.

Tyler WebCPA
6 years 9 days ago

100% with Eva, plus my credit union can do everything online as well. For consumer banking that’s hard to beat.

Anoel
Anoel
6 years 9 days ago
I so agree with this. I haaaated BoA when I used it and I definitely regret signing up for them when I was eighteen. Thankfully, fees and fees later and thanks to your book, I decided to switch to Charles Schwab and it was so much better. No overdrawn fees and other stupid fees, great service, interest (as piddling as it may be sometimes) and ATM rebates (still the best part). I’ll never go back to a big bank. It can be annoying to transfer cash and paychecks there (before direct deposit goes into effect) but it can be done… Read more »
452
452
6 years 9 days ago
I love banking with Chase. Their a big bank and I take advantage of their vast network of branches and kiosk that are on every single block. I can deposit or withdraw my money at any time and that convenience I value. For example, I can deposit my check or check my statement at a kiosk (since I don’t own a internet ready cell phone) when I’m grocery shopping. I keep only a certain threshold in my Case checking and the rest transfer to ING direct. What I like about Chase is that I also have my credit cards (one… Read more »
MissWhite
MissWhite
6 years 8 days ago

I bet you also love how much they pay you to say these ridiculous things.

Shane
Shane
6 years 9 days ago

I’m very interested in the ING system because of the sub-savings accounts, however it doesn’t look like they offer a checking account. Does anyone know of a bank that offers both?

Shane
Shane
6 years 9 days ago
Moneymonk
6 years 9 days ago

I have my checking at an credit union and my saving at ING direct. Be fine since I started. No issues

Minority Fortune
6 years 9 days ago

Yes, big banks suck more than BP’s oil cleaning strategy, which really suck (rather fail to suck). We’re big fans on Charles Schwab, ING Direct, and credit unions. A great ING Direct perk is the online mailing option, which will send out a check with free postage.

We too hope big banks fail, but they won’t go out without a fight of course. Posts exposing them for the douche bags that they are will be of great help.

K-bones
K-bones
6 years 9 days ago

Why would you ever want big banks to fail?

Shalin Shah
6 years 9 days ago
I bank with a couple of community banks, and a big national bank. (YCB, and 53 ) I think I am happy with both, since I have the free checking, and also the convenience of running up to the bank whenever I need to get a money order or any such stuff which needs an actual person ( Notarizing documents, getting signed bank statements) etc. I do not incur any “special charges”, neither is the banker trying to up-sell to me. These work well with me, since I need to get such services done on a regular basis ( about… Read more »
Andrew Baber
6 years 9 days ago

Hilarious random fact:

My friend’s father uses a particular bank in San Francisco because….

…they give him a free cookie every time he comes into a branch.

*facepalm*

Gregg Pechmann
6 years 9 days ago

World savings was notorious for that….plus their ugly buildings.

AM
AM
6 years 9 days ago

Decent chance he’s going to First Republic, which is hands down the most incredibly awesome bank I’ve ever encountered. It’s pretty much the Platonic ideal of banking.

jgonzales
jgonzales
6 years 9 days ago
I’m one of those who uses a big bank and I hate it. I’d like to transfer to an online bank, but my husband’s company doesn’t offer direct deposit (he works for a very small business) and I haven’t found an online bank that allows us to deposit his checks without it taking a week plus to clear. USAA has an option to scan in deposits, but you have to jump through hoops to qualify for the service. Thanks for the links to the fee waiver info Ramit, I had to use it with my big bank this morning. I… Read more »
Charlie Park
6 years 9 days ago

I’m just looking forward to BankSimple launching. Hard to quantify the awesome that that’s going to unleash.

Dan
Dan
6 years 9 days ago
I use a big bank to cash checks and have a small portion of my emergency fund (in case I need quick access) and direct deposit. Then use Ally savings and checking by automatically transferring money every month. I like Ally a lot, although I do wish they had sub-accounts like ING. Getting reimbursements for ATM fees alone is worth it. No longer worry about what ATM I am using (or spend time searching for one with out fees) is worth more then then few dollars I save. I love just using the ATM in the hotel lobby or airport… Read more »
trackback

[…] a post at I Will Teach You to Be Rich that basically says big banks are doomed. Why? Getting right to the point, the big banks: routinely […]

Erica
Erica
6 years 9 days ago
I use a local credit union, and I opened a checking account with Charles Schwab because I hated having to find a linked credit union whenever I needed cash. I’m very happy with Schwab, their service, and the ATM fee refunds, and my credit union has finally crawled out of the stone age and now allows me to do a lot of my banking stuff online (including opening accounts, FINALLY!). The only thing I don’t like is that Mint seems to have problems syncing my transactions from my CU from time to time, but that’s more Mint’s problem than my… Read more »
Suzie Savings
6 years 9 days ago

Your right: the younger generation does not have old habits, and big banks are aware of this! That’s why they try to lock in students with no fees student checking and savings accounts. Students, beware!

I still have not switched out of my BoA checking account because I enjoy the ease of depositing through an ATM and they still don’t charge me, however I recently moved my savings account over to SmartyPig. SmartyPig offers 2.15% APY, which is a 20% increase from Bank of America!

Krista B.
Krista B.
6 years 9 days ago
I was recently in Berlin and went to Deutsche Bank who has a “lab” bank downtown with a retail segment and a lounge inside the bank. It was an amazing setup but totally cost prohibitive for smaller branches and banks. After talking to the bank manager the main reason they were doing this is because they were losing business to online banks and wanted to increase new customers to their bank. Even though I enjoyed the tour of the bank felt it was completely impractical to go shopping at your local bank. I really love online banking and although I… Read more »
baron
baron
6 years 9 days ago

i’m curious as to how much revenue big banks make from dealing with individuals vs dealing with businesses. if you’re running a business with more than a few million in revenue, on-line banking and credit unions are probably not the right options.

perhaps they treat individuals like they don’t matter because when it comes to revenue, they don’t. can anyone here shed some light on the matter?

John
John
6 years 9 days ago

danversbank.com has a high yield checking account! pays 4% on your balance. use it like a savings account.. pretty sweet. blows away my previous “high yield” saving acct..which is now at .95%.

Peyton Farquhar
6 years 9 days ago

RE: the Wells fee for a checking account, but the fee is waived provided that you jump through a few hoops, including a daily balance of $5k, or, barring that fantasy, a recurring monthly automatic transfer of $25 or more to another account such as savings or a home loan.

Andy
Andy
6 years 9 days ago

You may be opted out of Overdraft protection, but don’t think you won’t get charged for a return check…so short sighted.

The fees are part of the business. Either accept them or move your business to another bank. I am sick of this complaining bullshit.

Karona
Karona
6 years 9 days ago
I love my ING Savings account, and have several set up for different savings goals, much like Ramit mentions in his book. I would LOVE to get rid of my Big Bank checking for all reasons above, except for one little problem… I am paid in both cash and checks throughout the day for my work, and I need to be able to deposit both on a regular basis, usually daily. I currently stop at an ATM (and my bank has many, so those fees aren’t an issue) on my way home from my last client to make a deposit.… Read more »
trackback

[…] Ramit Sethi looks at how big, popular banks are raising fees on customers and, in the process, dying […]

Tonei
6 years 8 days ago
I have over 98% of my cash in credit unions (the rest being in a Schwab checking account for ATM usage), and it’s fantastic. Since I have to maintain a bank account in my home state for various reasons, I picked a credit union that’s part of the Credit Union Service Centers network – meaning that even when I’m at school on the other side of the country, I can go to the credit union down the street and deposit cash or perform other transactions just like I’m at my own branch. And even though I opted out of overdraft… Read more »
Rose M
6 years 8 days ago
You wouldn’t know that big banks might be doomed here where I’m at, in the Chicagoland area. Chase is building a new branch on every darned corner! I don’t know how they can support that kind of overhead in this environment. I had a checking account with them and their credit card reward program is pretty good. I haven’t paid for gas in many months. I’m over 30 but do much banking online, but I also pay our local US Bank brach a visit a few times a month as well. They have branches and ATMs everywhere. They’ve made it… Read more »
EH
EH
6 years 7 days ago

I doubt they’re building. They’re probably just remodeling all of the WaMu branches that dropped into their lap.

Kevin
Kevin
6 years 8 days ago
This is completely unsurprising. We all knew this would happen when the government decided to step in and protect stupid people from themselves. By forbidding the banks from making money off of poorly-organized spendthrifts with shoddy credit, the banks did the only thing they COULD do – raise the fees on the rest of us. What did you THINK they were going to do? Just roll over and accept plummetting revenues? Don’t blame the banks – blame the shareholders. You know, folks like YOU and ME and your company’s PENSION FUND. Those evil, greedy jerks that actually expect the companies… Read more »
Gregg Pechmann
6 years 8 days ago

This whole discussion is based upon big banks….I’m in total agreement with letting them fail. That is the only way you clean out the system and the truly best rise to the top (see Japan 1990’s).
But what about big governments? Arent they more of a threat to individuals? Instead of worrying about bank fees, shouldn’t the light be shined on the wasteful $ spent by these crooks? We are at the tipping point where they collect more than what is produced…..problem with funding these non-producing people is that eventually the money runs out…

EH
EH
6 years 7 days ago

One topic at a time! I’m not sure this is the right place to get to the bottom of finance policy, but at any rate you get rid of the banks that are screwing people and you get rid of a lot of crooks. Maybe. At least they’d have to compete for fewer jobs, which means their compensation packages would shrink due to supply and demand. I’d call that a win-win.

Rahul
Rahul
6 years 8 days ago

Can anyone recommend a online bank which has the free ATM’s and works internationally as well?

Armando Baralt
6 years 8 days ago
The big banks are incredibly illogical. The credit card racket is specially pernicious. I have seen people who pay a day late, get charged a $39 late fee. Considering that they are already paying interest on the balance, that’s outrageous enough. But the worse part is raising the interest rate to a permanent 30% rate. That is draconian and stupid. They operate on a penalty model. They have the unmitigated gall to punish people to the tune of hundreds and even thousands of dollars. All this is in consequence for one late payment. On top of that the credit reporting… Read more »
Kevin
Kevin
6 years 8 days ago

Amando:

How is any of that “illogical?”

Are you completely unfamiliar with the concept of the risk/return relationship as it relates to finance?

Armando Baralt
6 years 7 days ago
Of course I am familiar with the risk/return relationship as it relates to finance. It is precisely your pedantic and condescending attitude that the banks are guilty of. It is illogical from a purely business standpoint. It is pushing people to file bankruptcy. There the credit card issuer gets zilch. It creates animosity towards the banks. It is a loose/loose relationship. That is no way to run a business. Notice that the two industries that needed bailouts are the two industries that make being a customer a miserable experience. The car industries do so in the whole process of buying… Read more »
trackback

[…] Are Big Banks Doomed? Look At These Survey Results – I Will Teach You To Be Rich […]

Kevin
Kevin
6 years 7 days ago
Armando: The banks got into trouble because they were TOO GENEROUS with lending, not because they were too adversarial or condescending. They were TOO TRUSTING, that people would pay back what they borrowed. They overestimated human nature and underestimated greed, and got caught holding the bag because of it. I still don’t see how it is “illogical” to charge higher interest rates to people who represent higher risk of defaulting. “Armando” seems Spanish – perhaps English isn’t your first language? Do you understand what “illogical” means? Maybe you just meant to use another word. Strictly speaking, nothing you’ve described is… Read more »
Armando
6 years 7 days ago
No, I am quite fluent in English. As a licensed bankruptcy attorney since 1987, I am arguing against self-interest. I listed my first and last time here so you can google me. I challenge you to do the same. It behooves me to have the banks treat their customers badly, as it has a direct correlation to the number of new bankruptcies that I file. I treat my clients well and I am nice to them. I do not penalize them for stupid mistakes. They refer other clients. My word of mouth referrals are amazing. It is illogical – and… Read more »
Armando Baralt
6 years 7 days ago

Oops, I meant to say ” I listed my first and last name here”. I surely don’t claim perfection. To make up for it here’s a free link to Bankruptcy filing statistics in my district – The Eastern District of Louisiana. This is just one of 89 federal districts!
http://www.laeb.uscourts.gov/pdf/Stats.pdf

Kevin
Kevin
6 years 7 days ago
“It is illogical – and I insist that is the correct word – for Banks to offer products such as ARM’s where the person who is least likely to have the ability to pay is charged the highest interest.” See, that seems exactly incorrect to me. What you just described IS perfectly logical. What’s the alternative? That banks charge higher interest to those MOST likely to pay? Or to charge everybody the SAME interest rate, regardless of the default risk they represent? None of that is logical. I guess we’ll just have to agree to disagree, but I’m pretty confident… Read more »
Armando Baralt
6 years 7 days ago
Kevin, I think that the difference in our opinions stems from me coming from a practical, dealing with real people situation. I understand what you are saying, but it seems more grounded in theory than in what I see day to day in the real world. Either that or you have a vested interest in that you work in the lending industry. Of course that’s speculation as I do not know your last name, Kevin. I have already admitted that I am not perfect so maybe I’m mistaken. I see day in and day out a great deal of suffering… Read more »
Armando Baralt
6 years 7 days ago

I promise this is my last comment. On the topic of logic I highly recommend “The Problems of Philosophy” by Bertrand Russell. I read this in college, then we touched on in in a Jurisprudence class at Loyola Law School. I am re-reading it now for about the 8th time. Enjoy!

James
6 years 7 days ago

It is safe to say that the 30 somethings out there do the majority of their business online and are looking for zero minimums and no additional charges. if you can offer these features you will potentially have a client for life.

Armando
6 years 7 days ago
I’m going to break a promise. I’m going to come and go like a pigeon eating a piece of French bread given by an old lady at the park. I have a tremendous amount of faith in the younger generations. I love this blog because it gives you so much great information about finances. As an average Joe, I am heartened by your well thought out comment. I read it along with my wife, and after a couple of readings, we understood the underlying wisdom. I have a couple of teens and I am going to get them to subscribe… Read more »
Peter
Peter
6 years 6 days ago
I hated banks. I used WaMu before they were bought out. What I found was I was being charged tons of money when things got tight. I switched to Wells Fargo. What happened at Wells Fargo was that they charged me a ton when things got tight. Notice when you complain about the fees they try to tell you how to balance your books. Anyways, I switched to Boeing Employee Credit Union. Suddenly, I get access to a cool website that let’s me make transfers and stuff. I don’t get charged a ton of money per mistake. When I do… Read more »
Zoe
Zoe
6 years 5 days ago

I actually banked with a relatively small local bank and HATED it. They nickle and dimed me for everything. I finally moved over to ING and am in love.

Peter
Peter
6 years 5 days ago

Zoe, glad you found something you liked. I’m going to take a look at ING Direct soon too.

renae
renae
6 years 4 days ago
I have used USAA for 20+ yrs and now also have ING accts. The bonus is that USAA has so many additional services. The insurance is probably the best. I watched the wildfires run through So Cal and my friend’s house burn to the ground along with their entire neighborhood. During the rebuilding process the neighbors had community mettings to discuss insurance issues with regards to rebuilding and my friend said she finally had to stop going to these community meetings because she had absolutely no issues with USAA like everyone else had. USAA totally took care of them. Same… Read more »
Fabian
6 years 3 days ago

has anyone tried Ally bank, the online bank? how do you make deposits online?

Erica
Erica
6 years 1 day ago

I have an Ally savings account. You have to set up an external bank account to transfer money in, both when you set up a new account and when you have an existing account. They do have a checking account, though, which I don’t have, but I believe it would work like a regular online checking account.

novatedlease calculator
6 years 3 days ago

I think stability plays a major part why these big banks are still incomparably dominating. They may offer less and pay more for lots of people but the idea that they generate lots of income simply states that majority of those holder of big accounts establish trust in them. We may possibly overlooked the most important role of banking because of the arising opportunities that online banking lays.I’m not against them but I think our choices depends on our financial support needs.

Mneiae
Mneiae
6 years 2 days ago

There are people trying to make the whole banking experience better. Here’s one of the new banks. https://www.banksimple.net/

Kevin
Kevin
6 years 13 hours ago

What’s with everyone spamming BankSimple?

For one thing, their website has a certificate error. That’s not encouraging, for a BANK site.

Secondly, reading their FAQ makes them seem a little too casual for my tastes. I’m not sure I want to trust my life savings with people who use words like “Yep” and “quickest” (hint: it’s not a word) on their website. It sounds like a 2-bit operation run by a couple of college kids or something.

No thanks.

Debbie
Debbie
5 years 11 months ago

Love USAA! I can even deposit my check by using my iPhone. How awesome is that.

CHASTITY RED
CHASTITY RED
9 months 17 days ago

Nice article – I learned a lot from the details . Does someone know where my business might be able to get ahold of a template Temporary Custody Agreement form to fill in ?

wpDiscuz