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Old 04-16-2007, 01:25 PM
 
108 posts, read 448,261 times
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What kind of customer does a bank really WANT? What kind of special "benefits" should a bank offer a customer with an investment portfolio, savings and checkings accounts, and home mortgage? Is it better to shop around and get the best rate, or find a convenient basket to put all of your eggs?
Just wondering... because I don't understand why all banks are elaborate, expensive buildings with high-salaried employees. After all, I put my money there and they pay ME, right? Who pays the bank?
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Old 04-16-2007, 02:57 PM
 
Location: Helena, MT
373 posts, read 1,753,191 times
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A bank wants any kind of customer who has financial needs that can be met in exchange for fees or interest income. They provide you a service, and you pay them. If you had the money on hand, you wouldn't need a loan. If you could pay interest on your own money, you'd have it made.

Most banks have highly salaried employees because many non-teller line positions require a bachelor's degree or higher and an healthy amount of ongoing education in legal compliance, financial management, etc. The reason they have to pay these employees so much is that these employees are skilled information workers who can command a high market rate in any business industry. Supply and demand.

I'd choose a bank that best meets your overall needs...sort of the convenience basket thing.

The reason they have big buildings is that appearance and security are big in banking. A bigger, better looking building will command a higher level of confidence from customers, especially commercial customers. If you want to go somewhere that looks like a convenience store or a pay day loan place, you might be wary of the security of your money or whether the bank is going to be around in 5 years.

Banks are also audited and insured by a variety of regulatory agencies that strive to make banking one of the most transparent, trustworthy type of businesses. You should feel confident that your money is insured and safe. I've only recently moved into a job in banking from previously working in higher ed. I was shocked at how regulated and focused on trust and security banks were. I never knew that as an outsider.

Also, most banks contribute huge amounts of money to charities and offer low or no-cost financing for things for hospitals, non-profit group homes, colleges, etc. Some folks think that charity should just come from individuals, but in reality, most non-profits rely heavily on the corporate sector for a planned revenue stream. Community banks in general have a mission of serving the needs of the local area and supporting community events and organizations. I am the marketing/charitable giving coordinator for a small community bank (with a big building).
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Old 04-16-2007, 05:03 PM
 
19,284 posts, read 25,808,645 times
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Quote:
Originally Posted by marymel View Post
What kind of customer does a bank really WANT? What kind of special "benefits" should a bank offer a customer with an investment portfolio, savings and checkings accounts, and home mortgage? Is it better to shop around and get the best rate, or find a convenient basket to put all of your eggs?
Just wondering... because I don't understand why all banks are elaborate, expensive buildings with high-salaried employees. After all, I put my money there and they pay ME, right? Who pays the bank?
mary, have you ever had a mortgage?? often, on a 30 yr loan, you pay three times the original principal in interest,,,
say you took out a mortgage to buy a house, the loan is 125,000,,,say your monthly payment is 800 a month,,,,for 30 yrs....look at your mortgage statement,,, most all goes towards interest,
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Old 04-16-2007, 05:44 PM
 
108 posts, read 448,261 times
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I guess I deserve that for such a vague question! Yes, I realize how banks work, that their employees are professionals, need a big building, etc. I'm just wondering about my local small-town bank.
Here's a more focused question: As a business operator, would a bank prefer the business of a blue-collar worker who has bad credit and would therefore pay larger interest rates on money borrowed, not to mention the fees for over-withdrawels? Compared to the wealthy person who pays little interest, has no loans anyway, and is actually taking money from the bank, in the form of interest? Bottom line: does the bank want you to keep money there (to use for themselves) or do they want you to borrow it with interest?
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Old 04-16-2007, 07:10 PM
 
4,607 posts, read 7,193,659 times
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Both to answer your question. Money is money. If they can take your money ( the wealthy person and invest it behind the scenes etc.)and actually make money off of it, great! If they can selectively give a loan to someone who in their eyes will repay it ( and make money off of the interest charges), great. Money is money,
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Old 04-17-2007, 11:14 PM
 
Location: Old Town Alexandria
14,495 posts, read 24,739,235 times
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Thumbs down they profit either way-dont worry-

Quote:
Originally Posted by marymel View Post
I guess I deserve that for such a vague question! Yes, I realize how banks work, that their employees are professionals, need a big building, etc. I'm just wondering about my local small-town bank.
Here's a more focused question: As a business operator, would a bank prefer the business of a blue-collar worker who has bad credit and would therefore pay larger interest rates on money borrowed, not to mention the fees for over-withdrawels? Compared to the wealthy person who pays little interest, has no loans anyway, and is actually taking money from the bank, in the form of interest? Bottom line: does the bank want you to keep money there (to use for themselves) or do they want you to borrow it with interest?
A person with his hard-earned savings puts 50k in a CD. He gets, say 6% (if he shops around) interest on that money.

That money is used by the bank in THEIR investments, triple and QUADRUPLE what they give the customer. (Not to mention tax benefits they get as a corporate entity).

The bank doesnt care about the customer. They are there to make profits. Botton line.Anyone doubting this should check their major credit card customer service: it becomes worse and worse.
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Old 04-18-2007, 12:31 AM
 
Location: Helena, MT
373 posts, read 1,753,191 times
Reputation: 307
Quote:
Originally Posted by marymel View Post
I guess I deserve that for such a vague question! Yes, I realize how banks work, that their employees are professionals, need a big building, etc. I'm just wondering about my local small-town bank.
Here's a more focused question: As a business operator, would a bank prefer the business of a blue-collar worker who has bad credit and would therefore pay larger interest rates on money borrowed, not to mention the fees for over-withdrawels? Compared to the wealthy person who pays little interest, has no loans anyway, and is actually taking money from the bank, in the form of interest? Bottom line: does the bank want you to keep money there (to use for themselves) or do they want you to borrow it with interest?
I think most small local banks don't want to be predatory in their lending practices, so they offer less high rate products for high risk customers. They leave those products up to financial companies. They like customers that overdraft occasionally but not extensively and who have credit scores over 660-670 (that's an "A" loan) for mortgages. Many smaller banks sell their mortgage loans to Freddie Mac, etc. and those buying groups will only buy A loans in most cases.

Most small banks actually don't have a good handle on who their most profitable customers are. We're looking at doing an analysis of that where I work right now, but it costs like $100K just to get a consultant to come in and get started on trying to determine all that.

However, just guessing industry wide, the most profitable sector right now is probably folks who are 5-10 years from retirement who have a lot of financial needs and less time to catch up.

The other issue is that banks use the money you deposit to make loans. So, in a best case scenario they would have a good mix of loans and deposits. Otherwise they have to buy more costly instruments like various bonds and brokered CD's in order to finance their lending. They need both types of customers equally.
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Old 04-18-2007, 12:35 AM
 
Location: Helena, MT
373 posts, read 1,753,191 times
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Quote:
Originally Posted by sunnyhelena View Post
A person with his hard-earned savings puts 50k in a CD. He gets, say 6% (if he shops around) interest on that money.

That money is used by the bank in THEIR investments, triple and QUADRUPLE what they give the customer. (Not to mention tax benefits they get as a corporate entity).

The bank doesnt care about the customer. They are there to make profits. Botton line.Anyone doubting this should check their major credit card customer service: it becomes worse and worse.
I think you really need to differentiate between small local banks and credit card companies. We just had a discussion today in a meeting about how we don't want to do this or that because we don't want to be "like credit card companies." I've worked for a finance company before, and that situation and a small local bank are apples and oranges. I know because I've been in both industries. I even did business development for CitiGroup where I set up those vendor "90 days same-as-cash" contracts you get at furniture stores, etc. I had to quit because my conscience made me. I've never worked for an employer that was as community-minded as my current one. Of course, banks are not non-profits. But, they do vary from fully stockholder owned to closely held family banks. So, comparing your small town main street bank and Chase is not really fair.
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Old 04-18-2007, 02:21 PM
 
Location: Old Town Alexandria
14,495 posts, read 24,739,235 times
Reputation: 8895
Exclamation fair enough-

Quote:
Originally Posted by lorelei2873 View Post
I think you really need to differentiate between small local banks and credit card companies. We just had a discussion today in a meeting about how we don't want to do this or that because we don't want to be "like credit card companies." I've worked for a finance company before, and that situation and a small local bank are apples and oranges. I know because I've been in both industries. I even did business development for CitiGroup where I set up those vendor "90 days same-as-cash" contracts you get at furniture stores, etc. I had to quit because my conscience made me. I've never worked for an employer that was as community-minded as my current one. Of course, banks are not non-profits. But, they do vary from fully stockholder owned to closely held family banks. So, comparing your small town main street bank and Chase is not really fair.
But is is incredible the lack of knowledge some people have about their own
HELOC loans and other equity vehicles ARE predatory. Citifinancial in S Florida is a prime example. Their interest rates were usurious. They caught people in the middle of a housing bubble. They are not doing this to help the consumer, it is to triple their interest rate. IMO Bank of America is also primary offender. People need to be aware, before jumping on another loan.
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Old 04-19-2007, 12:11 AM
 
Location: Helena, MT
373 posts, read 1,753,191 times
Reputation: 307
I totally know. I used to work for CitiGroup. That's why I quit. Yuck!
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