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Your Bank Should Be More Like Your Waiter And Less Like Your Landlord

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The financial services industry in America is locked into a business model of exploitation. For far too long, this has gone largely unchecked and unquestioned, even when advances in technology mean it doesn’t have to be so.

Is It All In Our Heads?

Technological advancements in everything from communication to transportation have streamlined our daily lives, and new, inventive solutions to age-old problems appear every day. But the financial services sector still looks largely like it did 50 or even 100 years ago. Why has it taken so long for these types of updates to appear where — in many ways — they’re needed most?

The biggest problem has been in our thinking. We’ve come to view financial services not as an exchange, but as an opportunity for businesses to extract as much monetary value as possible from the customer. Companies use sophisticated pricing tools to exploit every customer disadvantage, be it their own unique circumstances, their behavior or lack of choice.

This exploitative system leaves customers feeling like they’ve been treated unfairly, and each transaction creates moral debt on the part of the business. This is akin to a landlord attempting to gauge his tenants for money by unfairly raising rent costs, minimizing repairs and making monthly rent payments difficult (money orders required). Not all landlords are so unpleasant, but many banks are.

In a World Where Coffee Costs $35…

There’s a famous real-life story of a $35 cup of coffee caused by surprise bank fees. Often the blame is focused on the individual, but this is only because people have ignored the larger systemic issue at play. That is, until now.

These types of exploitative practices are finally beginning to attract attention, even from President Obama, who was recently quoted as saying, “We don’t mind seeing folks make a profit. But if you’re making that profit by trapping hard-working Americans into a vicious cycle of debt, then you’ve got to find a new business model, you need to find a new way of doing business.” When you consider that Americans spent more than $32 billion on bank overdrafts alone in 2013, more than what our country spends on fresh vegetables, he’s not wrong.

Americans spent more than $32 billion on bank overdrafts alone in 2013, more than what our country spends on fresh vegetables.

Picture a world where customers are happy about paying for services because of the value they deliver, where they want the companies they deal with to succeed and where they feel like they are collaborating with the company and its other customers as part of a society. It isn’t as far out of reach as you might think.

Tune In, Turn On, Opt Out

Emerging quietly, the “pay what you want” business model has been spreading across industries, from music to gaming to magazine subscriptions, and yes, even to financial services. When customers pay what they think is fair, a company’s profit depends solely on the customer’s experience. If a company treats its customers with respect and fairness, shows that it truly cares about the people it serves, and provides a valuable service, customers will reciprocate with the positive act of giving and supporting that company.

Financial Freedom: It’s The Choice Of A New Generation

No one has been more outspoken against antiquated and unfair banking practices than millennials, who would rather go to the dentist than listen to banks. As they mature, millennials are posing the single biggest threat to the industry as this tech-savvy generation continues to seek alternatives to the services banks have traditionally provided, such as access to earnings, budgeting and wire services. Technology has been quick to offer powerful alternatives that are giving customers what they really want — the respect and quality they deserve.

In the new world, bank fee structures are already beginning to crumble under the weight of their outdated methodology and consumers are gaining influence. With more options than ever, consumers are beginning to look at banks as a service industry that should depend on the quality of their work to keep their customers happy and turn a profit, much like servers at a restaurant. This is a world that we should –- and will -– strive to create. It’s not acceptable for a few to benefit from the exploitation of many. We can build a more collaborative society through shared value creation that works for the benefit of all.

Banks always do what’s in their best interest. In this case, giving customers better services without a side of exploitative practices is in their best interest. The question is, can they keep customers coming back when they’re no longer the only game in town?

Featured Image: Blend Images/Shutterstock