I have had the job of creating the response to this type of criticism. Its an easy response to make – we own the ATM’s, we can charge other Banks customers, but we don’t charge our own, ATM’s are horribly expensive costing $100’s of millions for a 2 – 3 thousand ATM network.
If the banks gave up, or reduced, ATM fees, maybe implicitly Ottawa is saying, ‘We might look more favourably on you as an industry if you come to us looking for changes in the Bank Act,’ ” he said.
Source: Canadian Banks & Insurance
But all those arguments fall on deaf ears. Especially in Canada, the weight of opinion will not hear that rationale, and especially not ordinary citizen opinion.
This is the ideal opportunity for a Bank(s) to break away from consolidating their views through the Canadian Bankers Association (CBA) and take a lead position. Everyone is fighting for market share, and also fighting to retain revenue. Will market share be improved by taking a common defense?
Question I would ask: what is the market share benefit of elimination of fees? This is an interesting business case.
Bankwatch 
The challenge is always that retail banking is notoriously in-elastic and switching costs are high for the consumer hence the situation we have now.
For the same reasons, stealing share is expensive for Banks, they can either beat each other up competing for tiny gains in share or tacitly match each other’s fee increases and collectively just make more money off the base they have.
RE: “or tacitly match each other’s fee increases and collectively just make more money off the base they have”
This is a highly perceptive comment about Canadian Banking. The only point I would make is that its not a long term strategy, and highly status quo’ish. Status Quo sugests acceptance of current market share.
The in-elasticity effect is only good as long as it is that. Technology changes, and vendor out sourced processes (eg Davis and Henderson) are reducing those costs.
Banks’ can await those reduced switching costs in full or start now. Especially with younger and more attractive customers (long term benefit) getting their attention now is not a bad thing.
Despite their complaints, Canadian customers have demonstrated a perpetual willingness to use white-label ATMs (which charge far more than $1.50 in most cases) rather than walk to their own bank’s ATM, hence white-labels outnumber bank-owned ATMs 2-to-1 now. Unless dropping fees would get customers to switch banks — and I agree with Tom that this is unlikely/difficult — all you’d do is attract traffic to your machines without increasing fee revenue, thus raising armored car fees, wear & tear, etc.
Colin, you’re right that this is a “status quo” approach. For the equilibrium to be broken someone has to change the game, but typically it’s not banks who do that.
I understand that Canadians seem to be ok paying the fees. But it strikes me that Jack Laytons blatent move to politicise those fees represents an opportunity for Banks.
I’d agree if I felt there was more public support, but I’m just not seeing it yet. Check out the early comments in this Globe article about RBC’s quarterly profits. Here’s a good one:
“Smart consumers use own-bank ATMs to avoid fees, and avoid the white-label rip-off ATM machines. Dumb consumers use any ATM that is convenient — including white-label machines that can cost them $3.00 to withdraw $20 — then whine to the governement. You can’t (or at least shouldn’t) legislate against stupidity.”
Granted, the Globe and Mail’s readership probably skews toward the bank-friendly, but from what I’ve seen Layton seems to be on his own this time.
They should tell their customers to go join a credit union if they don’t like them. Afterall CU’s have surcharge free ATMs all across Canada.
Nice one Benry 🙂