I am always one to take the consumer view in channel management, but Canadian politicians are guilty of confusing consumers on the ATM fee issue.  The Canadian Banks are quite right in their assessment of the impact on their results if they are forced to eliminate ATM Fees.

Lets look at Duceppe’s (Leader # 3 party in Canada) rater ignorant comment.

Bloc Québécois Leader Gilles Duceppe said later the banks are rich enough they should be able to absorb the cost of getting rid of ATM charges.

Source: Canadian Banks & Insurance

Consider the facts:

1. The vast majority of Canadians do not pay ATM fees
2. ATM fees are paid through use of other Banks’ ATM’s.  Customers largely pay no fees to use their own Banks ATM’s
3. ATM fees are 100% controllable by the consumer

This entire issue is completely political.  If the Banks accept Duceppe’s point and eliminate fees because they “are rich enough”, consider the impact.  First of all who is rich?  The big banks represent an enormous percentage of the TSE (Toronto Stock Exchange) so those who are rich, would be those who invest in that exchange …. last time I checked that’s every Canadian, whether directly, or indirectly through union, or pension funds.

So, if the Banks’ follow Duceppe’s comment, every Canadian would suffer as the market reduced the Banks’ stock market value by whatever amount relative to absorbing the fees.

This episode will result in one of two possible alternatives (IMHO).

• Banks will eliminate the most costly components of ATM’s such as deposits, using cheque scanning technology (very expensive), and paper bill payment, forcing everyone to use online banking
• Banks (some, not all) will sell their ATM fleet to a central operating company such as Symcor, which already handles cheque clearing, and Symcor can rationalise the ATM’s across Canada based on consumer need, and not branch distribution as it is today

The reality might be a combination of the above, but methinks the Banks’ won’t wait for this otherwise unwinnable situation to arise again.

Final point:

Their remains the opportunity for one Bank to choose to differentiate itself, and the commensurate fee reduction would be a marketing cost, to attract customers.  That Bank would need to have decent ATM coverage across Canada first.  This would only work if the costs were covered by the new revenue from new customers, and the more I think on that, its a tough sell, so now, I stick to my two alternatives above.