There were a couple of key moments for me growing up that felt like big markers: getting a bike, getting to stay home alone, my first date, and, of course, getting my own bank account. It was a Chase account, and it enabled me to deposit the $100 my grandparents gave me over the holidays every year, my earnings from summer jobs, and to take money out without asking my parents. For a teen, is there anything better?
I didn’t realize it at the time, and not for years, but I was actually being rooked in the process, to the point where I would have probably been better off just putting the money under my mattress. I didn’t have very much money in the account, so I was paying ridiculous service fees for “not meeting a minimum balance requirement.” Every once and while I would overdraw the account (hey, I was just figuring out this whole money thing) and would get stuck with fees. Then there were the fees I every so often faced for using the wrong ATM. Honestly, it’s kind of a miracle in retrospect that I ever had a positive balance in my checking account.
The big traditional banks have had such a hold on how people manage their money for so long it’s almost hard to conceive of doing anything differently with your cash, until you have that a-ha moment that comes to you after a glass of wine (or three) while going through your monthly bank statement, in which you find yourself asking the question: What value am I getting out of this bank account exactly? And in that moment, you will probably find yourself screaming “WTF” in your head and it won’t be pretty.
Think about all of the companies that were once so ingrained in the fabric of American life it was hard to envision they would ever not be that way: Sears, Toys R Us, Blockbuster, Kodak, Pan Am. That is until they failed to innovate and were relegated to the trash heaps of history.
2019 is the year that retail banks should be on notice. In recent history, it has simply been second nature for people to put money into a checking and savings account of a brand name bank and not to even think about the decision. But times, they are a-changing.
Per Gallup, millennials are 2.5 times more likely to quit their bank than anyone else. The consulting firm CG42 in a report is predicting that the ten largest banks will lose a staggering $159 billion in deposits to smaller upstarts over the next year. Meanwhile, venture capitalists are poised to capitalize on the rise of next-gen banking–this year alone “ne0-banks” have received four times as much funding as they did last year according to CB Insights.
Simultaneously, the big consumer banks seem to have their heads in the clouds–raising fees and by in large not passing along interest to customers with savings’ account.
It’s with all of this afoot that we have decided to focus on the disruption of retail banking in January: Why real people are leaving the “big” banks, the new options that are out there, and what’s next.
I’m not here to rail against the household name banks if they are working for you, truly. But if it’s not working for you, take heed that change is on the horizon. One valuable lesson I have learned covering personal finance is that the great money savers of the world do one thing differently from everybody else: they are constantly questioning and reevaluating their money decisions asking questions like “Do I have to live in a big house just because so many define success that way?” and “Why are the fees so high on this mutual fund” “and “Is this really the best way to pay down student debt?” It takes time and effort to do this, to be sure, but that effort pays off.
With that in mind, I invite you to question your bank to see how it holds up. It’s about time.
Have your own story about why you had to break up with your bank? I want to hear it! Drop me an email at email@example.com.
Feature Illustration: Laura Caseley For The Money Manual