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Dear banking

Beppe Grillo recently moaned about Italy’s expensive banking costs and I too would confirm that having a bank account is by no means cheap here, indeed Italy is one of the most expensive places in Europe to have a current account.  I noticed this years ago when I found out that you got charged on a transaction basis, so the more you used your account the more you paid.  To get round this I wasted no time in arranging one of the then new fixed monthly cost accounts.  You pay, but save in the long term.

Why is banking so expensive?  Well, for a start forget economies of scale.  Here in the living museum you will find as many banks as football teams.  Every town seems to have its own little bank.  Then there are the staff. In Italy you tend to find middle aged bank clerks and they are paid rather well.  The bank employees contract is generous and this will contribute to the high cost to the customer.  Back in the UK it was difficult to find a bank clerk over the age of 25 and many were a lot younger and, of course, cheaper.  I never paid charges to open or close an account in the UK, even when I opened my first account many moons ago and spoke directly to the bank manager.  This would be nigh on impossible in the UK now, but not in Italy.  I have to say that I’m quite happy with my bank and its staff, although my other half, who banks elsewhere, tends to find the bank employees uniformed and unhelpful.  There is always on heck of a queue in her bank too, which does not make things any better.

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Things are changing, slightly and slowly and bigger banking groups are starting to emerge, although lower costs for customers do not seem to be on the horizon.  Foreign banks seem to be few and far between, with the possible exception of a famous German bank, so cut price competition from abroad is limited to an on-line service.  In fact on-line banking is just about essential here unless you have plenty of time to waste hanging around in a time-consuming queue.

Only recently a law was made to force banks to stop charging customers for closing their accounts. Overdrafts are hard to come by and seem to necessitate several visits and signing sessions.  Back in the UK, years ago, I could get an overdraft authorised over the phone in around 5 minutes.  Here you still need days.

I’m sure a little bit of intelligent management would sort things out, but the amount of money being made means that this is not likely to happen, at least not until someone cottons on to the fact that low costs will hook more customers and with more clients you have more people wanting and using your other services.  It’s all really psychology: people will not spend any money on services which are expensive, but they will spend some on reasonably priced services.  If no-one spends any cash then no profit can be made, but this concept seems lost on the banks here.  However, this is the mobile phone model here.  First hook your client, then encourage them to use existing services more and get them to pay for new services.  Oddly enough the mobile phone companies which have instigated this model are not Italian.  Maybe the same strategy will penetrate the banking sector although heaven only knows when.

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