Thread: How much do u think it costs the bank 2 stop SOs (a question my bank manger asked me)

It is very interesting that banks charge around £1.50 to deal with foreign ATM transactions. I would suggest that using that as a yardstick....50p!

Big organisation use either mailsort of walksort bulk mail services from the Royal Mail. Walksort, which has a minimum of 4,000 items per mailing (which big banks will do no problem), charges 20p/item upto 100g. If you use OCR (and I think some of them are), you can get Mailsort down to 16p...

I did a bit of work for a major water company a few years back, and they reckoned that a customer statement cost between 4-6p to generate. This included the load/unload time on the room sized printer (they used a forklift to load the paper on!) and the envelope stuffer, the amortisation of all that expensive gear and trained monkeys to fix it when it started shredding 3-acres of paper per second.

So, only including these costs - 20-26p.

What you/we are forgetting of course, are the staff that are employed in the customer services departments and the cost of deploying all the sundry computer equipment and software. By my reckoning though, if the banks are truly spending all of that £4.7bn of penalties on staff, the UK banking industry employs 174,000 people to handle bank charges.

This doesn't seem likely.

What you/we are forgetting of course, are the staff that are employed in the customer services departments and the cost of deploying all the sundry computer equipment and software. By my reckoning though, if the banks are truly spending all of that £4.7bn of penalties on staff, the UK banking industry employs 174,000 people to handle bank charges.

Not to forgeting of course, that all these people work nights, since this is when most automated transactions happen.

Not to forgeting of course, that all these people work nights, since this is when most automated transactions happen.

Better yet, if they only actually work for the two hours before and after midnight(when all the charges are applied), then my maths is out by a factor of 4 - which means that 700,000 people are employed (part-time) to do this. Which is odd, because according to Amicus, the entire industry, including all aspects of finance, only employes 1 million...

The number was based on the employees earning the UK average salary of £27k. But as it seems likely they've outsourced it to a former colony, I guess it would be closer to 3,000,000 people? Which would be impressive. We're single-handedly keeping a working population the size of Birmingham in full employment!

We should be so proud...

Originally Posted by andyace

And according to Citicard they are applied at exactly midnight on the day the offence took place,so some of the staff must be part time.

cheers
andyace

( 5% is a good deal to me )

Maybe its done by the R.Whites Secret Lemonade drinking bear................he is always very active at midnight .........

...and yet, for Barclaycard, Barclays and Abbey, it only costs £3 to go and sort through millions of records, in big boxes, to dig out a microfiche of your statement.


Hmmmmm..?

This is my opinion on the costs to the bank of these transactions.

For a bank to stop an internally initiated payment (SO, Online Payment, ATM) will cost as much as 0p - the computer decides that it won't do it and doesn't - no cost at all.

For an incoming request for payment (Cheque, DD) there may be a cost of up to 20p to reject the request - although in truth it will be a lot lower than that due to the way they aggregate incoming and outgoing costs between banks.

For a payment to be made when there are insufficient funds - no more cost than if there were sufficient funds - or approx 0p.

For being over your limit - 0p. There is no cost, and in fact the unauthorised rate kicks in and more than compensates them for the 'inconvenience' of lending you a bit of money (unsecured loans available at 6.9% APR - unauthorised rate of 29% APR).

The only cost left then is the letter which is automatically printed out (pre-signed), folded and stuffed by a big machine and put into a prepaid, walksorted envelope and posted at heavily discounted rates - cost 25p. If you have online letters and statements then the cost is so close to 0p that you would need a lot of decimal places to represent it - just a tiny amount of storage space for the letter and a minute bit of bandwidth to send the notification email.

The rest of their charge - profit, shareholders payouts, directors payouts, greed and profit. Oh - and did I mention PROFIT? :o:o:o

Originally Posted by thewifeandI

This is my opinion on the costs to the bank of these transactions.

For a bank to stop an internally initiated payment (SO, Online Payment, ATM) will cost as much as 0p - the computer decides that it won't do it and doesn't - no cost at all.

For an incoming request for payment (Cheque, DD) there may be a cost of up to 20p to reject the request - although in truth it will be a lot lower than that due to the way they aggregate incoming and outgoing costs between banks.

For a payment to be made when there are insufficient funds - no more cost than if there were sufficient funds - or approx 0p.

For being over your limit - 0p. There is no cost, and in fact the unauthorised rate kicks in and more than compensates them for the 'inconvenience' of lending you a bit of money (unsecured loans available at 6.9% APR - unauthorised rate of 29% APR).

The only cost left then is the letter which is automatically printed out (pre-signed), folded and stuffed by a big machine and put into a prepaid, walksorted envelope and posted at heavily discounted rates - cost 25p. If you have online letters and statements then the cost is so close to 0p that you would need a lot of decimal places to represent it - just a tiny amount of storage space for the letter and a minute bit of bandwidth to send the notification email.

The rest of their charge - profit, shareholders payouts, directors payouts, greed and profit. Oh - and did I mention PROFIT? :o:o:o

I think you've summed it up excellently.

I work in the business division of a well known cable company in the UK, designing data and voice networks for business customers. The profit model is based on a cost + approach, whereby I design a network, and work out the costs associated with it, and it goes to a pricing team to fix a 'price' (the '+' but of the cost + model). This price includes all the opex and a certain % for profit.

If that certain % was anything like what banks unlawfully charge, our entire debt (before we had to be 'restructured') would have been wiped out overnight. The problem is, we would have had no customers base, 'cos they would have moved to another provider, i.e. what we have is proper competition (caveat, I can only speak for the Business division of this Cable Company, not the consumer, just in case anybody bemoans about how c**p cable is.....)

My point here is that the banks are in effect a cartel. There must have been collusion at some high level at some point between banks to 'fix' these charges, in the full knowledge of their true costs.