“We, as America, need to make sure [people] stay in the tent, so to speak, but also make sure that we can get a fair return for our shareholders at the same time.” – Brian Moynihan, CEO of Bank of America on CNBC

I assume he meant, “we, as Bank of America,” but I like the broader implication.  We, as America, need to make sure people have access to fair, long-term value financial services, while generating a return to shareholders.  And keeping people “in the tent” is going to dramatically diversify beyond banks.  In the same interview Moynihan discussed a $10/mo checking account, making quite a few general purpose prepaid products a lower cost instrument!  This is exciting for the GPR space, but let’s look beyond monthly fees, beyond waning overdraft programs, to see what value a bank might offer – or a GPR could offer – in the long term (and don’t get me wrong, I do not believe that banks are the panacea to consumer finance):

1. Free “loads.”  Banks don’t charge you to make deposits.  Admittedly, it takes your check a couple days to clear, but for on-us checks, and/or when banks start offering check “cashing” services, it will certainly be at a lower cost than traditional check cashing plus GPR reload charges.
2. Internal credit building.  For those who can stay clear of ChexSystems’ hungry jaws, a basic banking account usually provides seamless exposure to other products: CDs and money market accounts for savers, credit cards, personal lines of credit, sometimes auto loans and mortgages.  In the long run, most people need these extension products.  By and large this seamless path is missing from GPR today.
3. Personal contact.  I don’t know this from experience, as I haven’t walked into a Citi branch (where I bank) in 10-15 years, but whenever I look inside bank branches I see people sitting at a desk chatting with a banker.  Even the biggest, least personal, least community centric banks offer some form of localized, personalized financial advice for customers who choose to explore it.  And certainly the smaller community banks will work with people they see day-in-day-out and who have an account. Riddled with flaws? Absolutely.  Commonly used? Yes. Present in GPR? Barely.  Present in AFS (check cashing and payday)? Yes, but with a product suite limited to short-term transactions.
4. Local business lending.  Of course, retail deposits fund business loans. So there is ecosystem value to working with a local bank.  Not so much evident in GPR or AFS, other than token charitable gifts, but rife with possibility.  Look at El Banco, in Atlanta, for example.

Again, I’m not advocating for banks.  Believe you me!  But as we move towards a new new, GPR needs to set its sights on increased value.  Retail banks need to leverage their strengths.  AFS needs to think of ways to mitigate death-(or at least crippling injury)-by-regulation.

I do believe that financial services are not the same as other consumables.  All of us in this industry need to make sure all American can stay under the tent and can maximize their financial freedom – while delivering a competitive return to our shareholders.