[vailprogrammer]

I like it. How would the bank make its money? The standard exploitative practices of other banks, just with smaller fees ($5 overdraft fee instead of $37?, or lower interest rate spreads?) or just charge $50 a year, and do away with those fees? Would that lead to too many people taking advantage of it?

[SmirkingRevenge]

To be honest, I don't know what the business model would be, but it seems like it should be in the banks long-term best interest to create rich, prosperous people with invest-able funds. They are literally in a position to create their own wealthy customer base.

What would it actually do for a big bank, if it were the exception rather than the rule, that their low/middle-class account holders had enough savings to cover several months of expenses and small/medium emergencies without relying on credit, had a reasonable portfolio of retirement investments, and on their way to being in a financial position to get involved with other kinds of investments, eventually?

The banks could automate all the best practices of personal finance for most their account holders, to make all of the above happen for their average customer. Software is cool like that.

- They could divert a percentage of all deposits to emergency funds by default.

- They could set aside money for expenses, based on your cash-flow history by default.

- They could set aside spending money, also based on your cash-flow history by default.

- They could manage a persons credit debt (think pay minimums while savings/cushion is built, then use the extra cash flow from savings goals into debt payments).

- If the customer dip into savings because your car broke down or something - starting filling up the emergency fund again.

- If credit debt is paid up, savings goals are hit, they could start automatically put portions of savings into low risk long term investments (IRA's etc).

(Simple.com does some of the above kind-of but its a manual process - but quite nice compared to what 21st century online banking has been, so far)

And I'm sure there's much much more - and for the people who do really well, then they can funnel those people into more customized investment approaches. Are market forces so screwy, that all this would actually be bad for the banks bottom line, in the long run?

[sokoloff]

Banks make a lot of money (averaging a bit over 12¢ per dollar lent) on credit cards. It would likely be overall disadvantageous for them to pull people out of credit card debt, out of debt in general, and to eliminate overdraft situations.

[nunez]

Credit card companies make a ton of money on credit cards. Consumer banks are different, and not all banks offer credit cards.

[pixl97]

Well, that is unless the credit card bubble pops. Think there is a few trillion tied up in that.

No one is mentioning the insane debt levels we are currently holding in this country at every level in this thread.

[Kalium]

> To be honest, I don't know what the business model would be, but it seems like it should be in the banks long-term best interest to create rich, prosperous people with invest-able funds. They are literally in a position to create their own wealthy customer base.

You're right! It's absolutely in the best interest of a bank to help create a prosperous, happy, long-term customer with investable funds.

Of course, this seems like it would only apply to banks that manage investments effectively - which is the bigger ones. And they'd have to do so at least as well as specialist investment management funds, otherwise anyone who this bank helps become wealthy will invest with someone else. And they'd have to be able to successfully help people become wealthy at scale, instead of making it marginally easy for people to keep their heads above water.

Also, it might be worth considering that many people are at least somewhat uncomfortable with the idea of a robot managing all their finances for them. I use a bunch of automation to do a lot of the stuff you've mentioned, but it's all stuff I set up myself for the control that gives me.

Being as good at low-cost effective investing as Vanguard while convincing people to be happy with robots managing all their money and making people wealthy over time seems like it could be a tall order.

> Are market forces so screwy, that all this would actually be bad for the banks bottom line, in the long run?

Depends. How much are you willing to pay, each and every month, for this set of features? So far you seem to want it for free, with the idea that it could become profitable for this bank's investment arm three or four decades down the road. That's a rather long timescale to gamble on and a fairly substantial set of costs against a known successful business model.

Again, you're completely right! It's so painfully obviously in the interests of banks to encourage their customers to be happy, wealthy, long-term customers that it's very odd that they don't seem interested in investing in it. Are they just all collectively oblivious? Or could there maybe be something else worth considering?

[pixl97]

>Are they just all collectively oblivious?

The market cant see past the next quarter. Long term thinking requires visionaries that can sell the idea, without them you get 3÷ growth at any cost (including signing up customers for services they didn't ask for, Wells Fargo). Banks are late up with Too Big To Fail these days to care about the long term.