Few businesses are thriving right now. One after another, companies are being forced to lay off staff and shut up shop. In a sign of the times, even banks are taking a substantial hit – which could see HSBC opt for decisive, and unpopular action in order to establish a new revenue stream. ‘Free banking’ as we know it may soon be a thing of the past, as the British firm ponders plans to charge a monthly fee to customers who have a current account.
Such action would be hugely unpopular with customers who have suffered greatly in 2020, but with HSBC’s profits currently down by 36%, the bank might be pressed into drastic measures in order to sustain itself. HSBC finance chief Ewen Stevenson said: "We will have to look at charging for basic services because a large number of our customers will be losing us money." Paying for fundamental services would be a huge blow for millions, especially if rival banks follow suit.
The big six banks in the UK have already pulled their best credit card deals, increased mortgage rates and doubled overdraft charges in an attempt to make up for the financial black hole than many find themselves in. This essentially means that they pay just 0.1% on savings accounts while charging 40% for authorised overdrafts. Alternative banking methods can be explored such as PayPal casinos
Andrew Hagger, the personal finance expert at MoneyComms, said having to pay for current accounts will put even more stress upon Brits who are already struggling as it is. He claimed: "The end of free banking will hit people in the pocket at a time when so many are struggling to make ends meet. It would be awful timing."
Gareth Shaw, head of money at Which? Was similarly concerned: "It would be a huge and risky move for one of the major banks to start charging for an ordinary account. The danger is that if one of the big banks opens the door, the others may follow suit. But competition for customers would hopefully dictate there will be a range of attractive free accounts available for the foreseeable future."
Mr Shaw advised customers to be nimble, and willing to go elsewhere in pursuit of a good deal if necessary. According to the finance guru, "It should take just seven days and minimal hassle to switch to a new account”. In his opinion, should several top banks choose to implement fee’s on current accounts, it may just allow smaller firms to undercut the competition – as the good PR of offering free accounts would surely drive decent business in the short term.
HSBC currently holds more than 9.8m of the UK’s 70m or so current accounts
- according to figures released by the bank in 2019. The bank already levies charges for accounts in other countries where customers are accustomed to paying for banking services, such as Canada, the US and France. Bringing such practices to Britain, especially amid a pandemic, would be breaking with convention, and in a sense, breaking an unwritten rule.
Quite whether they choose to implement this remains to be seen, but it does certainly beg the question over what HSBC’s long-term ambitions are. Some believe that the economic downturn could be the perfect trojan horse for the company to sneak in similar account charges to that of the U.S and mainland Europe.
While this would be deeply unpopular, the fact remains that it would also be enormously profitable. The mere fact that such practices already exist in western Europe provides further validation for anyone who is looking to implement fees. Still, don’t expect customers to be this philosophical when the first bill lands on their doorstep.