This article has a lot of fluff and before getting to the point. It just seems unlikely that the success of these shops that provide expensive financial services to poor people is all down to the human touch. I see friendliness in the report but not much in the way of personalised service (just the lady with the payment plan).
The benefits of paying a percentage to get your money a couple of days earlier are clear enough. But the avoidance of overdraft fees may be the key. When paper cheques have had their day and every non-cash transaction is software talking to a bank server, there will be no need for unarranged overdrafts to exist for every bank account. Accounts that carry no risk of unplanned fees would be a disruptive innovation, given that retail banks seem very addicted to the profits from overdraft fees.
I have a bank account in Poland,and the account is
1) free to run,no monthly fees
2) cards are free if you spend at least $30 per month, otherwise it is $0.50 per card,per month
3) there is no overdraft(unless you specifically ask for it, I didn't)
4) nobody uses checks,so "unarranged overdraft" is virtually unheard of, I only once went "under" when I sent a large sum abroad, but then a few days later when the money actually left my account the price of euro changed and I was charged slightly more, putting me a few Zlotys under zero. I just quickly paid in some money to my account and there was no fee for that.
So how does the bank make money off me? It must be by investing the money they keep for their customers,because I certainly am not paying them anything. I've had an account with them for the last 5 years, and paid exactly $0 in fees.
With my extremely elementary understanding of the banking system, i'd think they loan the money you put in your account to others, and make money from the interest from that.
I agree with your analysis of overdraft fees however what you take to be fluff and not greeting to the point, others may interpret as good writing, or at least a more verbose style than we in the modern tech sector are used to.
I thought it was a colorful and well-written article that while anecdotal (plural != data!) effectively conveyed the conclusions this author, who is putatively an expert in the field.
I love verbose writing, but only if it's purposeful and spare:)
If there's a reason to tell me the color of her shoes, I'd love to hear about the color of her shoes. I don't want to hear about the color of everything in the room, though.
The benefits of paying a percentage to get your money a couple of days earlier are clear enough. But the avoidance of overdraft fees may be the key. When paper cheques have had their day and every non-cash transaction is software talking to a bank server, there will be no need for unarranged overdrafts to exist for every bank account. Accounts that carry no risk of unplanned fees would be a disruptive innovation, given that retail banks seem very addicted to the profits from overdraft fees.