Almost a year ago, our country’s anger was once again well targeted (*sarcasm*) against the titans of finance. Bank of America had announced a monthly fee of $5 to its debit card users. After giving the bank a free pass for billions in financial fraud (see Merrill Lynch acquisition and Countrywide subprime mortgages, for starters), consumers rose up as one and screamed, “Oh no you dit-ent!”
We wrote at the time that BofA had perfectly calculated a fee that was well below the true switching cost for consumers. Nonetheless, a couple of months later BofA caved in and “withdrew” the plan.
That outcome set a very low bar for anything else banks dare to do going forward. God forbid they try to run a profitable retail operation.
So we had to chuckle a few weeks ago when we read that Bank of America decided to remove ATMs from 61 grocery store locations in the southeast. If this had been on a larger scale, we could imagine some business rag try and rile up consumers with another “BofA Hates Its Customers” story.
But it wouldn’t matter. If you were with us back in 2008, you might recall this post that talked about the potential for banks to close their satellite grocery store “branches” – in essence, wrong thing in the wrong place.
Sure enough, since then, banks have announced such closures. As further proof, you’ll note in our story just last month about Hy-Vee’s new fantabulous grocery store that no one mentioned the inclusion of a bank branch.
BofA found that the smallest bank branch in the world – an ATM – doesn’t get enough use in a grocery store to cover its small costs. Once again, wrong thing in the wrong place. We’ll even wager that it won’t be two years before we start seeing “The Death of the ATM” headlines.
Bank of America has, as it did a year ago, taken a well-calculated risk with its business decision to withdraw its ATMs. Unlike a year ago, this time it won’t stoke another American Revolution. Because ten seconds later, PNC said it would put its own ATMs where BofA's once stood.
Does PNC believe its grocery-based ATMs are going to be little profit centers? No. It knows they will be money losers, just as they were for BofA. What’s driving PNC here is a marketing decision – the ATMs will be a way of introducing PNC as it rolls out into its newly acquired RBC Bank territory.
From that perspective we’ll give it a big thumbs down. As bad as grocery-based ATMs are for profits, they are useless tools for marketing. PNC would be better off if it took that $2000 per month per store and gave a rebate to shoppers that used its debit card for every grocery store checkout.