Anand Talwar from Ally Bank explains how banks make their money.
The primary way is through loans. Consumer loans, such as Ally’s leading auto finance business, need to charge more in interest rates than they are paying out in savings account interest. This ensures the entity earns more than it spends on overhead and other expenses.
Anand points out that brick-and-mortar banks have different expenses than online banks, as they need to cover facilities costs and on-site employees. This makes it easier for online banks to offer more competitive rates for their customers.
Mobile banking has become much easier and convenient for the average customer. Smartphone apps allow you to deposit checks, transfer money, and even . If you are looking for cash, the apps can help locate an ATM within your network in close proximity to you.
Banking apps, such as Ally’s, can also allow you to trade stocks and ETFs, and customer service representatives are available 24 hours a day to help you open an IRA.
The convenient services allow banks to provide you more services and products with less friction, making it much easier to do business with a bank.
Ally estimates there are more than $3 trillion dollars of consumer’s deposits are sitting at banks making almost nothing. That translates to $50 billion dollars of interest consumers are missing out on, but can be improved just by switching your bank.
Ally will be facilitating “National Online Banking Day”, so be sure to visit Ally.com to see what they are offering.
For more information, go to http://moneytreepodcast.com/211