Between 1990 and the end of 2003, over 2000 bank branches in Canada were closed, affecting mainly rural and low income areas. Jobs were eliminated as the banks leaned more and more towards ATM’s, or automated teller machines. We all know they saved a ton with these. Not only did they no longer have to pay the salary of someone, their pension, health care costs, etc., but they also got to do a double whammy.

We were told that ATM’s would never replace tellers, but the branch closures happened and the layoffs came. The double whammy was this. Lose the cost of employing someone, and make in branch service so dismally poor, that people would in a way be forced to use the ATM machine, where the bank could further profit by extracting a service charge from you. Here you were helping the bank make more money by reducing their overhead by using their machine, and they were going to charge you for it. Sweet deal for them, wouldn’t you say?

Since then, we have been given telephone banking, online banking, and debit cards. Both telephone and online banking are great conveniences, for us and the banks. While we have embraced them, we have yet to see any of the cost savings that they have provided the banks with passed along to us. The big six banks, which include Royal Bank Group, TD-Canada Trust, CIBC, Scotia Bank, Bank of Montreal, and the National, posted before tax profits in 2004 of $13.3 billion dollars! That compares to $9.7 billion in 2001 and $7.1 billion in 1998. I wonder how many Canadians saw their incomes almost double over the same six years? Not many I would venture.

While most banks will insist that things like debit cards are optional, the fact is they are becoming a way of life. Internet shopping makes it almost mandatory to have a credit card, as does renting anything from a hotel room to a car. With all of the problems that we have had with counterfeit money, it is almost becoming necessary to use debit cards. There are also POS terminals, or point of sale terminals; there are kiosks in malls where one can purchase movie tickets, license plate stickers, and the list goes on. Parking machines now take credit cards, and some pay phones don’t even have coin slots in them. They are credit card only. One day our kids will look at us with incredulity and ask, “You mean, you used to be able to just hand somebody money?” With every transaction, the banks suck a little more of our country’s productivity out of it, but believe it or not, things are getting better, no thanks to our big six. We’ll see why in Part IV.

Wouldn’t it be nice to be a bank? Nah, there’s that conscience thing.

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