US mega banks fail to satisfy customers it could only happen in America

Banking on Sundays has hit the US. Its just one of a suitcase of gimmicks some call them innovations that are driving a fiercely competitive but also somewhat schizophrenic banking climate.

Traditional banking the business of taking deposits and providing loans is now an industry with profit margins considered too low for shareholders. It is not that banks weren't making money; they just weren't making enough money to keep the bull market happy.

The buzzword is consolidation and a march towards the trillion-dollar bank, something once thought unimaginable and now a soon-to-be certainty, given the megabank mergers of the last year.

Instead of relying on banks, Americans are keeping their money in mutual funds and brokerage houses. Their MasterCards and Visa cards are issued from financial services companies that are not banks.

The US federal Reserve, the agency that monitors the industry, says that the banks' share of household assets has fallen from 90 per cent in 1980 to 55 per cent today. Mutual funds now hold 44 per cent of assets, up from 10 per cent in the same period. Commercial banks only hold a 28 per cent share of consumer credit, versus 72 per cent for non-banks.

What all this has meant is that banks are dying, with local branches closing. Mergers and take-overs are creating banking monoliths. BankAmerica Corp, for example, announced a merger with NationsBank last April, creating an institution with $570 billion (£410 billion) in assets. Along the way, analysts say that the new combined bank will cut expenses by 10 per cent, eliminating 8,000 jobs.

In the midst of this, banks are trying to lure customers with an emphasis on personal service, always a challenge, but never more so for a company such as Wells Fargo Bank, for example, that employs 32,414 people. Like many of its smaller counterparts, Wells Fargo is now keeping some branches open on Sundays. In Baltimore, Maryland, First Mariner Bank is experimenting with keeping two of its 15 branches open on Sundays. United Banks, with offices in Virginia, Maryland, and Washington, D.C., is offering drive-in banking at a handful of locations.

The irony in all of this is that as banks merge to become more profitable, as they stress the use of ATMs and online banking, they are losing any semblance of a personal touch. The mergers themselves are creating an increased exodus of customers. When Wells Fargo, founded in California to serve pioneers during the Gold Rush in 1852 and now the 10th largest bank in the US with assets of $95 billion, acquired First Interstate Bancorp in 1996, it touted its new size and scope to both banks' customers in the west. The advertising campaign was flashy, but the bank promptly lost about $5 billion in deposits.

Undaunted, Wells Fargo announced in a press release several months ago that it would team up with Starbucks Coffee, an upmarket outfit that brews libations like double-decaf, low-fat lattes for young urbanites, and a chain of dry cleaning stores, to offer drinks and sandwiches and perhaps even copying and postal services.

"The idea is really to offer convenience to the customer, to allow them to do more than one task in the same stop," said Wells Fargo spokesman Mr Rod Sherrell. In addition, the branches would be open on Sundays.

In other words, drop off that Ralph Lauren shirt at the cleaners, grab a cappuccino, get a mortgage.

An intriguing idea, one that undoubtedly sounded brilliant on paper. How different is the reality.

This glamorous concept of multi-tasked efficient living is now a reality on Sunset Boulevard in a decidedly unglamorous part of Hollywood. Starbucks is indeed serving coffee. But the dry cleaning and snack notion is instead occupied by a Burger King and a Mexican laundry outlet called Lavanderia. Across the street is a huge store called Home Depot that is open 24 hours a day in case some poor soul needs an emergency belt sander or a pick axe. There are no pedestrians here, save for a few tolerated neighbourhood stalwarts, such as the moody homeless man who wanders about wearing a large leafy plant on his head.

One must wonder if these banks are properly thinking things through. Last week a 20year Wells Fargo customer called her branch in order to secure a letter from them saying that she was indeed a 20-year customer. This request was in relation to her purchase of some real estate.

When she finally reached a person at the bank, the manager, she was told rather rudely she could not get such a letter. Why not? she asked.

"Well, if you'd been in here lately you'd know we don't have typewriters anymore!" the manager scolded. "You'll have to call the 800 number!" (a Freephone number.)

This customer, by the way, says she is now searching for a new and smaller bank, one that offers no pungent coffee aromas, or Sunday hours. Just a bank with typewriters.