The Washington times., 1925-07-10
MANY ACCOUNTS
UNPROF|TABLE
To BANKS
Services to Small Dspositors
Often Cause Financial In
stitutions Actual Loss
BY RICHARD HATTON.

There is q very general movement
among the banking institutions Of
the country at the present time to
analyze their business: |, e., check up
on what is profitable and what is
Improbable from O business stand
point. Serious Investigation along
these lines has led to soma very
surprising facts regarding old
established banking methods and
practices and, even many otherwise
thoroughly informed bankers have
been surprised at the conditions un-
covered.
This is especially the case with
regard to many accounts carried by
banks at a distinct loss to Nthem.
selves. The banking public VIII be
equally astonished TO know that
thousands upon thousands OF ac-
counts are carried by banks at a
loss, for, to the average depoeitor,
the mere fact that he carries a small
amount in a bank often leads to
doing the bank q fGvor which, In
turn. entities him to extraordinary
service.
There is, Of course. more than one
angie to the question of the un.
profitable account. II 10 pointed
out that one improbable account
carried at q loss may be the means
of bringing TO the bank many other
accounts which are profitable. That
It Is. in a. way, advertising and
that the loss might, properly. be
charged to the advertising account.
This view, however. is not held
generally by bankers among whom
there ID a growing belief in the
-
profitable accounts as matter OF
good business.
Not an Asset.
.'Depogits are not. necessarily an
asset" declared prominent Wash
ingtcn banker today. they may
easily become q distinct liability in
ease the deposits are collection
items or because interest ls PAID
which absorbs the profits"
The time seems to be at HAND
when the banks will realize that
there is no advantage to be gained
by boasting Of the great number OF
accounts carried, rather will 1t be
TO the banks interest to declare
that every account carried is q
profitable account. Like the H1er-
chant, the banker cannot afford to
carry dead stock, and an unprorit'
able account IL nothing more than
dead stock. eating up good earned
collars in overhead. -.
Public opinion should be with the
present movement TO do away with
the Improbable account, for 1t is
to the advantage Of the thousands
Of bank customers whose accounts
sustain the banks that there be no
unreasonable loss to the institutions
RAaRmf
methods, and 1t is distinctly unsound
business to carry on any part OF
O business at a loss. On this
point a report made recently by a
committee OF bankers which In
vestigated the question OF unre-
naunerative service says:
Question OF Good VIII.
"It IL a mistake to think that
the good will of your depositors is
earned by rendering them service
at 4 loss. In the first place the
deposition has no idea that what he
TO receiving Is anything but just
what the bank Is for and wants TO
do, and certainly no great amount
Of good will can be created in the
mind OF a depositor who thinks thac
his account In paying for all or
more than he is asking or receiv-
ing. Ninety-nine per cent of the
depositors are just average fair
minded human beings, not seeking
charity and willing to pay a fair
price for whatever they receive.
Naturally they do not know thai
their accounts are Improbable, AMI
our returns show conciusively that
when the situation is explained to
them, they either build their accounts
up to the required balance, or will
ingly pay e service charge"
The time has long since passed
when the bank was a mysterious
institution whose methods and
workings were dark secrets locked
In the breast of some inaccessible
official In q guarded private office.
In a way. the business OF a bank
today is evsrybody's business and
hank officials are easily reached and
frankly willing to explain banking
conditions and methods TO the pub
lie TO the end that an understand
ing which will rebound to mutual
benefits be reached.
Nothing makes for good will
says the report referred to ABOVE,
"as surely as frankness and fair
ness on the part of both the banker
and the deposition"
Many Services Required.
In the opinion of many Washing
ton bankers the time has come
when steps should be taken to dis.
courage the opening of accounts
that cannot earn the cost of the
service which they require because
the mere number OF accounts can
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