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Bank accounts big and small

Michael Poulos of Oliver Wyman, a consultancy, says that "before the crisis, almost every bank account made money. Big accounts made money on the spread, and small accounts made money on incident fees. You made money on all the accounts with interchange fees. All of that is either severely curtailed or completely gone." Oliver Wyman reckons that US banks now lose money on 37% of consumer accounts.

For those concerned that their low net worth bars them from the banking system, there are two reasons for hope. The first is that lenders and credit bureaus are starting to use a broader range of data to determine the creditworthiness of prospective borrowers. Many of the unbanked have no credit histories. But data from rent, mobile-phone and utility bills give lenders a way to find lower-risk borrowers.

The second reason for optimism is an increasingly competitive market in pre-paid cards. Once simply reloadable proxies for cash, many of these cards now offer much the same features as bank accounts.


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