Not many people can remember what this $2 solution was/is all about. Many have accepted it as a way of life and the new normal. It happened nearly 20 years ago, but I still remember. Just to refresh the memory, two decades ago computer technology was not that advance and computer memory was quite small and expensive. I am not sure if this was the main problem, but some banks found that having too many accounts was not only troublesome for their computerized system, but also costly. Computer memory cost money.
What to do? And to ridicule the problem, many accounts were either inactive or have very small deposits in them, some from children’s saving accounts. It was not profitable or meaningful to have these teeny weeny accounts. The only way to get rid of these accounts was simply to charge them a $2 monthly fee if the clients want to continue to keep the accounts. The logic was simple, it cost manpower and resources to service these accounts, and computer memory space.
As a result, all the banks started to impose a $2 fee on accounts with less than $500 or $1000 deposit. I was a victim of this brilliant solution. I totally forgotten about a gold savings account with a local bank. There were a couple of hundred dollars left in them after I sold off my investment. One day I received a note from the bank that it was closing this account of mine as there was no money left. My few hundred bucks gone like that!
I was furious. How could a bank eat up my money which I thought would grow as the interest was quite high then. What I did was normally expected of an unhappy customer. I closed down all my accounts with the bank. Till today, I have no accounts with the bank, not even its credit cards. I was not the only victim. Many victims also suffered in silence as it was their fault for not closing the accounts. It was the fault of the customers to leave their accounts open. The banks happily kept deducting the money and did not bother to remind the clients to close the accounts.
The $2 was a brilliant solution to save money and unnecessary work for the banks. The one who came out with the solution must be a brilliant super talent.
I think NUS School of Management should use this as a compulsory case study in its management courses. It will be a shining example of how effective a $2 solution can be in cost cutting and getting rid of undesirable customers. Harvard may also want to incorporate this into their courses, as a brilliant Singapore solution.