Deposit rejection scheme

30 Dec 2020 By Peter Thal Larsen Follow @Peter_TL

Converting savings into loans is the bedrock of banking. Yet near-zero interest rates and a pandemic-induced deposit surge are squeezing revenue. Some lenders will charge customers to look after their cash. Upstarts will decide regulated deposit-taking is not worth the hassle.

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Global banks will lose cumulative revenue worth $3.7 trillion by 2024 compared with projections before the Covid-19 pandemic, according to McKinsey’s Global Banking Annual Review published on Dec. 10.

HSBC on Oct. 27 said it would seek to flip its main source of income from interest rate to fee-based businesses following the pandemic.

“We will have to look at charging for basic banking services in some markets, because a large number of our customers in this environment will be losing us money,” HSBC Chief Financial Officer Ewen Stevenson told Reuters.

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