(on the subject of automated teller machine fees and electronic payments)
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Thank you, Mr. Chairman.
We are pleased to have the opportunity to appear before you to discuss our approach to Automated Banking Machines.
BMO has invested heavily in our network of Instabank banking machines. We currently have nearly 2,000 machines across the country. In the past couple of years, we have replaced every one of them. Our new generation of machines makes banking from an ABM more accessible, faster, and simpler. In short, they make it easier for our customers to do their business with us.
We have been strategic about locating our ABMs in locations that provide convenient access for our customers, allowing them to avoid hassles and fees, especially those charged by the higher-priced, white-label ABMs. For example, we have more than 200 ABMs within one kilometre of university campuses across Canada– and an additional 300 within two kilometres.
Our customers’ behaviour tells us we must be doing something right when we decide where to locate our machines because, at last count, about 85% of our customers’ transactions were completed at BMO machines, compared with 75% industry-wide.
That said, we do take seriously the concerns raised by the Minister of Finance and your Committee. We recognize that you are approaching this issue not only as responsible public policy makers, but as consumers of banking services, in your own right.
We are conscious of your concerns about the cost of banking for seniors and students – which is why we provide no-fee banking plans for both these groups.
Seniors in-the-know know that BMO’s banking plan for seniors is free and that it is the only free seniors plan that offers them one free monthly Interac transaction at another financial institution’s ABM.
That is a market response; that is a competitive decision.
Students in-the-know have known for some time that BMO has the best student banking plan – a free banking plan with the added flexibility of one free e-mail money transfer per month.
When compared to most of our competitors before you today, our free monthly plan saves students anywhere from $1.25 to $3.45 per month. That adds up over the course of a year. That is a market response; that is a competitive decision.
And yesterday, we reaffirmed our commitment to seniors and students by extending the fee waiver on our Performance Plan for seniors and our Plus Plan for students for three more years.
What does this all mean, Mr. Chairman, in practical terms? It means that, in 2006, we provided free banking services to 390,000 students, youth and young adults, as well as to 866,000 customers aged 60 or older.
Let me cite another example of a competitive solution to the issue of ABM access.
HSBC and BMO entered into an agreement under which HSBC decided to buy access to our Instabank network, instead of making a large capital expenditure. HSBC does not charge a fee to their customers to use the BMO machines, but, then, neither did they incur the cost of building the network. Under this arrangement, BMO does not charge a fee to HSBC customers to use our machines. Nor does HSBC, but then, neither did they incur the cost of building the network.
HSBC customers can even make deposits to their accounts through a BMO machine – and, as you know, Mr. Chairman, your Committee has discussed this issue of full functionality in the past. The point is, there is nothing stopping individual financial institutions from these kinds of creative arrangements to gain competitive advantage, and we have.
That is a market response; that is a competitive decision.
Mr. Chairman, I thank you and your colleagues for giving us a chance to exchange views on the subject.
I’d be happy to answer your questions.
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