By Art Gillis

Global economics says a $29 shirt at Wal-Mart was manufactured by a worker in China who was paid seven cents to make it (the coins whose copper value is worth more than the face value). After the shock wore off, I worked on a few value-add services closer to my own business. Free checking, for example, has been available for decades even when it cost a lot to produce a checking account. Now it’s really free, but not for banks. A typical outsource vendor charges a bank $1.08 per month per account for the computer processing service to produce an average (22 trans) customer account. But the cost model vendors are using is as obsolete as a free toaster for opening the account. Take a look.

Checks aren’t as much a part of the equation as they used to be, so input costs are lower. Fine sorting and storage costs are lower and in many cases have disappeared. Reject/reentry costs are lower. Workers in the statement rendering departments have become the current generation of their parents’ generation of unemployed factory workers. Processing costs are lower thanks to ongoing improvements in electronics (smaller, faster, more powerful and cheaper). Some banks that do their own processing once battled the clock to get their work done by seven the next morning. Now the posting and updating run takes about an hour. If the bank is up to date, it’s a lights-out operation, so there’s no labor cost. And some day, there won’t even be a posting and updating run because everything will have been done in real time, before a teller could finish saying, “Have a nice day.” Transporting output by courier is now a function of the Internet delivery channel and I don’t believe Internet engines are run by gasoline. Even low-cost call centers in Mumbai aren’t busy in a do-it-yourself banking world where banks are pushing customers to “go online.”

So it seems to me that the likes of Ralph Lauren or lots of middlemen between the Chinese worker and the consumer are making one heck of a huge profit because the ultimate payer in the chain hasn’t realized that the benefits of the flat world Thomas L. Friedman wrote about two years ago are actually working. I wonder why my bank is charging me 15 bucks a month for my checking account, and I’m not even getting an animated polo player logo on my bank account screen.

This is a public forum. CMP Media and its affiliates are not responsible for and do not control what is posted herein. CMP Media makes no warranties or guarantees concerning any advice dispensed by its staff members or readers.

Community standards in the message center do not permit hate language, excessive profanity, or other patently offensive language. Please be aware that all information posted to this forum becomes the property of CMP Media LLC and may be edited and republished in print or electronic format as outlined in CMP Media's Terms of Service.

Important Note: The Message Center is NOT intended for commercial messages or solicitations of business.