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Big banks have little interest in competing on price for the basic services that many households prize. Consumers had to pay an average of 15% more a year, or a difference of $27.95, to maintain a regular checking account at a large bank instead of a small one, according to the U.S. Public Interest Group. The gap grew to 100%, or $110, when large banks were compared with credit unions. At the NationsBank branch in Woodstock, Ga., a personal checking account costs $10 a month without a minimum balance, while a similar account at the locally owned Bank of Canton costs $8.
Few banks have suffered more painful defections than Wells Fargo, a San Francisco behemoth that paid $11.6 billion for First Interstate in 1996. Wells Fargo laid off thousands of managers, tellers and computer experts and started charging for services that had been free, like giving account information over the telephone. A computer crash knocked out phone banking for days. For a time, frustrated customers bolted at the astonishing rate of 1.5% a month.
Despite such horror stories, the pace of bank mergers is likely to accelerate as McColl and his rivals battle for market share. "The next five years will make the past five look tame," says Lenny Mendonca, a senior partner at the McKinsey consulting firm. Mendonca says that the number of large national banks could shrink from about 40 today to as few as six or eight shortly after the turn of the century.
Whatever the tally, McColl insists that NationsBank will be among the survivors. And he's currently eyeing California, where NationsBank has no branches as yet. "Will we ever stop expanding our company and be satisfied with what we have?" he asks. "No! We're interested in California, and we're interested in a lot of things." The trick will be to keep the bank's customers interested as well.
--With reporting by Leslie Everton Brice/Atlanta