“Don’t Put your Valuables in the Bank” .. say’s Bloomberg
That’s the headline of a recent article by Matt Levine, a Bloomberg opinion columnist. I thank Matt for sharing his story online. The article is a major hit on the US Banking sectors attitude to the humble safe deposit box.
I have some knowledge of the challenges faced by the consumer. My company MySafe, operates a number of fully automated, insured, 24/7, convenient Safe Deposit Box centers in the United Arab Emirates.
This Bloomberg article follows another major news story in recent days, this time published by the New York Times and again castigating Wells Fargo bank for their dysfunctional treatment of a highly respected safe deposit box client. These stories have been shared across the world and shine a welcome light on a dark corner of the banking sector’s approach to the humble safe deposit box.
The challenge the Banks face is that they have this legacy service which was initially offered as a convenience to privileged clients and thereafter the banks felt obligated to maintain the service across an ever increasing branch network. The concept was never a core banking service, it was never a core profit center. After the financial crash of 2008, retail banks across the world began a process to fundamentally change their business model. No longer a warm welcome from the local friendly bank manager, now your issued with your password and an e mail/WhatsApp welcome to their online platform. This transformational change has brought about unprecedented closures of bank branch’s in countries across the world and with that, a collateral collapse of the concept of local community based secure storage facilities.
I am highlighting this not least because the challenges amplified by Bloomberg and the New York Times accurately reflect a malaise within the bank safe deposit box networks worldwide. The bank safe deposit box service stopped being innovative in the 19th century. It recent years it settled to become a relic of the past and the banks struggled to figure out a way to divest themselves from this legacy service.
The industries migration from physical branch networks to a transformational digital banking platforms resolved this issue but had collateral consequences leading to the decimation of the local bank branch safe deposit box network .
This coupled with the lack of investment in the service, the lack of strategic focus, the logistical consequences of brank closures (and with corresponding physical challenges associated with the management of legacy storage will become an ever increasing challenge for the consumer. Retail banks in the US shut down over 8,000 branches over the past 5 years with 1947 branches shutting down in 2018 alone. In 2018, Well’s Fargo shut down 293 branches or 5% of its total network. In many countries across the world you are seeing similar patterns repeated.
It constitutes a “Perfect Sorm” in terms of risk to the clients who for decades have depended on the banks to provide this personal storage facility. Please don’t be fooled by the spin that all of this is driven by the consumer, nothing could be further from the truth with bank waiting lists growing exponentially and clients who achieve the criteria for membership of the coveted waiting list to rent a safe deposit box sometimes being forced to wait as long as 4 years in some countries. Not exactly proof of a dramatic decline in consumer demand, more an illustration of the ever growing gap between available capacity in the banking sector and the consumer demand for a professional, secure, insured service.
That brings me to the reason I wrote this article in the first place. This is a call to the private safe deposit box industry to continue to take a leadership position in the market as many of the members of the Safe Deposit Box Federation and other private safe deposit box companies have done. The challenge however is not just to add private sector capacity, its not a challenge to just soak up the “spill” from banks unable to provide the service anymore, this is a call to show leadership and innovation. The “competition (Banking sector)” for years has dominated the market offering the consumer access to what in many cases has been a mediocre service during bank hours, with no option to insure. The private safe deposit box industry must focus not just on capacity build but we must also invest in the product, invest in the service, agitate for innovation, look for new applications, embrace fintech, reach out to the consumer and add value.
We should not lose sight of the fact that despite the spin, at its core, we rent box’s to clients who need to securely store items of value. Let’s do that in a way that inspires, add’s value, creates partnerships, builds trust. Don’t be fooled by the PR spin that the service is in decline because of lack of consumer demand. The notion that a consumer should have to be one of the privileged few who are then on the waiting list for years so they can rent a “box” is a nonsense. Nothing could be further from the truth, its just that people expect a professional service, a 21st century solution, a SMART, convenient service, accessible to all. We need to market our product/ our service to its true market potential, fulfill the expectations of existing bank clients and create awareness / new markets across a global consumer base that has been conditioned to believe they may not be worthy of achieving their place on the coveted waiting list.
To all my colleagues in the private safe deposit box industry, let’s continue to find strategic investors who see the strategic global opportunities we see.
Let’s reach out to the banking sector who have a genuine strategic challenge, clients they appreciate who need a service they can no longer provide.
This is a classic opportunity to create a win/win for all stakeholders.
As the private safe deposit box industry, let’s invest, let’s invent, let’s build partnerships of trust and mutual support, lets add value but most of all, lets engage the consumer, develop new applications, new markets, let’s make it exciting again, accessible for all and a convenience that can’t be done without. The market really is a “blank canvas” and its up to those who aspire to full potential to innovate, to engage.