Cash lost in the ethernet
In an age of instant communication where everything from music to the latest films are available in the wink of an eye, why does it still take banks up to six working days to electronically transfer money from one account to another? The reason is that banks are making a killing on interest, according to an article in Politiken newspaper.
"The slow movement of transfers means that the bank does not have to pay interest earned to either party,” Troels Holmberg, an economist for Forbrugerrådet, a consumer watchdog, told Politiken.
Even though the money is sitting in a kind of financial limbo – somewhere between the sender’s and receiver’s accounts – it is still listed among the bank’s assets, so banks are essentially double dipping.
"The fact that banks have stayed out of the digital age is very good business for them,” Morten Westergaard, from the analysis group Mybanker, told Politiken. “By waiting to move money, they earn their bank interest rates while saving the interest they should have paid to the customer.”
Conservative estimates say that banks earned 1.1 billion kroner in 2010 by dragging their feet when making transfers between accounts.
Although banks have been reluctant to increase the speed of transactions, in 2013 customers can expect transfers to be made on the same day they are requested.