That is a reasonable argument. (You'd make a great banker!) However, realize that in today's world the message coming from banks is spend-spend-spend.
Furthermore, a huge amount of overdraft fees comes from the practice of auto-enrollment in overdraft protection. If consumers need education, having transactions go through at the point-of-sale despite having an empty bank account is a recipe for trouble.
Last, is the issue of check ordering. (Considered a "courtesy" by most banks!) Today, most banks clear all debit card purchases (and checks) at the end of the day, after sorting them from largest to smallest. The idea is to run your account into the red as quickly as possible, saving the small $1-5 charges for the end. This simple greedy algorithm (no pun intended) maximizes the number of overdrafts. The typical rationale is "big checks tend to be rent and other important payments, which you would prefer to clear under any circumstance" -- laughable when the majority of overdrafts are on small, card-based debits.
So while I agree with you that consumer behavior needs to change, the people that need to save and not spend are exactly the ones that banks are (intentionally) targeting, and they have gotten exceedingly good at doing so. Check order policies and automatic enrollment in OD protection only complicate the issue.
I look at this the other way; assaulting the bastions of banking is probably pretty difficult and could take years (though it might be a bit easier at the moment).
But if we can brainstorm/think of other ways to modify individuals behavior - to help them manage money better, avoid over spending etc. then the banks are a bit screwed and would have to adapt.
Actually better idea: we'll meet in the middle. :D
Why 'assault the bastions'? Why not just chip away at the edifice? A smaller bank with clear customer service pledges that rigidly controls costs through as much automation as possible. Keep most transactions online. No large physical locations with drive thrus and corresponding staffing...smaller loan centers with loan officers paid by some sort of commission structure based on loans given out and repayment rate.
Lean and mean...except when it comes to customers who will be treated with the dignity they were used to 25 years ago. Make money with the bank's core services instead of an abusive fee structure. Doesn't seem terribly outlandish to me.
Ah. I see where you are going. For a second I thought perhaps you were defending the practice as necessary :)
The average consumer is shockingly disorganized with their personal finances. Sites like Mint are a tremendous step in the right direction. Online banks are also emerging as "consumer-friendly" competition. For example, Schwab has one of the best deals out there right now -- free, interest-bearing checking, no overdraft fees, unlimited ATM surcharge rebates.
I think consumers want to understand but are overwhelmed. Perhaps an approach lies in expanding the 3rd party services market to continue to provide helpful tools to consumers.
