The Only Good Banking Stat These Days: Number of Bank Accounts

I never met a number I didn't like. Numbers are absolute and they avoid confusion or interpretation. For example, .9999 is not a one, and that matters a lot when a computer is looking at the two numbers. My wife, the artist, sees a dozen "white" color chips and she can define the differences. "There's a little bit of pink in Atrium White." I see one white, not a dozen shades of white, each with an exotic name. When I buy paint, I ask for it by number. My wife is analog; I'm digital, but we get along fine.There are 1.21 billion bank accounts (deposits and loans) in the U.S. these days, and growing. Two additional stats within that aggregate number may provide a little more meaning. Bank of America (the largest U.S. bank) has 138 million of those accounts (includes Countrywide but not Merrill Lynch). Fiserv (the largest core processor and software provider) represents 300 million of the 1.21 billion.

Customer deposit and loan accounts seem to be the only good numbers in banking that are growing. The number of financial institutions is dropping every year at the rate of 2.4 percent, maybe more this year. The number of employees in banking is dropping. I don't know at what rate because banks like Wells Fargo aren't telling Wachovia employees until after the conversion. Merrill Lynch is dropping 10,000 employees to soften the $50 billion purchase price that BofA paid. That's sort of like buying a Bentley and running it on regular unleaded. I think there'll be fewer branches after the past five-year boom of one on every corner. The trouble is this time there won't be any new tenants like Starbucks and Blockbuster to move in. They're cutting back also. In Dallas, Wachovia converted a gas station to a branch. Another bank converted a church to a branch. We may not need as many gas stations with the proliferation of hybrids, but if the world keeps spinning out of control, there may come a time when the only other bailout left will be more houses of worship. Or maybe we'll abandon Earth for a new planet so we can start over.

The nice thing about bank accounts is they almost never go away. Even bad mortgages stay on the files so they can be tracked, and we might see the previous "home-users" returning after January 20 to pay their arrears, since they hopefully will be living in a better nation. Even though some little old ladies may be stuffing their money in the proverbial mattress, the number of new babies with college funds will more than make up for that tiny decline. Granny wouldn't have had to worry about the safety of her $100k (now $250k) if her bank was part of the Promontory Interfinancial Network that technologically protects deposits up to $50 million by spreading them around. I'd like to see our next president use that kind of innovation to make government work better.

On a personal note, even my first savings account opened in 1945 is still active, and I have five passbooks to prove it. Mr. Tyler isn't there anymore, but the memories are. I just hope Whitey Bulger doesn't come out of hiding to rob the Winter Hill Bank for some pocket money.

There's another interesting number that speaks volumes. With all the noise in the press about our gluttonous consumption and excessive credit, one wonders why only 7 percent of the 1.21 billion bank accounts are loan accounts. That's when I turn to my analog wife for an explanation. She says, "It's the amount that counts, not the number of accounts." I knew that. Can you handle one more bummer? Why does it cost $1.09 per month worth of IT resources to process a Demand Deposit Account that averages 22 transactions while a commercial loan with maybe zero to two transactions per month costs $1.48? She says, "The devil is in the details." I DIDN'T know that.

No matter what happens to the economy ("no matter what" is very unpredictable right now), bank tech companies can at least enjoy a small degree of comfort knowing that their financial processing factories will continue to grow and perform the increased workload that consumers and businesses depend on every day, every hour.

Disclaimer: Bank of America didn't tell me how many deposit and loan accounts they process. I computed the numbers based on publicly available data, Automation in Banking - 2008 exhibits, Data Processing Cost Analyst models, extrapolation algorithms, and a glass of Georges Duboeuf Cabernet Sauvignon 2006.