Thank you, Mr. Chairman.
We are pleased to have the opportunity to appear before you to discuss our approach to automated banking machines.
BMO has invested heavily in our network of Instabank banking machines. We currently have nearly 2,000 machines across the country. In the past couple of years we have replaced every one of them. Our new generation of machines makes banking from an ABM more accessible, faster and simpler. In short they make it easier for our customers to do their business with us.
We have been strategic about locating our ABMs in locations that provide convenient access to our customers, allowing them to avoid hassles and fees, especially those charged by the higher-priced, white label ABMs. For example, we have more than 200 ABMs within one kilometre of university campuses across Canada and an additional 300 within two kilometres.
Our customers' behaviour tells us we must be doing something right when we decide where to locate our machines because, at last count, about 85% of our customers' transactions were completed at BMO machines, compared with 75% industry-wide.
That said, we do take seriously the concerns raised by the Minister of Finance and your committee. We recognize that you are approaching this issue not only as responsible public policy-makers, but as consumers of banking services, in your own right.
So, we are conscious of your concerns about the cost of banking for seniors and students, which is why we provide no fee banking plans for both these groups.
Seniors in the know know that BMO's banking plan for seniors is free and that it is the only free seniors plan that offers them one free monthly Interac transaction at another financial institution's ABM.That's a market response and it's a competitive decision.
Students in the know have known for some time that BMO has the best student banking plan, a free banking plan, with the added flexibility of one free e-mail money transfer per month. When compared to most of our competitors before you today, our free monthly plan saves students anywhere from $1.25 to $3.45 per month. That adds up over the course of a year. That's a market response and that also is a competitive decision. Yesterday we reaffirmed our commitment to seniors and students by extending the fee waiver on our performance plan for seniors and our plus plan for students for three more years.
What does this all mean, Mr. Chairman, in practical terms? It means that in 2006 we provided free banking services to 390,000 students, as well as to 866,000 customers aged 60 or over.
Let me cite another example of a competitive solution to the issue of ABM access. HSBC and BMO entered into an agreement under which HSBC decided to buy access to our Instabank network instead of making a large capital expenditure of their own. Under this arrangement BMO does not charge a fee to HSBC customers who use our machines. Nor does HSBC, but then, neither did they incur the cost of building the network. HSBC customers can even make deposits to their accounts through a BMO machine, and as you know, Mr. Chairman, your committee has discussed this issue of full functionality in the past.
The point is that there is nothing stopping individual financial institutions from using these kinds of creative arrangements to gain competitive advantage, and we have. That is a market response and, again, a competitive decision.
Mr. Chairman, I thank you and your colleagues for giving us a chance to exchange views on the subject, and of course I'd be happy to answer your questions.