How many bank accounts do you need?

“8 is great,” I remember hearing in the strategy halls of one big Australian bank. They were referring to the number of financial products that a customer should have with a single bank.

I actually visited a branch of the US bank ?that coined the “8 is great” motto in 2011.?I tried to open an account. They said, would you like cheque or savings??I said I wanted to save and spend, and they said not a problem – they could bundle both together.?Only one issue. If I didn’t deposit regularly, they would charge me a fee.?Not a problem, said the banker again. We will open another pair of accounts, and sweep from the first set to the second set and back again to avoid the fee.?Just one visit and I was already half-great! If you Google “8 is great” you will discover more about this now discredited approach. ??

So with that memory at the back of my mind, forward one decade to 2021, and in the process of getting my home loan refinanced with a large Australian bank, I applied for a loan account. Along with this I got a deposit account. Ok – lots of banks do that.?But this time I got not one account, but 3: Pay, Spend,?and Save, each with its own account number.?What’s going on here??Perhaps the Pay account is for salary, Spend is for bills and Save is for savings.?That’s logical. The only problem is that all three accounts have the same interest rate: 0%. That’s when the “8 is great” fiasco came to mind.

Financial products are wide and varied: managed funds, markets, insurance, loans, credit cards and savings.

What if you could get all these accounts in one place: for an individual has one balance sheet or one position. Wrap accounts, and consolidated SMSFs try to do this today, but less than 5% of people would have access to these products. And they are complicated.

There are some reasons that products may need to be separate, e.g. joint accounts, tax accounting, etc, but sophisticated bank systems can start to integrate many of these together and still provide separate tax reporting.

Ideally you should be able to have the option of one account. In some countries, one account can take care of deposits, borrowing, ?funds and share trading.?State Bank of India’s online platform, for example is called “YONO” – You only need one.

We might have a debt strategy, where all excess money should offset our debt, or an investment strategy, where we maximise leverage and invest all our money in a diverse investment portfolio.

There is a clear benefit with having just one account with multiple investments.

I have heard arguments from pseudo alcoholics who like to maintain different accounts to reduce the risk (they take a low- balance card out on Friday nights), for those with unreliable banks, a second back-up card could be handy. Or, perhaps earmarking money for the next family holiday is a good thing.?But for successful investors: reducing spend and increasing returns is the simple formula to a robust strategy: opening a low performing account to segregate money often works against you.

It is surprising how few banks have implemented this one account to rule them all philosophy. They have the technology – it’s time they used it.