Over the past couple years there have been few topics as hot as “bank fees”. The financial collapse of 2008 started a chain reaction that included lots of consumer outcry and intense regulatory scrutiny. As a result, banks got squeezed…hard. Whether they deserved it or not is a debate for others who are smarter and better informed than I am, but what even I can figure out is that when a business starts to lose money and has its revenue streams cut, it has to identify ways to stop the bleeding. In bank-speak, that means raising fees.
As a consumer, I don't like fees any more than anybody else does, but I also recognize that a business is in business to make money. Rather than curse the fates, or fees in this case, I did what I do best...I researched the issue.
Using TRC’s proprietary email panel and by employing our Bracket™ approach, we asked consumers which bank fees would be most likely to cause them to switch banks. Our findings were not really all that shocking. Fees that nicked the consumer most often and for the most common of activities were most likely to cause a change in bank – the top 4, in order, were monthly/annual debit card fee, teller usage fee, ATM usage fee, and low-balance fee. On the other hand, it seems banks could institute or increase fees associated with one-off events, or activities that consumers don’t anticipate – think stop payment fee, bounced check fee, overdraft/insufficient funds penalty, etc. While these less frequent fees offer a less lucrative opportunity for banks, they do represent a relatively safe start.
The research also yielded other interesting findings. It seems most consumers really aren’t that informed about bank fees at all. The vast majority of our survey participants claim they have a “free” checking account even though half of them acknowledge one or more requirement to avoid paying a fee (strictly speaking, checking is only considered “free” if there are no requirements to avoid fees). Further, when asked to rate other common services on being a “good value for the money”, checking accounts were rated far more favorably than were cell phone plans, cable television service and gym memberships. Perhaps the PR machines can leverage this perceived value the next time there’s an outcry about new fees?
It’s very clear that consumers, when motivated, can be heard. Who wasn’t impressed when the big-banks blinked after announcing new fees because consumers, in masse, stared them down? But it is also worthwhile to try to look at this issue objectively and understand where the threats and opportunities really are, and how the cost to do your banking stacks up against other services. One of the things I like about being a researcher is helping people do just that.