Fleeing the Fees?

  • Mary Wisniewski
  • March 23, 2011
  • 1

Durbin’s got the banking world in a tizzy. Where will it recoup revenue losses from expected lower debit interchange fees?

Though the amendment hasn’t officially gone into effect (mark your calendar for April 21), some lenders have offered a few possible solutions, including reduced rewards, added ATM fees and the elimination of free checking. JPMorgan Chase customers, for example, will no longer be able to earn points on their debit cards this summer specifically so that the can make up for lost interchange fees, reported The Associated Press this week.

But not just Chase is saying goodbye to rewards program, and more than likely, others will soon follow its footsteps. Certainly, this perkless world vision was described at a recent payments conference as the next reality for banking. Panelists and attendees alike maintained that not only are feebies endangered at banks nationwide, but new fees will creep up.

“Fees never went away, and they will get worse,” said PayPal’s CTO Scott Guilfoyle, during a panel.

Yet, Bankrate.com released a survey this week that found 64% of consumers polled would consider cutting their ties with banks that added in checking fees. These results got Bank Innovation wondering: would consumers actually flee their banks if checking fees were added? Or is severing ties more dependent on how banks levy those “fees”?

Sure, consumers would consider bolting their banks with added fees thrown into the mix, but the reality is that changing banks is a beastly endeavor, and laziness usually prevails. That will change — eventually — when new players and innovators enter the market. To-be-launched BankSimple is a classic example of a newbie that will strive to fill that need, and the bank might even enjoy the privilege of charging consumers a premium for its more-valuable banking experience.

But more established banks could fulfill that same need.

Recently, we spoke with Ron Shevlin of the Aite Group LLC, and he said banks simply do not provide enough value for the fees consumers are paying. Think overdraft fees. That value disconnect requires refinement — and soon. In other words, banks need to add real value to their offerings in order to charge fees, Shevlin told Bank Innovation. Practically speaking, he believes banks could charge a fee for consumers to use their PFM functionality as “that’s where the value is.”

“I’m a believer that PFM can become the platform for engaging customers,” he said.


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Mary joined the Bank Innovation team in 2011 and serves as its editor, blogger and content curator. She covers the commerce, fintech and small business beats. She also oversees RMG’s custom publications, manages the freelancing team and contributes stories for the media company’s print publications. Prior to working at RMG, Mary was the fashion editor at National Jeweler magazine, where she contributed, among other things, coverage of international jewelry shows, Fashion Week, rising gold prices, bloody Burmese gemstones and a Bill Clinton watch junket. Her written work has also appeared in Cracked, Billboard and a number of fashion blogs and business publications. Mary has a BA in Journalism from Pepperdine University in Malibu. She grew up on a dirt road in the suburbs of Detroit and currently lives in New York with two roommates, a record player, an espresso machine and a toy poodle. Mary is endlessly curious and follows anything that grabs her. Current interests include literature, anthropology, travel, essays and fashion. She is fond of good conversation, oceans, startups, dandyism, coffee, cemeteries, Cat Stevens, Gregor von Rezzori, Oscar Wilde and Gidget.

One thought on “Fleeing the Fees?

  1. The customers at Chase may be mad because of the rewards shift but (because of their upscale demographic) they should be even madder at the role that Chase played in losing so much value in their balance sheet assets.


    Lets face it – there are 4 banks that have all the deposit share that they should legally have. Any innovation from them will be to primarily reduce costs and not to help the customer. Those costs are operational and interest expense. The

    actions to replace that debit card  income will most likely coming from new ways to help the middle class become poorer. The innovation to help the middle class become wealthier wil come from VENDORS that help the next 100+ banks play the role of “Good Guys” in helping our economy. The truth may upset the big four banks but they have yet to refute any statements similar to this that I have been making for the past two years on this site. Their only defense is that they are beholden to their shareholders and bank stock analysts every 90 days and do not have the fortitude to take a long-term view of good actions for the economy. We the public let our politicians de-regulate the banks (by ignoring 200 years of US  banking history and ignoring the large amounts of money spent on Wall Street lobbying) and we the public have now seen the result. So the blame and bad results of the last decade must be shared.


    Again, the innovation will come from the middle size banks that allow their creative staff the latitude to “innovate”. I am confident that will happen.

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