Bank of America Corp (BAC): Banks Hit on Fees That Won’t Drive Customers Crazy

Page 1 of 2

Since interest rates have hit bottom -- reducing the revenue that banks generally pull in from products such as loans and securities -- banks have been scrambling to come up with new sources of revenue, generally in the form of banking fees. This endeavor has turned into a sort of tug-of-war between banks -- which are continually trying to come up with creative new charges -- and customers, who just as persistently resist such fees.

Bank of America Corp (NYSE:BAC)

The situation has turned into a real battleground, with regulatory agencies like the Consumer Financial Protection Board throwing its weight around on behalf of the consumer, as well. Even banks have learned to be cautious. Bank of America Corp (NYSE:BAC), for example, decided late last year to put off levying any new checking account fees, still suffering from the beating it took over the infamous attempt to institute a $5 debit card fee on its customers the year before.

Mobile banking: a new frontier for fees One area of consumer banking is showing promise for fee generation, however: mobile banking. While not exactly joyful about paying new fees, bank customers are showing signs that they are less apt to balk at charges associated with Internet and mobile banking services.

A recent survey by ath Power Consulting showed that one-third of consumers would consider paying some type of fee for mobile banking services. Not a majority, of course, but quite an increase from the previous year, where only 20% responded that they would entertain such a notion. As for small businesses, over 60% expressed a willingness to pay for mobile banking products.

Banks are anxious to make money off of their mobile customers, but they don't relish the type of backlash B of A experienced. Yet, banks have a point. Downloadable apps cost money to create, with estimates of between $1 million and $5 million for each project. Surely, banks can be excused for wanting to recoup some of that investment in research and development. Some already do -- U.S. Bancorp (NYSE:USB) has been charging $0.50 per mobile check deposit for over two years, and Regions Financial Corporation (NYSE:RF) charges for this service, too. U.S. Bancorp notes that customers have willingly paid for this amenity, and Regions plans to further monetize its mobile banking services platform.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 30 percentage points in 13 months Learn how!

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!