Bank of America Adds Monthly Statement Fee for Paper Statements
As Congress passes the Financial Reform Act, I found some recent news kind of interesting.
A story this week from American Banker (link) said that Bank of America would start charging certain customers a monthly statement fee for receiving paper statements. While certainly branded as an ongoing push toward encouraging paperless banking and all of the green marketing initiatives that go with this, it most certainly is a step toward adding fees to compensate for the upcoming changes with overdraft programs in August. Bank of America has said that they will change their overdraft program to simply not allow customer transactions to take an account negative for certain types of debit card transactions (a ‘novel’ approach to this new regulation, since most banks are desperately trying to get consumers to opt-in right now). Bottom line is that a huge gravy train of fee income is about to dry up at banks and credit unions at a difficult economic time, and it is opening up some interesting moves by FI’s to make up some of it.
It will certainly be interesting to see if the fee changes mirror what has been happening in other industries during the downturn. The airlines for example. A recent flight charged me $50 to place my bags on the plane. And I thought they didn’t want us to lug stuff on to the cabin of the plane. But I digress.
So what amount of fees are we talking about?
One fee quoted in the article was for $8.95 a month – to receive paper statements! Really? Sure, it was for one type of account, and in only one state, but will this trend continue. Will other financial institutions also choose to go this route. At least they aren’t charging their own customers for accessing a BofA ATMs, or for using online banking or bill pay. Or will they? I recently saw one bank charge customers for bill pay services (albeit a small market player, but really? Aren’t these services designed to be a hook to the customer and reduce costs to the bank?). The path to charge fees for basic services have been seen at other banks over the years. The majority of which, like the fees to call the call center, have been squashed down and not taken up by the rest of the industry. But this one might be different.
I would agree with Jacob Jegher’s comment that this fee is a ‘big deal’. Having met Jacob recently and having been on his panel about social media at Celent’s Innovation and Technology event in NYC, I would say that Jacob knows his stuff. His company Celent, and companies that analyze the financial services market, will be busy seeing how banks and credit unions will react to this, and more likely other types of fees to compensate for the overdraft changes. Jegher said some banks have had better results with the carrot approach — rewarding consumers for turning off paper — than with Bank of America’s stick. I totally agree.
The article goes on to give several examples of FI’s that have used a more reward based approach to change behavior. I would suggest that you reward by providing better technology like personal financial management and alerts…which make the idea of statements more meaningless. When is the last time anyone under 35 opened a paper statement?
That’s what I thought.
I plan to continue to post more frequently on the blog. Look for changes to the format as I poke around WordPress.
And yes I work at a financial institution, but my blog posts are my own opinion.
ABOUT THE AUTHOR
Bradley Leimer is a dedicated senior marketer with experience in brand development, online / offline marketing, database marketing, web development, and online banking / mobile financial applications. Connect / Follow via linkedin.com/in/leimer and twitter.com/leimer (@leimer).