No one likes bank fees. They’re a penalty for something that you’ve done, or simply a reminder that there’s a price for storing your money. Either way, it makes you watch more carefully what you do with your money. Like the fear of a speeding ticket, bank fees make you look twice before writing a check, withdrawing money from an ATM or dipping below a preset account balance. Most people are OK with a reasonable fee for a service that goes beyond their standard service plan. But the facts change online, where free (not fee) is the standard.

Today, any online application that hopes to gain customers and a loyal following offers its service free of charge, and is continually adding features and improving its customer experience. Online Banking should be no different. Instead, banks today offer free online banking with strings attached, tacking fees for bill pay, viewing deposit/check details, or worse, for dipping below a minimum balance.

The primary reason fees are worse online are that they discourage online usage. Banks in turn miss a great opportunity to:

1. Quickly capture customer suggestions or feedback on existing features. Unlike traditional bank products, online banking crosses business and product lines, merging them into one seamless experience (that’s the hope at least). By providing customers with free online services, they are more likely to send feedback about both their online and offline experiences, as well as make unsolicited suggestions that may improve everyone’s experience. In this age of rapid technological innovation, customers are often way ahead of businesses when it comes to using personal technology to meet their needs. Banks would be well served to explore new ways of doing things by not just listening to their customers, but putting themselves in their shoes. The plus side is that online you’re more likely to get feedback from the customers you want to keep; those that use the system the most and those that are loyal enough to suggest a feature rather than switch banks.
2. Sell additional services & upgrades. The more time customers are on the site, the more likely they are to see the value of an additional service or upgrade. Greater usage is a desire that’s hard to quench in the online world. The more you have it, the more it seems logical to have more of it. Who would have guessed that smart phones such as the Blackberry Pearl and Apple’s iPhone would morph into what they are today. The same phenomenon is happening in personal financial management that’s slowly and surely morphing into a full fledged iBank.
3. Educate and inform. Much like upsell opportunities, greater online usage means that a bank has more time to assist with tips and suggestions for making best use of what exists today. Given that most customers seek only to be online for a short while, why not encourage greater usage by encompassing the full breadth of service offerings. Google has shown that contextual advertising is a powerful tool, especially when a user is performing a task. What better way to communicate the value of a bank then by creating avid users who are constantly staying abreast of new features and advice.
4. Associate the brand with their financial activity. As financial data becomes more accessible and open, banks risk losing ownership of the one asset they have beyond a customer’s money: their transaction information. The alternatives to online banking are growing, albeit with limited features. And given that customers bank at several institutions, a holistic, aggregate view of their financial activity becomes even more important. By providing them valuable services, it’s more likely that customers will associate all their financial activity with the brand, and in turn give a bigger incentive to transact seamlessly with a single bank rather than many.
5. Go green! From saving paper through e-statements, paperless billing and e-checks to skipping a drive down to your local bank, online banking is the eco-friendly way to save more than just your money. “Moving all US banking activity online would save 17 million trees and reduce greenhouse gases by four billion tons per year” according to Javelin Strategy & Research’s “2007 Online Banking and Bill Payment: Trends, Forecasts, and Strategies for Reinvigorating Growth and Adoption” report.

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This entry was posted on Wednesday, August 8th, 2007 at 3:06 AM and is filed under ibank, paperless banking, green banking, bank fees, online banking. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.