Blog
Teller fees on the rise, but at what cost to FIs?
October 10, 2013 by Jim Ghiglieri — Senior Vice President, Corporate Communications, SHAZAM
With more consumers doing their banking via apps and websites, some financial institutions are looking at in-person transactions in a new light. Specifically, a number of larger FIs are viewing human contact at a brick-and-mortar branch as a premium service.
Last December, PNC Bank added a $7 branch-banking fee to its "Virtual Wallet" accounts. The fee can be waived if the customer carries a $500 minimum balance, is a student, or vows to use electronic means to do business with the FI.
"The question is, what are consumers going to be willing to pay for?" said American Banker editor Neil Weinberg in a CNBC report. "What is a premium service that they're willing to see fees from? That's the experimentation."
FIs are tracking consumer trends, noting that in 1980, 95 percent of customers went through branch banking. Today, that number is down to 50 percent. Overhead and staff expenses can be reduced or eliminated if customers are steered toward electronic means through a "behavior"-type fee.
Bank of America considered charging its eBanking account holders an $8.95 fee if the customer performed transactions through a teller after signing up for fee-free checking with no branch access. However, just 10 percent of customers signed-up for the so-called "branchless" banking option, which led BOA to discontinue the service in August.
"Customers want full-service banking, even if they only visit a teller infrequently," said BofA spokeswoman Anne Pace in the CNBC report.
There's no doubt that there are cost-savings to encouraging customers to utilize self-service options. As an example, Javelin Strategy and Research reported FIs could save $1.5 billion each year through mobile check deposit.
However, there is also no doubt that this "savings" comes with a price. While staffing a branch with tellers is an expense, it doesn't compare with the expense of losing a customer. Most likely, charging a fee for a service consumers previously received for free will result in some lost customers.
If your FI is considering implementing a teller fee, it's important to look at more than just the bottom line.
Consider the value teller interaction brings to the financial services relationship. Not just in the realm of providing quality customer service, but also regarding cross-selling opportunities and the degree of customer loyalty only a human connection can bring.
