What would you be willing to pay to transfer money to a savings account or settle up with a friend for last night’s dinner on your iPhone? Unfortunately, your bank might soon answer that question for you.
Not without controversy, banks are starting to introduce fees for mobile banking. US-based PNC, Regions, and U.S. Bank are leading the mobile banking fee revolution. At this stage, mobile fees appear inconsistent and currently range by service. Regions Bank plans on hitting you with a $1 (USD) fee for a person-to-person (P2P) payment while PNC’s Virtual Wallet will run you about $10 a month. Some banks will waive these fees if account balances remain at a certain level.
Banks of all sizes have been offering their customers access to banking services through smart phones and tablets for years. So, why introduce fees now? Survey research reveals customers are willing to pay for mobile banking… even more so than they were just a few years ago. This could translate into a significant revenue opportunity as many banks are now seeking out non-traditional avenues for fee income.
Mobile Fees: A Balancing Act
Banks have a few hard decisions to make as they assess whether charging for mobile banking is a sensible move. Will customers be willing to pay for the convenience of banking on their phone? Or will they abandon their mobile apps (and maybe their bank altogether) and move to a competitor or a non-bank option?
It’s a tough decision because the advantages of a mobile banking program extend far beyond fee revenue. Mobile apps are a low cost channel for customers to self-service versus higher cost alternatives; such as brick-and-mortar branches or telephone call centers. The mobile channel also presents prime marketing opportunities for financial institutions. Mobile banking offers the “soft” benefits of brand enhancement as well as another channel to cross sell customers on higher margin products (e.g. unsecured loans, credit cards). Marketing in the mobile channel is relatively effective as customers who use bank apps are often more profitable on average and are very “sticky” when it comes to bank loyalty.
The mobile space is critical to reaching bank customers, particularly in certain segments. As smartphones and tablets continue to proliferate the market, mobile banking will only continue to grow in importance. This is why banks need to get their mobile strategy right. If banks go the way of charging for mobile banking, executives will need to strike a balance between maximizing fee revenue while ensuring customers perceive value in what they are paying for. After all, every consumer knows that going from “free” to “fee” can be a tough pill to swallow.