financial services

Fees Could Alienate Online Bank Customers


Online banking continues to grow in popularity, and according to Mintel, 79% of consumers visit their banks' online Web site on a daily or weekly basis.

But loyalty to online banking would vanish if the service wasn't free, as almost 80% of consumers would stop using their banks online bill pay services if their financial institutions charged a monthly fee.

When asked how much they would be willing to pay, just 7% of consumers said they would continue using online bill pay if they were charged $5. The number willing to pay $10 for online bill pay services is a mere 5%, while only 2% said they would pay $25 or more per month. The final 7% said they didn't know at what price they would stop using online bill pay services.

"Overall, banks do a great deal of promotion of their online banking services," says Susan Wolfe, VP of financial services at Mintel Comperemedia. "Unfortunately, customers most commonly use the service to check balances, leaving lots of opportunities for banks to deepen the online relationship."



Getting more customers to pay bills online, transfer money, and receive text alerts is the next step, followed by mobile banking, Wolfe tells Marketing Daily. "To do that, banks probably need to utilize their Web sites -- implementing live chat or providing online video help would be two ways to do that," she says. "In addition, the marketing messages could be more detailed about the benefits and detailed information about how to set up the different services."

For the most part, banks tend to offer similar services and functionality, Wolfe says. "There are, of course, some exceptions," Wolfe says. "Chase has begun to offer remote deposit and person-to-person payments. And US Bank and Wells Fargo have both begun to provide personal financial management solutions through its online banking service. Customers can categorize spending and bills in order to better track finances. To date, the banks have largely let third-party vendors supply this functionality. Think or Yodlee."

Banks need to consider what services to provide and carefully consider how to position those services to consumers, she says. "The technology and functionality is advancing so quickly that most customers probably are not aware of the full offering," Wolfe says. Many of the offers we see state that online banking can help customers gain control of their finances or better manage them. But they don't go into a lot of detail about how that really happens."

Despite the popularity of online banking, writing checks is still a popular way to pay, according to the Mintel study. Sixty-two percent of consumers who are responsible for paying their household's recurring bills report that they have paid a bill with a check. Forty-five percent have paid their bills through the biller's Web site and 42% have paid a bill with a credit card in the past six months. Online bill payment through a bank comes in fourth, at 40%.

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