SAN FRANCISCO (1/3/12)--The movement to switch banks will force consumers to choose between fees and convenience, and it will be up to banking technologists to bridge the gap, according to Javelin Strategy & Research, in its latest report identifying trends for banking, payments, mobile and security in 2012.
"The movement to switch banks will force consumers to choose: fees or convenience?" said Phil Blank, managing director, security, risk and fraud at Javelin in the upcoming Jan. 7 Marketing Weekly News. "Occupy Wall Street protests, anger over banking fees, and the rhetoric of election-year politics will spur many Americans to consider dumping big banks in favor of community banks and credit unions," Blank added.
"Although smaller financial institutions charge lower fees and have higher levels of customer service, they typically cannot match giant banks in terms of convenient 24/7 multichannel banking that features extensive branch and ATM networks, online banking, bill pay and mobile banking," he added.
"The Occupier's Dilemma is that small financial institutions have the love and large banks have the technology, yet neither provide the level of empowerment and control that Javelin expects to see in the future," wrote Javelin President/CEO James Van Dyke in an op-ed piece for Bank Technology News (Jan. 1).
Javelin may be unaware that many credit unions already have made themselves more competitive as smaller institutions--primarily because they were at the forefront of some new technologies in online and mobile banking. Nor does Javelin mention credit unions' cooperative philosophy that allows them to enter shared-branching contracts so they can serve each other's members conveniently, or the extensive CO-OP Network of 28,000 surcharge-free ATMs and 4,400 shared-branch locations.
Meanwhile, certain technology companies are experiencing the backlash for tacking on fees to some of the conveniences consumers already use. Last week, Verizon Wireless announced that as of Jan. 15, it will charge customers a "convenience fee" of $2 when they pay their bill online or by phone. However, Friday afternoon the company announced it would drop the plan because of complaints from consumers and a statement by the Federal Communications Commission that said it would look into the matter (The Wall Street Journal Dec. 29). The newspaper said the fee created a "protest movement on the Internet."
The company was trying to get customers to pay via autopay, but the fee drew comparisons to Bank of America's infamous $5 a month debit card fee that prompted the Bank Transfer Day movement on Nov. 5 (Forbes.com and SmartMoney.com Dec. 29). BofA pulled its plans to charge the fee after significant consumer backlash that resulted in credit unions gaining 450,000 net new members (new members minus the attrition of those who move or closed accounts) in September and October.
Originally, Verizon had said the fee "will help allow us to continue to support these single bill-payment options in these channels and is designed to address costs incurred by us for only those customers who choose to make single bill payments in alternate channels (online, mobile, telephone)," reported Forbes.com.
In 2012, consumers objecting to fees by banks and others will have to "put a personal price tag on convenience," said Javelin, suggesting that financial institutions upgrade with personal finance management tools to make it easier for consumers to monitor and manage their money. Javelin also suggested upgrading faulty account opening processes, installing and marketing bill pay switch kits and building out a compelling mobile banking solution.