Consumers Hate Fees But Would Rather Gripe than Switch Banks

by tom 27. December 2013 11:40

What causes consumers to change banks or credit unions? Customer dissatisfaction comes in many shapes and sizes, but a recent survey of 2,000 consumers by MoneyRates.com reported by The Financial Brand reveals that despite complaints about fees, bank closures, and bad customer service (the top three complaints), customers don’t change financial institutions.

imageAmong the complaints made by consumers, fees topped the list. A credit union survey found that 60 percent of consumers said they would leave their current bank of credit union if they didn’t get free checking. However, 31 percent of consumers said they were pleased with the fees they were paying. Only 39 percent of banks currently offered free checking in 2012, down from 45 percent in 2011, and the number of checking accounts with no maintenance fees dropped 5 percent.

Bad customer experience ranked number two as the biggest consumer complaint. Only 2 percent of those surveyed found customer service to be the best thing about their checking account provider. The MoneyRates.com survey said one in five consumers said they would switch over bad service, but only one in 10 actually do.

Consumers still want the convenience of branch banking. If those surveyed, 40 percent said branch convenience was one of their top two priorities. However, branches process only half the number of transactions they did 20 years ago; specifically a decline of 45.3 percent since 1992 according to one study.

So if consumers aren’t going to the branches, they must be doing more banking online. The survey showed that 83 percent ranked their provider’s online banking as “excellent” or “very good,” and 46 percent said that easy online banking ranked number one or two as their most important criteria when looking to open a checking account.

The truth is that most consumers would rather gripe than switch. Research from Deloitte says that 74 percent of customers are “satisfied” or “very satisfied” with their primary bank. However, these same consumers are willing to take a survey to tell you what they don’t like about banking services. Only 12 percent of consumers have actually changed banks in the last two years, and of those, one in 10 switched because of relocation, and 39 percent cited fees as the main reason to change; that’s only 4.7 percent of consumers.

What this survey does tell us, however, is even if consumers aren’t ready to change financial institutions, considerations like fees and customer service are top of mind with customers. When they do relocate, or decide that excessive fees, bad customer service, or some other factor forces them to make a change, bank fees will be top of mind when they do choose a new bank. To remain competitive, banks and credit unions need to rethink their fee strategy so they can use value-added services, like mobile deposit and online banking to bring in new customers. Our research shows that the right combination of value-added services not only increases revenue but improves customer loyalty as well.

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Weekly Term Accounts APY Spread and Index–Dec. 23

by Tom 23. December 2013 16:52

American Banker and Market Rates Insight feature a weekly APY Spread and Premium indices to provide pricing executives with greater insight into national pricing trends and practices.

APY Spread Index
The APY spread is a simplified form of a standard deviation. It measures the variance between the high and low ends of the price range to the average, which indicates whether the APY of a particular CD is closer to the low or the high end of the pricing spectrum.

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Premium Index
Premiums are used as the main vehicle to drive balances towards the most desired deposit products, and are an indication of the capital strategy of each individual institution. This week’s highest and lowest national premiums:
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Capital One Taking the Lead in the Race for Digital Banking

by tom 20. December 2013 13:45

According to a report in Bank Innovation this week, Capital One Financial is going digital in  big way. According to CEP Richard Fairbank, almost two-thirds of Capital One customers are using online and mobile services.

Capital One has more than 16 million deposit accounts and is one of the largest credit card issuers in the United States, so the fact that they can claim two-thirds of their customers are online or mobile demonstrates a clear trend. It also shows that Capital One is moving ahead of its competitors for digital services.

The article notes that Bank of America reports about 30 million active online users, which is less than half of its total 66 million deposit account holders. Most other financial institutions are reporting mobile imageenrollments of about 20 percent of their customers. The article also notes that Capital One is one of the largest consumers of postal services to mail credit card offers. With broader adoption of online banking, that strategy could change.

The push for mobile and online services creates some new service possibilities for financial institutions. Capital One, for example, already has a deal with PushPoint to make geocentric offers like concert tickets to customers via their mobile app. Combining location-based services with mobile banking offers a number of joint marketing and service possibilities well beyond directing bank customers to the nearest ATM.

Mobile payments are shaping up to be the next major front for mobile banking. Amazon recently acquired Gopago, a software maker creating mobile apps that let consumers use their smartphone to prepay for goods before they pick them up, and that gives retailers another point-of-sale option. With Amazon looking at digital point of sale, it looks like they are getting ready to take on more established e-payment players like PayPal. While banks and credit unions are currently waiting in the wings, this is a logical arena for them to offer future mobile banking services.

It’s all about capitalizing on convenience. Our latest research study, “Growth and Revenue Potential from Emerging Financial Services,” clearly shows that consumers want and are willing to pay for convenience services. Mobile banking tops the lost for many. Mobile deposit, location-based coupons, and mobile photo bill pay are on the top of the list. When you create the right service bundle, consumers have indicated they are willing to pay from $10 to $12 in fees per month for the right combination of services.

Digital convenience banking is here today, and the innovators will be the one to reap the benefit.

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Weekly Term Accounts APY Spread and Index–Dec. 16

by tom 16. December 2013 17:04

American Banker and Market Rates Insight feature a weekly APY Spread and Premium indices to provide pricing executives with greater insight into national pricing trends and practices.
 
APY Spread Index
The APY spread is a simplified form of a standard deviation. It measures the variance between the high and low ends of the price range to the average, which indicates whether the APY of a particular CD is closer to the low or the high end of the pricing spectrum.

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Premium Index
Premiums are used as the main vehicle to drive balances towards the most desired deposit products, and are an indication of the capital strategy of each individual institution. This week’s highest and lowest national premiums:

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Making the Most of Overdraft Transfer Fees

by tom 12. December 2013 16:26

It seems that overdraft revenue for banks and credit unions is on the rise.

According to a recent report by American Banker, overdrafts were on the rise in the third quarter as consumers struggle to pay their bills as the economy slowly recovers. Much of the uptick in overdrafts is being blamed on the effects of the government shutdown and automatic tax increases from the beginning of the year. As American Banker reports:

“Lenders took in an annualized $31.8 billion in overdraft income — a 1.6% increase from the previous period, according to a quarterly report from economic research firm Moebs Services. While average overdraft fees held steady at $30, consumers overdrew their accounts more frequently. The average customer overdrew his or her account 7.1 times annually, compared to an average of seven times in the previous period.”

This is good news and bad news for banks and credit unions, but it’s mostly bad news. While financial File:Dollar sign (reflective metallic).gifinstitutions are seeing a slight increase in revenues from account overdrafts, it also means that their depositors and members are on shaky financial footing. According to Moebs service, the quarterly increase in overdraft revenue is a drop in the bucket and doesn’t have much impact on the bottom line. However, this does offer banks and credit unions a chance to throw a lifeline to struggling consumers.

Our report on “Growth and Revenue Potential for Emerging Financial Services” reveals that overdraft transfer services matter to customers. Our research shows that 48 percent of consumers current have some kind of overdraft protection in place, but another 39 percent want such protection. And they are willing to pay on average $3.11 per month or as much as $4.34 for such services.

In these troubled economic times, bundling overdraft transfer protection with other desirable financial services can net financial institutions $10 or more per month in fees for services that consumers actually want. And protecting consumers from overdraft fees is a great way to build customer loyalty and show your willingness to stand behind depositors while building fee revenue.

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Weekly Term Accounts APY Spread and Index–Dec. 9

by tom 9. December 2013 20:37

American Banker and Market Rates Insight feature a weekly APY Spread and Premium indices to provide pricing executives with greater insight into national pricing trends and practices.
 
APY Spread Index
The APY spread is a simplified form of a standard deviation. It measures the variance between the high and low ends of the price range to the average, which indicates whether the APY of a particular CD is closer to the low or the high end of the pricing spectrum.

image

Premium Index
Premiums are used as the main vehicle to drive balances towards the most desired deposit products, and are an indication of the capital strategy of each individual institution. This week’s highest and lowest national premiums:
image

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APY | National Pricing Indicator | CD Balances

Mobile Bill Payments on the Rise According to Javelin

by tom 5. December 2013 16:52

We love it when other research firms confirm our findings. In our most recent consumer study, “Growth and Revenue Potential from Emerging Financial Services,” we discovered that mobile banking services are in demand: only 16.8 percent of consumers we surveyed only 2.9 percent of consumers said they had mobile photo bill pay but 48.8 percent wanted such services. According to the latest research report from report from Javelin Strategy & Research, 12.5 million Americans are starting to use mobile bill pay, and there is a huge potential for growth.

The latest Javelin report indicates that paying bills from handheld wireless devices such as a smartphone or tablet is slowly going mainstream. Those Americans using mobile banking are paying an average of seven household bills per month, or an average of $2.1. trillion using mobile devices. Topping the list of mobile payments are credit cards, utility bills, mortgages, car loans, student loans, and, of course, mobile phone bills.

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For banks and credit unions what’s noteworthy about this latest report is that one-third of customers are new users of bill payment services. Our research shows those numbers may be even higher.

And since more than half of all Americans have smartphones, the growth potential for mobile bill pay is really big, especially when you consider how small the user segment is today (see the pie chart). And the revenue potential as well.

Our study shows that consumers are willing to pay an average of $2.53 for mobile bill pay services; substantially more when those services are bundled with other convenience services. As popularity for mobile banking services continues to grow, so does the revenue potential.

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Weekly Term Accounts APY Spread and Index–Dec. 2

by tom 2. December 2013 16:42

American Banker and Market Rates Insight feature a weekly APY Spread and Premium indices to provide pricing executives with greater insight into national pricing trends and practices.
 
APY Spread Index
The APY spread is a simplified form of a standard deviation. It measures the variance between the high and low ends of the price range to the average, which indicates whether the APY of a particular CD is closer to the low or the high end of the pricing spectrum.

image

Premium Index
Premiums are used as the main vehicle to drive balances towards the most desired deposit products, and are an indication of the capital strategy of each individual institution. This week’s highest and lowest national premiums:

image

Ally Bank Moves Closer to One-Stop Mobile Banking

by tom 29. November 2013 12:48

This week, Ally Bank of Utah announced that it has upgraded its Ally Mobile Banking app with new support for Fiserv’s Popmoney® person-to-person funds transfer services. And it has added scheduled, recurring funds transfers to the mobile app; previously the app could only support one-time transfers. image

Ally Bank has been offering Popmoney since 2011, but this is the first time the bank has extended it to mobile banking. It’s an ideal convenience service add-on for customers who want to use peer-to-peer payments for the babysitter or gardener. With this move, Ally Bank is one step closer to offering comprehensive mobile banking, that includes mobile deposit, mobile bill pay, finds transfers, including to non-Ally Bank accounts, and more.

In a press release issued by Ally Bank this week, Diane Morais, Ally Bank deposits and line of business integration executive, said:

"One of the recurring themes in the feedback we receive from consumers is how much they like the convenience of a direct bank, and these latest offerings are the result of our commitment to deliver customer-friendly products and features. We have seen phenomenal growth in customers using our award-winning Ally Mobile Banking app, and we're taking our cue to continue to build the functionality of mobile banking to respond to that demand."

Ally Bank is the latest financial institution to expand its mobile banking services, which are gaining popularity across the board with consumers. However, Ally is offering these services at no charge to consumers, and although they may be saving overhead costs in terms of transaction processing and in-branch visits, they are leaving money on the table.

Our latest consumer research report shows that mobile banking continues to be one of the most popular services with bank customers, and services for which they will gladly pay. Our newest “Growth and Revenue Potential from Emerging Financial Services” study shows that only 11.6 percent of consumers are currently using mobile deposit services, but 46.5 percent want such services. Similarly, 3.5 percent of consumers are using mobile photo bill pay, but 44.0 percent want such services. And they are willing to pay a monthly fee for what they want; on average  $2.63 per month for mobile deposits and $2.53 per month for mobile photo bill pay.

Peer to peer payment services are also in demand. Our consumer study shows that 19.6 percent of consumers currently have such services, but 50.9 percent would gladly add such services, and would pay up to $1.31 per month.

And they are willing to pay more for bundled services; as much as $12 per month for the right service bundle. Clearly the combination of mobile banking and services that offer greater banking convenience are a winning combination for consumers, and a combination that banks like Ally could readily use to build fee revenues at the same time they promote customer satisfaction.

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Weekly Term Accounts APY Spread and Index–Nov. 25

by tom 25. November 2013 16:19

American Banker and Market Rates Insight feature a weekly APY Spread and Premium indices to provide pricing executives with greater insight into national pricing trends and practices.
 
APY Spread Index
The APY spread is a simplified form of a standard deviation. It measures the variance between the high and low ends of the price range to the average, which indicates whether the APY of a particular CD is closer to the low or the high end of the pricing spectrum.

image

Premium Index
Premiums are used as the main vehicle to drive balances towards the most desired deposit products, and are an indication of the capital strategy of each individual institution. This week’s highest and lowest national premiums:

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APY | Market Research | National Pricing Indicator | CD Balances


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