Customers frustrated by banks’ controversial new fees are finding out what industry insiders have known for years: It is not so easy to disentangle your life from your bank. The Internet banking services that have been sold to customers as conveniences, like online bill paying, also serve as powerful tethers that keep customers from jumping to another institution.
Tedd Speck, a 49-year-old market researcher in Kent, Conn., was furious about Bank of America’s planned $5 monthly fee for debit card use. But he is staying put after being overwhelmed by the inconvenience of moving dozens of online bill paying arrangements to another bank. “I’m really annoyed,” he said, “but someone at Bank of America made that calculation and they made it right.”
Former bankers and market researchers say that it’s no accident. The steady expansion of online bill paying, they say, has emboldened Bank of America, as well as rivals like Wells Fargo, JPMorgan Chase and SunTrust, to turn to new fees on customer accounts as other sources of revenue dry up. The fees have caused an uproar among consumers and drawn sharp criticism from politicians, including President Barack Obama.
“The technology locks you in and they’re keenly aware of it,” said Robert Smith, who was chief executive of Security Pacific when it was bought by Bank of America in 1992. “It’s very hard for consumers to just ditch that.”
While consumers may not be accustomed to paying for fees for various services, the convenience of online banking provides an impediment for customers to change accounts, and provides a way for banks to reduce attrition.
As more customers use online banking, they see the value it, and mobile banking, can offer. And as they see their user experiences and overall interaction experience with their financial institutions improving, some will likely place a reduced emphasis on fees, and more attention on the overall value proposition the bank offers.
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