As banks look to increase fees, they need to ask themselves if the revenue is worth the potential impact on customer satisfaction. Prime Performance research shows that when customers believe their bank offers competitive fees, 96 percent of customers are satisfied with the bank, while only 28 percent of customers who feel their bank’s fees are not competitive are satisfied. The larger the bank, the more sensitive the bank needs to be to customer perception about the competitiveness of their fees.
The Boston Globe recently ran an article titled Want to switch banks? There’s a fee for that discussing how a number of banks are charging fees to customers who close their account shortly after it is opened. For many banks, this is not a new practice, but this and other fees need to be considered in an environment of heightened customer (and media and political) sensitivity. What I think is lost in the conversation is whether some of these fees really make sense. Several bankers in the article claimed that they rarely charge a customer the early account closure fee, or are likely to waive the fee. The article says that Northwoods Community Credit Union in Wisconsin charges $50 if customers close a premium checking account within 90 days of opening, but the chief executive, Susan Schmidt said no one has ever closed their account quickly enough to incur the fee and that they would consider waiving the fee if asked. Likewise at Salem Five, a community bank with 23 branches, there is a $10 early account closure fee, but the chief marketing officer, Martha Acworth said she could not recall any cases where the bank charged the fee. Salem Five is considering eliminating the fee.
Why have fees that you rarely collect? Think of the cost of disclosing the fee, the time involved in the branches and call centers explaining the fee and the impact on customer perception. Think about how your employees feel about charging the fee or dealing with customers asking for a refund of the fee. If your employees don’t feel good about it, it will hurt employee engagement and customer satisfaction and they will end up waiving the fee. Is the fee worth it? In some cases the answer will be a resounding yes, but in many cases, it will be an easy decision to abandon the fee.