Banks Look to Hike Fees, Customers Strike Back

ADVERTISEMENT

Bank customers are fed up with fees, so much so that the fee issue is the biggest reason that customers distrust banks. As more banks learn that trust – and not price –drives business and profits, look for more financial institutions to implement relationship marketing programs that might “set the stage” for easier management of bank-related fees.

Bank customers certainly could use the relief. According to the Greenlining Institute, more than 50 million Americans overdrew their checking account at least once in 2009, paying a whopping total of $23.7 billion in overdraft fees for the year.

Worse, the Institute says that half of those 50 million consumers overdrew their bank checking account five times or more during the same year. Given what the Greenlining Institute calls a “common” overdraft fee of $25, that translates into $125 billion? annually in overdraft fees for some 25 million Americans.

Call it the last straw, but a new study clearly shows consumers have had enough. The report, from Mintel Comperemedia released Aug. 26, says more consumers are growing tired of big banks.

According to the report, only 36% of large bank customers trust their financial institution – well below the 57% of consumers who say they trust their credit unions. The reason for the disparity?

You guessed it: bank fees. And banking customers seem hard-pressed to give their banks any wiggle room on overdraft fees.

"Most banks would like to reinstate annual fees on checking accounts and debit cards to make up revenue lost from changes in (financial reform),” comments Susan Menke, vice president and behavioral economist at Mintel. “But banks, particularly the large ones, will be met with substantial resistance from their customers.”

So, how can banks get back in customer’s good graces? The Mintel study says that survey respondents responded favorably to two key characteristics cited – the terms “honesty” and “respect: - a pair of attributes that customers feel their banks have in short supply. Nearly all survey respondents, or 75%, say those two terms are at the top of their wish lists when it comes to dealing with their banks.

Adds Menke: “Research shows that people really do want a relationship with their banking institution, one based on openness and fairness." Almost 60% of Mintel survey respondents agree that “trust in a brand is more important than price.”

If – and that’s a big “if” – banks can persuade customers they feel their pain, and can show those customers genuine honesty and respect, absorbing a fee or two might not be as big a deal to financial consumers.

But even the terminology that Mintel uses when describing customer’s feelings about how banks treat them is revealing. Mintel says that customers would be “less resentful” about fees if banks showed more human interest in them.

This can’t be good news for big banks. When the term “resentful” shows up frequently in a consumer survey, it’s evident banks have some heavy lifting to do.

—For the best rates on loans, bank accounts and credit cards, enter your ZIP code at BankingMyWay.com.

Show Comments

Back to Top