Banks Start to Lower Fees to Attract New Customers

by Mike Bevel, CollectionIndustry.com

Hey, banks, I?ve got an idea: how about you not charge me for access to my very own money? Whaddaya think about that?

Well ? according to a CNNMoney.com story ? they?re entertaining the idea, somewhat.

Given the increasingly competitive landscape, with high-yield online bank accounts stealing market share, retail banks are having to fight tooth-and-nail to draw traffic to their stores. ?And that means,? the article continues, ?innovative, consumer-friendly products.?

For starters, that means lower ? or no ? annual fees. Also, not hitting customers up for cash each time they use an out-of-network ATM simply because the bank didn?t plan ahead enough to realize that it?s not my fault there isn?t a Chevy Chase bank machine within walking distance of my apartment.

Or, you know, something,

Of course, there?s always someone nearby to point out the bad side: “To some degree, there is a revenue hit from these kind of initiatives,” said Madhavi Mantha, senior analyst at independent research and consulting firm Celent LLC. “But the whole goal, especially from free checking, is to gain deposit customers and that is financially more important than any hit they have from waiving fees.”

Washington Mutual ? or WaMu as they irritatingly like to call themselves ? has already seen an additional 400,000 new bankers ever since they imposed their no-fee checking and ATM usage. TD Banknorth, which also unveiled some new banking products ? including reimbursing customers? ATM fees at out-of-network machines ? has seen some initial hits to its bottom line, but is willing to take one for the team if it means more and more active banking clients.

“Customers that have multiple products with banks are less likely to leave those banks,” noted Gerard Cassidy, managing director of equity research at RBC Capital.

As far as if this customer-focused scheme will be good for banks in the long-run ? that remains to be seen. If nothing else, it is a long-awaited boon for customers.