The retail banking is an industry that traditionally has been very reluctant to charge their customers for the many add-on services that are offered. Instead, these services have been viewed as means to penetrate the market, and primary services such as lending are then used to cash in on customers. However, making money on lending is harder than ever, and eventually, banks will have to look for alternative sources of revenue. Of course, the obvious place to start is charging a fee for the numerous services that are currently being offered free of charge. Here are 3 ideas for fees that retail banks can charge.
1) App Download Fee
A mobile banking app is not a necessity per se. After all, customers can access their online banking account from their computers, so it is not impossible to live without the mobile banking app. However, it is, of course, very convenient and customers don't mind paying for convenience. The key here is they have a choice; and therefore, a small charge on downloads won't cause any major uproar from price-sensitive customers. These customers will just stick with the web-version.
A study by Deloitte found that 40% of smartphone users use a mobile banking app in the UK. The revenue potential is big here.
2) In-App Purchases
The customers are used to them by now. Nearly all apps they use on their smartphone offers some form of in-app purchase, and there is no reason a mobile banking app should be any different. In-app purchases could include a "Premium" version that gives users a better overview of their transaction; or budgeting functions where users can get a comprehensive overview of what they spend their money on. These are "extras"; no one needs a budgeting function. But it sure is a nice feature; and customers don't mind paying for nice "extra" features.
3) Fee-Exemption Bundles
Customers hate unexpected fees - it's a jungle to navigate those fee policies, right? "If a Type X customer uses Mastercard Y to pay in in a Type 1 Currency in a Type 2 Country, a 2.75% charge will be levied (minimum £2, unless when the money is paid from a Type Z account". These "fee jungles" do generate substantial revenue for retail banks, and I am not calling for their elimination: However, different fee exemption bundles could be used to generate revenue from risk-averse customers who want clarity about their expenses. These types of bundles have been used, with great success, in the telecommunication industry, where add-ons creating more certainty about charges for calling abroad have raised substantial revenues.