Banks looking for alternate sources of revenue; Customers willing to pay for Simplicity – $2.6B opportunity

Regulation is making banks react in different ways. One big bank is looking to trim costs by cutting jobs in the consumer and small business units. While others majors are looking to find alternate sources of revenue. Almost all national banks have started to take away free checking while a few others are starting to charge a $5 ATM fee for use by non consumers. Trouble is that consumers have gotten used to everything for free (online, mobile, bill pay, remote deposit capture) and it will take a while before they realize they have to pay for using the bank’s services.

At the same time, there is an opportunity to increase pricing/charge more by making things simpler and making it easier for consumers to manage their financial lives.

According to Siegel+Gale, which surveyed 6,000 consumers in seven countries to gauge perceptions of brand simplicity, U.S. consumers would be willing to pay 4% more for bank products and services if only they came with clearer rules, streamlined options and fewer hassles.

Not surprisingly, in the survey, the lower the income bracket of respondents, the less willing they would be to pay more for simpler products, services and communications from banks. Among respondents with household income of at least $150,000, 17% said they would pay a simplicity premium, versus 5.9% among respondents with household incomes under $20,000.

Below is the ranking from the American Banker article.