Whac-A-New-Banking-Fee

With consumers crying out for weeks that they will flee their banks over new debit card fees, financial institutions have been backing down from imposing new charges on once-free services.

Wells Fargo & Co. and JP Morgan Chase & Co. called it quits Friday on their pilots of charging debit card fees, and this week, SunTrust Banks Inc. and Regions Financial Corp. joined them in retreating from imposing the new customer cost. Media outlets are even reporting today that Bank of America Corp. will follow its peers and drop the fee, too.

Though the big banks are retreating from this particular fee, new banking fees going poof altogether is much like expecting that smacking a sole whac-a-mole will win the arcade game. In other words, it’s just a matter of time before another fee in response to Durbin creeps up again — which is fine and reasonable, as long as banks introduce new costs that merit something to consumers. The strong rebellious consumer reaction toward debit card fees underscores just how important it is for banks to prove there’s a reason why a consumer is paying for a service. Perhaps the answer lies in FIs’ layering in deeper PFM functionality or merchant-funded rewards or mobile payments. Whatever the case may be, the market is ripe for innovation right now, and one thing is for sure: the answer didn’t lie in levying debit card fees. The backlash has been brutal, especially given the cross currents. Occupy Wall Street continues to intensify, and ‘Bank Transfer Day’ is just around the corner. What it all comes down to is there’s a sizable amount of consumers fired up from their usual state of banking apathy, and big banks should especially stay tuned to their sentiments. Whatever fee comes next needs to bring something to the table.