Could Mobile Banking Apps Begin to Charge?

There’s no doubt that online banking and mobile apps have changed the way consumers manage their money. Not only can users now move money or make payments but can also deposit checks just by taking a photo on their phone, saving them a trip to the bank or the ATM. So with the convenience of these apps being fully understood, could banks begin charging for their services?

According to a new study reported on by the Wall Street Journal a sizeable chunk of customers would actually be willing to pay for access to their banking apps. The survey by S&P Global Market Intelligence asked Bank of America, Chase, and Wells Fargo app users how they’d feel about paying a $3 monthly fee to maintain access to these apps which are currently free. Somewhat surprisingly more than a quarter of BofA customers were on board with the plan. Meanwhile slightly less Chase and Wells Fargo account holders (21% and 20% respectively) say they would pay the fee.

The study then followed up by asking about a $1 monthly fee instead. As you might expect this plan got wider support, while still being in the minority. Once again Bank of America account holders were the most in favor with 43% saying they’d pay the dollar compared to 39% of Wells Fargo and 36% of Chase customers.

It’s easy to see why banks might want to consider charging for their apps. First a survey conducted by the Federal Reserve last year discovered that more than half of smartphone owners in the U.S. used some sort of banking app. As a result S&P estimates that a $1 monthly fee would net the three banks mentioned a combined $292.1 million dollars. When raised to $3 a pop that figure goes up to $501.6 million (accounting for a potential loss of users at the higher price point). However the banks do run the risk of alienating their customers and losing them to competitors who might not charge for their app. Even if these big three banks all suddenly implemented fees it may only serve to send users to local or even online banks, the irony being that these mobile banking apps make having a physical bank branch in your area all but irrelevant. 

Another thing to consider is that there are plenty of other personal finance apps on the market that not only offer more services than most bank-specific apps but can also be free or very cheap to use. That being said the popular mobile check deposit feature might be difficult to accomplish via a third party application. Still, with only about 48% of banking app users taking advantage of that feature, while 94% use apps to check their balances, it’s possible that these all-encompassing applications could very well be seen as an alternative should the big banks begin charging.

For an industry infamous for inventing new fees it does seem somewhat inevitable that a plan like this would be in the works. But if they know that’s best for them, traditional banks may want to think long and hard about how to proceed. After all there will almost certainly be a FinTech startup right behind them ready to take advantage of any potential misstep.

Author

Jonathan Dyer

I'm a small town guy living in Los Angeles looking to make solid financial decisions. I write for a number of finance websites, including HuffingtonPost and Business2Community. I founded DyerNews.com in 2015 to focus on personal finance and the emerging FinTech markets.

Other Articles by Jonathan Dyer

Amex Launches Digital B2B Payments Platform Business Link

For consumers, these days, there's no shortage of peer-to-peer apps they can use to move money, with some popular examples including Cash App, Venmo, and Zelle. As for businesses, the list of options for sending money to vendors may be more limited. Now, a well-known credit card company and small business supporter is introducing a new platform for this purpose. This week, American Express announced the launch of Amex Business...

Carbon Credit API Cloverly Joins Visa's FinTech Partner Connect 

Last year, Visa introduced the FinTech Partner Connect program to the United States, with the goal of introducing institutions to vetted startups that could help them expand their product offerings. Now, the latest company to join the program is Cloverly. Founded in 2019, Cloverly is an API for carbon credits, allowing businesses and consumers to help fight climate change. As the company points out, with the Visa partnership, Visa clients...

Prosper Announces $75 Million Growth Capital Financing

A long-admired FinTech has added some new capital to its coffers and it continues to grow after more than 15 years in business. Recently, Prosper Marketplace announced that it had closed a $75 million debt financing round. This capital came from a fund managed by Neuberger Bergman and will be used to help Prosper meet the demand for its loans, credit card, investment products, and more. According to the company,...