As we count down the days to 2012 and reflect on 2011, one industry that saw a lot of action was the financial sector. The consumer banking experience surely had its ups and downs this year; from the shift in debit reward programs to an unsuccessful push to introduce monthly debit card usage fees. Banks are still in limbo over how they are going to recover from the estimated $10 billion loss in revenue from new laws. If the theme of 2011 is fee reorganization, 2012 is going to be all about structuring a new fee foundation.

Beyond new products and fees, banks are also stepping up their game by increasing their investment into technology. With the rise of mobile applications, more banks than ever have iPhone / Android apps with the nation’s biggest banks also offering tablet experiences.

Before we get going, I should quickly mention that this article is purely speculation. The opinion presented is based on what we have seen in market adoption and trial testing over the last 6 -7 months. Some of our predictions from 2011 came true, while others haven’t completely panned out, possibly looking for a perfect time to launch — we think 2012 is that time.

With that being said, here are some possibilities of how your banking experience may change in 2012.

New off-line fees will drive higher online engagement

For banks, as with any other corporation, the more they can utilize technology and the Internet to complete or service their clients needs, the cheaper operations will become. It only makes sense that banks will continue to push their audience to process all banking habits online and – soon after – mobile.

One way to drive higher engagement patterns is to introduce (or increase) fees for non-online banking services. As we highlighted here, some banks have already implemented fees for completing certain transactions that can be done online for free. A perfect example of this is charging $3 for transferring money through a phone representative.

Banks have also increased their fees on other forms of transferring money like incoming wire transfers. TD Bank, which used to offer this service for free, applied a $15 fee earlier this month.

Banks made additional changes designed to drive online interactions like charging for paper statements. Bank of America even rolled out its eBanking checking account, which applies a fee of $8.95 in the months that customers make a deposit or withdrawal through a teller.

Introducing fee-based online & mobile banking services

The interesting point regarding the now-defunct debit card usage fee is that, in the 11 months leading up to the new laws, banks had been reorganizing every other fee that already existed. Tack on stricter requirements to avoid these fees and consumers were just as likely to pay as much annually, if not more, in fees as the would-be debit card fees.

Even still, complaints have been minimal. It took an in-your-face fee – charge for a service we use multiple times a day – to strike a nerve. Banks will be sure to avoid making this mistake again.

How do they avoid this? By not waiting for a common banking action to become mainstream before applying a fee. With 100 of the largest banks offering mobile banking to approximately 19 million U.S. households, and predictions of this number growing to 38 million by 2015 (FDIC), now is the time to introduce fee-based services for online and mobile applications.

In fact, OBR (Online Banking Report) projects that if banks had charged $1 per month per user over the past decade, more than $10 billion in new revenue would have been collected. While this revenue may not have looked as appealing ten years ago, it’s definitely a hot topic today.

We are already seeing banks making online bill pay free for premium users, while charging as much as $6.95 for those who carry basic or low-tier checking accounts. It is our expectation that online banking will come with a fee that can be avoided – a model like that of your checking account.

Some banks are already addressing their online accounts by making customers meet certain criteria to avoid an account maintenance fee and a $1.95 monthly online banking fee (1st Mariner Bank currently uses this program).

Adding monthly online banking fees is a simple change for banks as they continue to look for opportunities to apply fees in the ever-evolving world of online and mobile.

If we look at mobile check deposit, a service that can easily justify a fee considering the cost of gas to travel to a location for the purpose of depositing a check. It’s easy to see why customers are not starting riots when U.S. Bank and First Tennessee Bank charges $0.50 and $0.99 per deposit, respectively. We expect this fee to gain traction once Bank of America rolls out its own mobile deposit feature in Q2 of 2012.

Where else could banks look to apply fees? Possibly multiple logins for joint accounts, or a VIP monthly fee for those who want live text chat customer services on their mobile phones. Mercantile Bank of Michigan charges $4 per month to provide its online banking customers a peek at pending transactions the day before the charges are applied to their accounts.

As mobile banking continues to grow, new features will begin to emerge, offering more ways for banks to monetize their services. However, we as users need to recognize that with new technology come new risks. Protection and security should always be top-of-mind when considering mobile banking.

Relationship matters, unless you care less about convenience

Many of the nation’s largest banks used 2011 to restructure their products to create packaged deals. This made it more difficult for members to avoid fees if they didn’t have several accounts, including savings, credit cards and mortgages with one bank.

As news of consumers looking to move to smaller community banks and credit unions continues to grow, big banks need to form deeper relationships with their existing (and new)  customers to deter the possibility of switching.

As we pointed out before, dumping your bank is not a tedious chore when you only have a savings account, but once you begin adding other finances and loans to the equation it becomes a different story.

And big banks know this, as seen by Wells Fargo CEO John Stumpf’s new strategy to increase cross-selling of products while streamlining service through a single fee.

Wells Fargo, Bank of America, and Citibank are making relationship banking a major factor to avoid monthly fees. For example the Citi Account, has a $20 monthly fee that you need $6,000 in combined average balance to avoid. Fifth Third is charging certain checking account customers as much as $15 per month for only having one account.

Big banks understand that building awareness is never an issue; they have the luxury of putting millions of dollars in market to grab the attention of new customers. Banks can leverage their convenience to charge fees – it’s up to consumers to decide whether it’s worth the cost.

A recent Javelin Study predicts that those who leave larger banks due to fees should first place a price on convenience. The study points to the fact that, “although smaller FIs charge lower fees and have higher levels of customer service, they typically cannot match giant banks in terms of convenient 24/7 multichannel banking that features extensive branch and ATM networks, online banking, bill pay and mobile banking”. We may need to add “the ability to bank all at one location” to that study as well.

Offering an Elite status for premium customers

While the platform for the relationship banking experience is already on the horizon, it may only be the beginning. In 2012, banks will to mirror a tactic more commonly used in the airline industry by offering perks for their elite status customers.

Much like the airline industry which requires you to rack up serious miles, earning these perks is conditional on having a colossal pile of cash. For example, with daily balance of $20,000, you may enjoy unlimited wire transfers (domestic only), rebates on home closing fees, and non-capped ATM surcharge rebates.

Though these perks seem tempting, as highlights, with minimums in the six figures to earn these perks, it’s probably more valuable to park your money in a high-interest savings account. That option may no longer be viable as interest rates continue to fall.

Prepaid cards will continue to gain steam

If there is any market that has been slowly gaining traction in the banking world, it’s prepaid debit cards. Over the past year, a number of companies have popped up that are fully focused on this space (i.e. BillMyParents). At the same time, several of today’s most popular banks have rolled out their own prepaid products.

In this year alone, consumers have loaded more than $409 billion on prepaid cards. A study conducted by Aite Group found that the breakdown in spending is generally focused on day-to-day purchases, with 40 percent going to stores and restaurants, 27 percent directed towards online shopping, and 24 percent was allocated to paying bills.

In 2012, prepaid cards will more than likely continue to grow at a moderate pace, with the chance of picking up steam as big banks compete against small banks for consumers’ attention and their dollars.

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