| By Jim Bruene on February 18, 2009 10:00 AM | Comments (2) |
Yesterday, I looked at a list of free services likely to come under pressure as banks work on the Herculean task of returning to normal profitability. One area that's likely to remain free for the foreseeable future is online and mobile banking, at least the core account-access portion of it.
But we continue to believe that financial institutions are missing a revenue opportunity to provide premium fee-based services to certain segments.
If American Express can command $2500 per year for its black Centurion Card and Barclays $495 per year (see note 1) for its slightly more pedestrian Black Card launched in December (see note 2), why can't banks get $10/mo for a similar premium version of online and mobile banking? The short answer: They haven't tried.
Just for the sake of discussion, here's a "gold online banking" service for which I'd pay $15 per month without a moment's hesitation:
- High-end website and iPhone app
- Long-term (7+ years) online storage of images, transactions, statements
- On-demand credit score like Credit Karma
- Credit bureau alerts when negative items hit
- Account aggregation with weekly summaries like Mint
- Email customer service with 30-minute or less turnaround time
- VIP phone and tech support with no phone tree
- No overdraft/NSF charges (within limits of course)
- Travel rewards/sweepstakes on electronic transactions
- Pre-filled one-click credit application
- Extra security options
- SMS balance inquiry
- Iron-clad, no-fine-print security guarantee with 100% immediate reimbursement and emergency credit line
For more elaboration on these benefits, see our Online Banking Report on Pricing Online Services.
Visa Black Card homepage (15 Feb. 2009)
Includes one-page online application
Note:
1. The benefits of the Visa Black Card are similar to those from many gold/platinum cards. One of the biggest differentiators is free limited membership to Priority Pass which gets cardholders into 500 airport lounges in 250 cities. However, according to the FAQs, Black Card holders are limited to two complimentary visits per year, so this would cost $154 annually if purchased directly from Priority Pass. In fact, for $349 annually, you could get unlimited access to airport lounges.
2. The Visa Black Card has been advertised with full-page ads in the New York Times, the latest on 10 Feb. 2009 on p. A5 (national edition).
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This is a solid list of premium services! I will pass it along to our VP of Deposit Operations. As consumers we have come to expect many free services with our bank accounts. You outline most of these in your previous post, but I worry about banks charging for these free services.
With dropping rates on interest accounts, customers are looking for better deals. Add to that new fees on previously free services and consumers will most certainly start moving their money. This should give internet banks, with lower operating costs, a significant advantage.
If institutions chose to monetize with premium services it may solve this problem. Customers can keep the free services, and pay for valuable add-ons that relate to their specific financial needs. I would pay extra to have my credit score and account aggregation in one place.
Plus travel rewards are something I’d love to see!
This card is being blasted in the media for its poor timing. Ads pushing a super-elite credit card is not appropriate in this credit-stressed environment, or so the argument goes.
It may be a neat card, and it may have been wildly popular...back then, in the hay day. Now, it seems to feel a little vulgar, or insensitive, or something. Something doesn't feel right about it.