The scariest thing about being a banking industry analyst, besides boring your family & friends, is looking back at the advice you handed out 5, 10 or even 15 years ago. While I've had my share of hits and misses, one thing I've been particularly adamant about, is the need to create fee-based online financial services. Sadly, this is one that's been completely ignored so far (see note 1).

If U.S. financial institutions had charged an average of $1 per month per user (note 2) over the past decade, it would have generated $10+ billion in incremental profits, much of which would have been reinvested into the channel. 

Had that happened, we'd already have:

• Ironclad security
• Highly personalized 2-way alerts & messaging
• Integrated PFM and credit monitoring
• Responsive online/email customer service
• Killer mobile banking and iPad apps
• And much more

But what matters now is where do we go from here? Consumers have been trained to expect everything, even costly services such as online billpay, to be free of charge. Anyone who tries to charge fees for the existing state of the art risks massive backlash from customers and the media.

The way to introduce fees after the fact is to charge only for new value-added services such as those listed above. That way, no one pays fees unless they want the new benefit. It's the classic freemium model, and it works well across a number of industries, just ask LinkedIn.

Our latest report lays out 33 value-added modules that could support a la carte subscription fees. We look at eight use cases where these modules are bundled together for various-high value segments:

• Power mobile users
• Road warriors
• Families/parents
• Small/micro business
• Homeowners
• Financial trackers
• Empty nest/retirees
• VIPs

Currently, the best examples of multi-tiered pricing in the United States is business online banking where a number of banks and credit unions have a basic free option and at least one higher-end "cash management" solution (see Western Bank screenshot below).

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About the report
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Creating Fee-Based Online & Mobile Banking Services (link)
Pricing 2.0: How new revenue models will propel online/mobile banking to the next level

Published: May 18, 2011

Author: Jim Bruene, Editor & Founder, Online Banking Report

Length: 44 pages (10,000 words), 17 Tables

Cost: No extra charge for OBR subscribers, $395 for everyone else (link)

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Western Bank's online banking pricing matrix (link, 15 May 2011)

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Notes:
1. At least in North America. Financial companies in other areas of the world have been more successful with fee-based services.
2. This is an average amount. Most users would pay zero, but with 20% paying $5/mo, you get to the $1/mo average.