by Michael Nuciforo

Editor's note: This post was written by Michael Nuciforo, a Mobile Banking Consultant at Keatan. He previously worked at ANZ on a number of developments, including goMoney, and more recently was Head of Mobile Banking at RBS managing the UK Retail portfolio.

Banks has perfected what I refer to as the ‘negative pricing model.’ In simple terms, fees are charged when customers make mistakes. We are all familiar with it. It is the annoying cost of returning a DVD late, or staying too long in your parking space.

At present, banks rely significantly on revenue generated from fees when customers fall afoul of their terms and conditions. Amongst all the doom and gloom of regulatory pressure, the euro debt crises, and record low margins, could mobile banking be the right service to implement a ‘positive pricing model’?

Tiered charges for access to additional features and content have become common due to the popularity of games such as FarmVille and Sims. This is great news for banks as the market has likely reached the right point of innovation, access and acceptance to allow for the monetization of mobile banking.

Now that most banks have launched first-generation mobile services, new features are perfect for tiered pricing. Areas such as NFC payments and remote deposit-capture are a great place to start. They are tangibly more convenient than existing processes, and are designed to leverage the specific capabilities of a mobile device.

But can banks pull this off? Or will it just be seen as yet another annoying banking fee?

When implementing a pricing model, banks need to be clear about their strategy and objectives. For the model to work, it is critical that unique, mobile-specific services are delivered to warrant the cost. And banks shouldn’t charge for services that they already offer for free today. This will only anger existing users. They should also avoid charging for services available in other channels for free, although some exceptions could apply. Banks need pricing that is fair, transparent and that rewards loyalty as well.

Any new fee will disappoint some customers. Banks should also expect negative media attention at first. This will happen any time bank and fee are included in the same sentence. Banks need to be proactive about engaging regulators during the process and communicating actively to customers. It is important that fees are integrated seamlessly into the customer journey. Regular enhancements should also be made to the service. Success will ultimately rely on the quality of new features.

With traditional revenue streams under attack, and investment in mobile growing, pressure will come on mobile leaders to justify the costs. The honeymoon period for mobile banking will be tested at some stage. Customer retention and transaction migration are fine, but are they enough for your senior executives? And can they be accurately proven?

With customers now familiar with this pricing model in other facets of their everyday life, it is important that banks also take the opportunity to do this now. Otherwise mobile banking, like online banking, will become a free channel for life.