Mobile Banking? There’s an App for That — and Often a Sizable Fee Too

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Banking with your smartphone? There’s an app for that. But some customers are finding there’s a fee for it as well. 

Mobile banking has grown significantly in the past couple of years. The Pew Research Center says more than half of Americans now have smartphones. Consultants at the Aite Group said in a report last year that the number of people banking on their phones will triple by 2016.

Among the time-saving features that banks have started offering, generally through apps, are the ability to deposit checks by taking a picture of them instead of delivering them to the bank, and the ability to pay bills by snapping a picture of them instead of writing paper checks and dropping them in the mail.

Whereas some banks are offering these kinds of services for free, others have seen an opportunity to charge extra for them. According to a recent American Banker article, “evidence is starting to mount that retail banking fees, so unpopular in areas like checking accounts, may be palatable for mobile banking services.”

U.S. Bank, for example, charges 50 cents per mobile check deposit. Alabama-based Regions, meanwhile, uses a “tiered fee structure” for mobile transactions, as CNBC reported this week

For immediate availability, which is a risk to the bank because it then doesn’t have time to verify the fees, customers must pay $5, or a percentage of the deposit — whichever is higher. For access two days later, once the funds are verified, the fee is 50 cents.

Some feel that more fees for mobile services are inevitable, given industry trends. Andy Schmidt, research director at CEB TowerGroup, said in a report last year that the increase in mobile banking is “an opportunity that banks must capitalize on to improve customer profitability.” Banks have lost overdraft and debit interchange revenue, and they’re losing ground to online payment processors. “If you look at the competition banks are facing down the road, it’s from Google, it’s from PayPal,” an executive at the bank Wintrust Financial told Bloomberg Businessweek last week. Banks are looking at smartphone owners to fill that gap.

So far, the nation’s biggest banks are not charging fees for mobile banking services. Citi, Bank of America and JPMorgan Chase & Co. say they don’t charge for any mobile banking features or functions; and Wells Fargo says it charges for what it calls “minor exceptions for premium services,” like expedited bill pay.

(MORE: You’ll Never Guess What Banks Have Started Charging for Now)

Even without charging fees directly, however, banks have much to gain by pushing more mobile services on customers:

Customers are less likely to leave. Customers who use these kinds of features are “stickier,” in industry parlance. The more ways you’re tied into your bank, the more of a pain it is to untangle if you want to move to a new institution. In a case study of SunTrust bank, CEB TowerGroup found that customers who used mobile banking were 53% less likely to leave. If they used both mobile banking and bill pay, they were 82% less likely to leave.

It’s cheaper. A March article in the Chicago Tribune raised the possibility that PNC could start charging for mobile deposits. “Mobile deposits save PNC Bank $3.88 per transaction compared with a deposit made with a teller. Those savings amount to millions of dollars annually for PNC and other major banks,” it says. (PNC, which doesn’t currently charge for the service, says an executive quoted by the Tribune was just speaking hypothetically.)

It’s more secure. In a blog post last month, Bob Meara, an analyst at the consulting company Celent, said remote check depositing is actually less risky for banks than having a person go into a branch with a check. Why? Meara says the sophisticated technology it takes to turn a snapshot into a financial transaction does a better job of catching fraud than a human teller using technology available at the branch.

(MORE: Why Banks Love Debit Cards Again)

The bottom line? Bank customers should know that, whether or not they’re being charged directly for mobile banking services, they aren’t really getting something for nothing. “You don’t need to start charging fees in order to monetize mobile,” Citi exec Andres Wolberg-Stok told American Banker. “Our data shows customers who adopt mobile banking increase their balances on deposit, decrease their attrition and see their overall profitability rise very clearly.”