Online Banking Keeps Customers on Hook for Fees - Business Day

Customers frustrated with banks' controversial new fees are Have Known Know what industry insiders for years: it is not so easy to disentangle your life from your bank.

The Internet Banking that were sold to customers such as convenience, such as paying bills online, use powerful ties to prevent them from jumping to another institution.

Tedd Speck, a market researcher for 49 years in Kent, Connecticut., Was furious about Bank of America charges $ 5 per month with a planned use of debit cards.

Goal is submerged After staying put by the inconvenience of moving tens of Online Bill Pay arrangements across the river.

"I'm really bored," he said, "Somebody aimed at Bank of America did the math and that they did right."

Former bankers and market researchers say it is no accident. The continuing expansion of online bill paying, they say, has emboldened Bank of America, as well as rivals such as Wells Fargo, JPMorgan Chase and SunTrust, to turn to new fees on accounts receivable and other sources of income dry up. Costs have caused an outcry among consumers and years attracted strong criticism from politicians, including President Obama.

"Technology and locks that you are well aware of this," says Robert Smith, who was CEO of Security Pacific when it was bought by Bank of America in 1992. "It's very difficult for consumers of any gap."

For years, banks have openly sought to tie loans and as many services as they can for a client, such as credit cards, mortgages and banking by mobile phone.

What they did not mention marketing are controlled studies such as Fiserv, which develops systems for online bill payment, showing that using the Internet to pay bills, make debits and send electronic checks customer churn for banks reduced to 95 percent in some boxes.

With 44 million households used the Internet to pay bills within 30 days - against 32 million five years ago and projected to reach 55 million in 2016 - is a major change that has ramifications for the competition.

There is evidence that consumers are much less switching banks, with 7 percent of 'em estimated to be their main account to move to another institution in 2011, down 12 percent last year, according to surveys conducted by Javelin Strategy and Research.

Emmett Higdon, a consultant who managed Citibank products online bill payment from 2004 to 2007, said that "the consumer is a double edged sword." While customers appreciate the convenience, within the industry "We knew it would be a powerful retention tool. That's why Bill Online Pay Free Went first. Inertia is powerful in the banking sector. "

Bank of America now has 29 million online bank account holders and 15 million use the service to pay the bills, so company officials say there is no connection between the viscosity of the project Internet bill paying and the decision to impose the $ 5 monthly debit card fees.

"People like to pay the bill online, it is convenient and secure," said Anne Pace, a spokesman for the company. "The attrition rate lower Cam Along With it was simply the result of a range of valuable services."

Costs, she said, "we can continue to provide the benefits that customers expect from our debit card," as protection against fraud, the prevention and has found large ATM network .

Asked if online banking calculated how-Bill-pay a new fee would drive customers, Ms. Pace said, "We did extensive research on how they react to a new charge and if it was fair."

The new tariff will not apply to customers of Bank of America mortgage or those with an account balance of $ 20 000 or more.

Members of Congress have taken note of fresh tumult - The Ties That Bind and customers to their bank.

"The difficulty of moving accounts is deliberate and pointless," said Representative Brad Miller, who introduced a bill this month that would make it easier for customers to switch.