MADISON, Wis.-Bank of America may have backed off its planned $5 per month debit card fee, but one analyst is cautioning credit unions to recognize that other pricing changes are still likely at major banks.
Had the BofA debit card fee not been waived, it would have created a new "price umbrella," noted John Lass, SVP of strategy and business development at CUNA Mutual Group. Whatever fees may follow, Lass added, don't have to be matched by credit unions, but those fees could provide some "competitive air cover" to allow CUs and community banks to institute their own fees to offset losses in interchange revenue.
Lass spoke as part of CUNA Mutual's second annual Online Discovery Conference, and while his presentation focused on fee income strategies, BofA's attempt to implement the fee came up again and again in both the presentation and the subsequent Q&A.
Lass said that it's too soon to say how the BofA move will play out, but noted that "every financial institution, whether a credit union or a bank, incurs significant costs to develop the products and services that they give to members. ...As certain types of fee income become subject to caps, they have to look for other sources of fee income. I, for one, will not rule out the possibility that we'll see credit unions apply monthly fees. Maybe not to the extent of what Bank of America proposed," but it is still a possibility.
Lass, who spoke prior to BofA's retreat on the new fee, proved to be prescient, noting consumer reaction could also dictate how things progress. "Only time is going to tell," he observed.
Even if CUs do choose to institute fees, said Lass, consumers don't necessarily mind paying for something as long as they feel that what they're paying for has value-and that is where credit unions can be successful.
"Let's remember that, at the end of the day, what sets a credit union apart from a bank is that we go back to cooperative principles," said Lass. Member-owner status can be emphasized, but CUs should also "focus your fee strategies around your value proposition, and emphasize the benefits you're bringing to your members."
