SAN ANSELMO, Calif.-While credit unions have long been averse to fees, a new study finds that CU members are willing to pay for what the study's authors refer to as "lifestyle financial services."
The paper, titled "Integrated Study on Service Fees," was authored by Market Rates Insight and Dr. Dan Geller. Geller and MRI surveyed 1,500 consumers (both bank customers and credit union members) from across the nation and analyzed their interest in-and willingness to pay for-services such as identity theft alerts, credit score reporting, P2P payments, mobile RDC and more. The study found that nearly seven out of 10 bank customers and CU members are willing to pay for such services.
"We were able to establish that the common denominator of those services is the emerging lifestyle of consumers," explained Geller. "Mobility, time, efficiency, digital identity protection-those kinds of services didn't exist a few years back. When you look at mobility, for instance, the issue of mobile deposit capture is a new thing that's only about a year old...Now it's becoming more and more desirable, and pretty soon it will be the norm for those institutions that want to stay competitive."
Geller conceded that some services, such as mobile RDC, may become more widespread over time and be integrated into an FI's services at no cost to the user (such as with online bill pay), but he stressed that for now some are willing to pay.
The More Important Issue
The larger, more important conclusion, he said, is that "the resistance to charging fees on services or increasing fees on services is not absolute; it's not on all services, but only on traditional services that in the eyes of the consumer were grandfathered. And the study shows consumers are more willing to pay for services that support their lifestyle."
Consumers participating in the study indicated how much they would be willing to pay for specific services, with a sweet spot of between $3 and $4 per service per month. Credit union members indicated that they were slightly more likely to pay for lifestyle services than bank customers, at a rate of 68.7% compared to 66.3%. More than 82% of respondents indicated they would pay an average monthly fee of $4.07 for identity theft protection. The second-highest level of interest was credit score reporting, with 73% indicating a willingness to pay an average of $3.39 per month. The average for P2P payment services was $3.31.
Geller explained that the study was prompted by consumers' negative reaction to Bank of America's proposal last fall for a $5 fee on debit users, and MRI believes the study is the first of its kind. Geller said that aside from the factors that spurred it, one reason such a study has not been undertaken before was the cost and time involved in designing the right methodology, finding the right sample and compiling the results.
Geller stressed that credit union members indicated a willingness to pay for services, and he said that for a CU to successfully implement such fees it must be optional to the member. "If they feel it brings value to them, they will willingly pay for it, but they will probably resist if they have to pay another $3 per month for a checking account as a maintenance fee. It's a trade off."
