It's an understatement to say that banks had a rough go of it in 2008; consumers too. And NSF fee income may be rising as consumers struggle to pay their bills, but institutions counting on this rising revenue stream to counterbalance other declines should be on the lookout for both consumer and regulatory blowback.

Bankers need to hold onto and grow deposits, but angst about overdraft is a leading cause of customer attrition. So as NSF charges multiply, flight risk increases. Customers hit with multiple overdraft fees in a year are five percent more likely to select a new account when using than those who didn't overdraft, estimates Robert Rubin, the founder and chief executive of Facilitas, which runs the Web site. "People are becoming quite sensitive to the fees that they are paying," Rubin says. "Banks may try to recoup some of their losses by fee revenue, the double-edged sword is that consumers are paying more attention."

Ron Shevlin, a senior analyst with Boston-based consultant Aite Group, also looked at consumers that went to FindABetterBank and found that 50 percent of people searching the site had overdrawn their account in the past 12 months. Shevlin says that this is significant because, on average, only about 10 to 20 percent of total customers have overdrawn their accounts in the past year. "The fact that 50 percent of the people who were searching for a checking account on this site had overdrawn on their accounts in the last 12 months is a clear indication to us that overdrawing is a trigger event to make the decision to leave their bank and look somewhere else," Shevlin says.

In a study of consumers conducted by Javelin Strategy and Research, while the No. 1 reason people switched their bank was because they moved (31 percent), No. 2 was too many fees (23 percent), says the firm's founder and president James Van Dyke. Furthermore, when asked what was most important for picking a new bank, the most common response by far - selected by two-thirds of respondents - was rates and fees.

And consumers aren't the only ones readying a revolt on the issue; government intervention remains a possibility. While the Federal Reserve Board in December stripped a provision from new credit card rules that would have forced banks to let customers opt out before enrolling them in overdraft programs for certain transactions, the issue is not dead. Regulators continue to study the idea and said they need more time to evaluate the possible effects on banks if implemented.

But asking banks to reduce reliance on fees is a nonstarter given how intensely many firms have realigned their businesses to increase the share of revenues fees generate. Bank executives would need to see quantifiable returns before they stop beating on the fee mule.

Some see ancillary services playing a role. Van Dyke recommends banks looking into two relatively untapped products: credit monitoring services and expedited payments. Since the fees tied to these products are voluntary, the revenue is divorced from a powder keg of ill feelings that overdraft or ATM fees bring.

With consumers willing to pay in the range of $10 to $20 per month for credit monitoring services, the market is fertile. Van Dyke recommends charging customers to make the information available through the online banking channel.

And though not as vast as credit monitoring, the expedited payments market is ripe with potential. Last year, Javelin reported that there is up to $5 billion in available quick-pay revenue through 2013 as consumers adopt the service-be it through their bank or from a direct-biller's own site. Biller sites have owned an advantage over banks in offering same-day postings, often for a fee that consumers gladly pay to avoid a heftier late fee on their accounts. "The real strategy here," Van Dyke says, "is to take fees that the bank's customers are paying to others and bring those into the bank."

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