A quick read of the tea leaves surrounding one of Bank of America's latest initiatives suggests the bank prefers its customers avoid parchments of any kind.
The institution is charging some customers to receive their monthly statement in the mail, the industry's most aggressive move yet to encourage paperless banking. For now, the $8.95 monthly fee applies to just one type of account, and only in Georgia. But BofA plans to roll out the product in other markets soon as a replacement for its popular student checking account, which has no monthly fees when opened online.
While some banks might be reluctant to impose a fee for such a basic service, anything Bank of America does will draw followers. "When you have banks like BofA ... do something that's different, it's quite natural for the rest of the market to strongly consider and pursue that type of option," says Jacob Jegher, a senior analyst for the Boston market research firm Celent.
Though BofA would not be the first U.S. bank to nudge customers away from paper statements, it is the biggest to start charging a fee for them. The Charlotte company's new eBanking account is offered online to Georgia residents. It is pitched as a self-service account, and the monthly $8.95 fee is waived for people who agree to receive their statements only online and who do not visit a teller for any transactions that can be handled by an automated teller machine or online, such as balance inquiries and deposits.
A person familiar with Bank of America's plans says that the company is planning to replace its CampusEdge student account with eBanking in other markets in the near future. BofA spokeswoman Tara Burke said Wednesday that it is "testing a lot of products." She would not provide any details about the eBanking account.
Many banks encourage customers to shut off their monthly statements, though few have reported significant success.
Consumers often say they want the paper records to keep track of their finances and to document payments and other transactions, such as when checks clear. Jegher says some banks have had better results with the carrot approach-rewarding consumers for turning off paper-than with Bank of America's stick.
Toronto-Dominion Bank, for example, provides some services, including check images, for free to its paperless customers in Canada, but charges a per-item viewing fee to those who receive mailed statements. Other institutions to try to eliminate paper statements for some accounts include American Express, Frost National Bank and PNC.
Jegher says Bank of America's new account terms could indicate that the company is not satisfied with its efforts to persuade customers to shut off paper statements. "Clearly they have some room to grow."
Cathy Graeber, the founder of the consulting and research firm Swimming Upstream, says Bank of America is wise to pitch eBanking as a replacement for its student account for people who are already comfortable interacting online and might not have developed specific habits for managing their finances. The eBanking account "is, from a business standpoint, a very smart way to train new customers," Graeber said.
Graeber compared Bank of America's statement fee to First National Bank of Chicago's decision in 1995 to charge customers for visiting a teller, another fundamental banking service. Consumers were livid over the $3 teller fee, and First National dropped it from most accounts a year later.
However, Graeber says Bank of America might not get the same reception. "They have more channels and they're giving customers the choice" to perform the same activity without a teller or without a paper statement to avoid the fee, she says.
Nicole Sturgill, the research director for delivery channels at TowerGroup, says that by only attaching a fee to statements for a new account type, the bank could avoid the backlash it would face if it were to change the rules for existing accounts. She agrees that other banks are eager to move customers away from paper statements and will likely follow, but adds they are more apt to take their cue from PNC, which did not offer even the option of a paper statement.
Bank of America will likely get results, in no small part because it set its fee so high. "For $3, you may not get people to turn it off," she says, but "$9 for a paper statement? It will make you think twice."
