When Bank of America debuted its new eBanking account, it ignited a firestorm among industry experts, journalists and customers alike, all of whom dispute what the account’s $8.95 fee signifies. With such widespread confusion and heated controversy surrounding BofA’s eBanking product, there needs to be some clarity about what the account is not:
- It does not “charge customers for talking with a representative,” as Bloomberg says
- It is not “a $9 fee for printed statements,” as Consumer Reports inaccurately reports
- The bank isn’t telling customers to “get out and stay out” of its branches, an exaggeration by The Motley Fool
- It does not signify “the end of free checking,” as the Wall Street Journal implies
- It is not an attempt by BofA to “profit from new regulations,” a ridiculous, twisted interpretation from The Huffington Post
BofA’s eBanking account is pretty simple really. Customers who opt for eBanking must:
- Receive eStatements through BofA’s Online Banking center.
- Make deposits and withdrawals using self-service options instead of in branches with a teller.
That’s it. Customers can still go into branches to ask questions, acquire additional products and resolve service issues, etc., without incurring a fee. They can call BofA and talk to representatives on the phone. All customers are expected to do is use alternate channels — ATMs and online/mobile banking tools — for the most basic transactions — deposits and withdrawals. Customers who want printed statements can choose another account.
The bank’s invitation reads, ”You’re always online and using ATMs — that’s how you manage your banking. Now Bank of America offers a checking account that helps you avoid the monthly maintenance fee just by doing what you already do.”
Customers can sign up for the eBanking account online and (somewhat ironically) in BofA’s branches. The account does not require direct deposit, nor is there a minimum balance.
After enrolling in eBanking and signing up for eStatements, customers will only be charged the $8.95 fee if they go into a BofA branch to make a deposit or withdrawal. Once a customer has incurred the fee, they can make unlimited deposits and withdrawals within that month; the $8.95 is not charged for each subsequent transaction, nor charged in subsequent months unless the account holder conducts more branch-based deposits or withdrawals.
Account holders who have service-related questions or need to deposit coins will not be charged the monthly fee.
BofA’s eBanking account, initiated in November 2009, is currently in a pilot phase in Georgia. It will be introduced nationwide in August.
Controversy, Fear and Outrage
One article at Yahoo! on BofA’s eBanking account triggered around 1,000 fiery reactions from commenters spanning a wide range of opinions — mostly negative.
Current BofA customers are concerned what eBanking means to those with MyAccess Checking accounts? Will MyAccess Checking go away? Or have new requirements?
Time Magazine deplores what would equate to $107.40 in annual fees for those who prefer printed statements. Others have suggested that the account would be more palatable if customers could opt for email statements instead of requiring them to view statements through the online banking center.
Nicole Sturgill, the research director for delivery channels at TowerGroup, pointed out in an American Banker article that “people are not comfortable enough that they are willing to turn off those bank statements. For $3, you may not get people to turn it off, but $9 for a paper statement? It will make you think twice.”
Or as Cathy Graeber, another analyst puts it: “They’re giving customers the choice. If you want to pay the $9 fee, come on in, but they are giving you an alternative to save the $9.”
Joe Goode, SVP Global Media Relations/BofA, sums it up this way. “If you want to use the teller regularly or receive paper statements, there is probably a better account fit for you.”
Analysis and Perspective
Banks have been offering various e-accounts with all sorts of fees for years, and the notion of charging fees to discourage/encourage certain customers behaviors is far from novel, and nowhere near outrageous. Indeed back in mid- to late 90s, banks — including BofA — toyed around with a very similar account. The pay-as-you-go scheme charged customers who enrolled in these accounts a fee around $3 every time they used a teller or spoke with a representative on the phone. Alas this model proved unpopular and was quietly retired. Skip ahead a decade and now the number of self-service channels available today makes it much more reasonable to price accounts in this manner. Today, BofA has about 18,000 ATMs — 13,800 that print images of deposited checks — which in one of the things that makes this account so practical.
Reality Check: The notion of “free checking” was largely a myth. Almost every “free” account in the U.S. had fee triggers. eBanking is just another step in the evolution of retail checking accounts.
As for BofA’s timing and motives for introducing an account with a $8.95 fee? They are looking to recover lost overdraft income — just like thousands of other financial institutions — while right-channeling customers. What’s so scandalous about that? Nothing.
But the media loves to bash big banks even more than credit unions do, so they print headlines inaccurately implying customers will be gouged $9 every time they step foot in a branch or read a statement. Tempted as you may be to snicker while a rival squirms under the media microscope, remember that these stories are very effective at generating the eyeballs media outlets crave…and the regulatory legislation financial institutions deplore.
Don Vecchiarello Jr., BofA’s VP Media Relations Manager, reassured The Financial Brand that BofA’s eBanking account does not signal a wider change in the strategic role of the bank’s vast branch network.
“Our Business Centers have been and will continue to be the cornerstone of our business,” Vecchiarello said.
Now if that doesn’t sound like an unequivocal commitment to branches, what does?