A byproduct of changes to Regulation E is the future of the checking account.  Will the industry abandon free checking and return to the more traditional banking practices of charging account maintenance fees?  While the full impact remains to be seen, customers are sharing their views on a fee-based world.

According to a survey administered by MoneyRates.com, 49% of respondents said “avoiding monthly maintenance fees” was the most important factor in choosing a checking account.  Responding to a recent New York Times article, “Would You Pay for  a Checking Account?,” customers state “No, I won’t pay for a checking account” and “should [my bank] try charging me I’ll shop around until I find the last bank offering free checking.” Banks therefore find themselves in a delicate situation with huge implications. So… what now?

Fees or no fees,  banks will have to begin to innovate around the “free checking” offer and its positioning.  By transparently offering services and product features that customers value, banks can transition from punitive to value-added fees.  The obvious next question is, what do customers value?  While I can’t speak for every customer, I can say two things that matter to me: choice and clarity.

• Choice – No one likes to be told what is best for them.  Customers want to be able to choose the features and services that best suit their personal preferences and banking behaviors.                                                                                                                                                                                     What I Like: Some of the products that I think effectively address this need give customers the power of customization by allowing them to add to their checking account only those features and services they value (such as free non-bank ATM access).

• Clarity – Hidden fees are what started this mess.  Customers prefer upfront fees where they know when and what they will be charged for from the start- not surprise fees that seem “sneaky” and unfair. What I Like: Institutions that I think that have been particularly clear with their customers are stating upfront how much the customer will pay for a certain product and detailing what exactly is included.

As we can see, banks have been listening and are coming up with products and services that align to customer value, some of which we have profiled in our Global Product Innovation Library.  Regarding free checking and whether or not it’s in its final chapter- only time will tell.