It looks like banks are still struggling to figure out how to make checking accounts profitable in the wake of the Durbin amendment and other new regulations.
Via Andrew Dunn at the Charlotte Observer, Wells Fargo chief executive John Stumpf was asked how his bank is adapting to the new regulatory landscape at an annual Goldman Sachs financial services conference in New York. Here's what he had to say:
At Wells Fargo, we've had the view that -- and this is true for most of our customers -- they pay for that by doing more business with us. Business that they would have done someplace else, they're doing it with us and it's a better deal for them. We can give them package pricing. We get a better deal, it's better for our team members and certainly better for our shareholders.
That's not true in every customer's case, and we're testing ways of getting paid on one monthly charge for a customer. Customers have told the industry loudly and clearly, "We don't want to get charged for a debit charge per month." So we continue to look.
What that sounds like to me is Wells Fargo is experimenting with making the monthly maintenance fee higher or harder to avoid. Right now their cheapest checking account is going for $5 a month, and that fee is avoidable by signing up for direct deposit or having an average daily balance of $1,500.
What Stumpf seems to be suggesting here is that unless Wells Fargo is able to cross-sell a checking accountholder on some other, more profitable services, that accountholder is going to end up paying a monthly fee for checking.
I don't think Wells Fargo is alone in considering this; a simple monthly fee is probably the most logical way forward for a lot of large banks. It seems more practical than trying to recover lost revenue a little bit at a time through under-the-radar fee increases on the margins going on at a lot of banks right now.
Stumpf also said that while Wells Fargo is hesitant to start cutting back its network of branches, they're probably going to get smaller and a little more thinly staffed going forward, in order to cut costs:
Part of it is tightening our belts. We have to do things differently in the consumer business and it's not shutting down stores. Stores are enormously important to our customers and if they're going to be important to our customers, they're going to be important to us. But maybe you don't have 5,000 square-foot stores, maybe you have 3,000 square foot stores. Maybe we have different levels and types of team members in there.
What do you think? Would one monthly fee for checking be more palatable than a monthly debit-card fee? Would you rather see your bank cut back on services and staff than raise fees?