![]() ![]() Depending on options available, this can also offer the perception of greater flexibility, with customers able to upgrade, downgrade, or suspend the service as required. As this includes per-use items, for consumers this is a predictable and fully transparent cost. Here customers pay a set recurring fee (typically monthly) that they choose upfront for a desired level of service. Subscription pricing can address many of these issues. ![]() Subscription pricing provides control to customers in setting predictable, transparent, and flexible recurring fees This can create the perception of inherent inequity in the system one that regulators in many markets have been taking an active interest in reducing. Monthly fee waiver requirements typically demand a high minimum level of balance and/or income into the account, and for most banks the majority of penalty charges are collected from a subset of the customer base (the 80:20 rule generally applies here). Particularly for those that are unable to regularly meet waiver requirements, customers can end up feeling fees are both high and unpredictable.įrom a societal perspective, the wider issue here is that costs are often disproportionately borne by low-income customers or customers with financial struggles. This can mean that pricing detail is not intricately known by most. As an example, for Britline, a French bank targeting British residents in France, the 2022 fee document is 48 pages long. Of course, banks must provide full information around fee charges, but this complexity means fee documents can run in tens of pages. Admittedly there has been a move to simplify structures in some markets, but in the main overall pricing structures remain complex.įor customers, the result of such pricing intricacy is often one of the primary sources of dissatisfaction with their banks. These may relate to payments transactions (use of checks, credit or debit cards, or non-bank ATMs), overdraft usage, or other services provided (such as sending a letter, reissuing statements, new cards, returning a check). While the typical structure of pricing models for transaction accounts does vary considerably by country, most banks operate with a mix of a monthly maintenance fees together with individual charges for various services. The fee structure for most banks is complex, often resulting in unpredictable and unequitable charges It should be a bigger change than offering a collection of pre-paid fees or a product bundle for a fixed fee. The move to subscription pricing is part of a far wider rethink of the customer value proposition, and as such the underlying banking business model. However, a key point to note is that subscription pricing should not just been be a marketing rebrand of the monthly maintenance fee. From Celent’s perspective, this is positive development, and one that most banks should explore. In line, with widespread trend seen in the media (think or Netflix or Spotify) or software (Microsoft 365 or Adobe Creative Cloud) sectors, these are typically based on a subscription-pricing model where consumers pay a recurring monthly set fee for access to a bundle of products/services.Īt a number of banking get togethers this year, Celent has come across significant executive interest on this topic from traditional banks, considering whether they should switch to such an approach. Indeed, while neobanks invariably deliver a strong, intuitive digital customer experience, for most customers the primary switch factor is the allure of a free, or low-cost, core service, with the choice of selecting additional services for a predictable cost. A major difference between neobanks and traditional banks lines in pricing. ![]()
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