There’s a growing discontent for traditional bank fees; subscription-based banking offers a potential solution:
What single bank fees do we consumers dislike paying the most? The most detested fees include bank ATM fees, overdraft fees, and bank account maintenance fees.
And that’s where subscription-based banking comes in.
Here’s how it works: Banks can charge a flat monthly fee instead of those annoying multiple, per-use fees, which makes things easier for us customers when it comes to predicting our expenses, while operational costs are reduced in the process for the banks.
This may seem nothing new compared to what banks are already offering nowadays as some sort of subscription, but it’s the mindset behind it that makes the difference here and in this time of the ‘Subscription Economy’ trend.
After all, this trend shifts the focus onto customer-centric pricing and for that purpose, the door is open for financial institutions to enter with their subscription offerings focusing on validating customer needs and helping them to achieve their goals.
Let’s dive a little further into the bundled benefits of the subscription-based banking model:
A monthly fee instead of per-use fees could give us customers with multiple banking relationships a more compelling reason to consolidate our accounts with the bank of our preference.
For the banks, this is really a recurring, stable source of engagement and it’s believed to be a major benefit of the subscription-based banking model.
On top of that, banks can benefit from subscription models by grouping all consumers’ existing subscriptions into one of their payment solutions. In fact, most consumers put subscription services – like video streaming – on their credit and debit cards. Yet, this isn’t common with other bills – like telecom, utility, or insurance payments, which are also subscriptions. Those recurring payments can also be grouped into this type of behavior, because the more that a financial institution can capture that, the more likely that we will choose that institution as our primary provider.
This is a great way to be sure neither we nor the bank overlook any payments. Plus, we as consumers can get rewards on those payments. (van Driel, 2024, paras. 6, 9)
I found this article to be biased towards subscription services; it holds the notion banks should take inspiration from them. Rather than combating these services’ recurring payments with per-use fees, the author insists we should leverage more of those payments in banking. This greatly contrasts the article I read that believes subscriptions are ruining financial wellness and should rather be influenced by banking. I believe banks and subscription services parallel each other and that there is an opportunity to learn from one another to benefit our well-being. The question is then, should banks leverage subscriptions services or be combating them?
I read up on some strategies to encourage customer-centric design, but this was the first mention I had of customer-centric pricing. If personalization is the future, why wouldn’t that apply to the price tag? How can helping customers achieve their individual goals begin with a general price tag? I think validating customers’ needs should extend to price.
What I found most interesting was this article’s correlation between paying for bills and subscriptions. To be missing out on possible rewards, simply because it is common to put these services on credit cards should not be overlooked. Here’s an opportunity to go beyond a subscription command center and look further into the system in which we pay for them.
References
van Driel, D. (2024, May 28). Subscriptions in banking: The payment preference for payment services?. AirPlus Communications. https://comms.airplus.com/en/blog/subscriptions-in-banking
