As the new Dodd Frank legislation works it’s way through the bank operating committees, the firms have lost a number of historical cash cows. As a result, they have to be innovative to generate new fees to continue bolstering revenue, and that seems to be underway at the nation’s largest banks.
Wells Fargo (NYSE: WFC), Bank of America (NYSE: BAC), and JPMorgan Chase & Co. (NYSE: JPM) are all using new fees and deposit requirements in an effort to boost revenue. Feeling pressured by regulatory changes, the banks are quickly reshaping their business models, introducing the new fees and deposit rules. Mark Calvey of the San Francisco Business Times, reported earlier this month that other fees for services tied to checking accounts, such as wire transfers and overdrafts, are also rising. On Feb. 8, Chase will reportedly revamp its checking account offerings to four choices in a product called Chase Total Checking, dropping earlier product references to free checking.
Angry customers will likely lash out over this – rather than delinquent customers paying the fees they historically did for overdrafts and other similar fees, now all customers will have to bear those costs. Since all the major banks have adopted similar strategies, evading these fees will prove difficult, if not impossible. Customers should expect more of this to come, as prop trading revenues disappear from the firms, and higher capital requirements are implemented. Investors may be appeased as this may bring with it a return of dividends, but as always, this is coming at the expense of the consumer.
