PNC Financial Services (PNC), Bank of America Corp (BAC) – Banks Tell Customers: Pay Up or Get Out!

Source: www.pncsites.com

If done correctly, establishing or increasing a fee can avoid public outrage and be a great thing for shareholders. In late 2011, the beloved retailer Costco Wholesale Corporation (NASDAQ:COST) clearly communicated to its member its intention to increase its annual membership fee by 10%, and in 2012, the company saw its highest annual membership renewal rate — nearly 90% in the United States.

Will this fee become a huge money-maker for PNC Financial Services (NYSE:PNC)? No, but it will allow the bank to focus on profitable customers and how it can best serve those customer that drive the most value for cross-sales opportunities.

A sweeping change
PNC Financial Services (NYSE:PNC) is not the only bank with this strategy. Though without the same dramatics as its proposed debit card fee, Bank of America Corp (NYSE:BAC) is aiming to migrate less-profitable customers into its eBanking Checking Account, a product that incurs no fee as long as the customer only transacts with the bank’s electronic platforms such as ATMs and online bill pay.

In addition to squeezing more out of less-profitable customers, B of A is putting increasingly more resources around nurturing its most profitable customers through its Platinum Privileges program — the bucket consisting only of customers with assets with the bank of greater than $50,000.

The retail banking model is no longer a one-size-fits-all business. Banks will become increasingly specialized and will continue to do what is most profitable for their shareholders.

The article Banks Tell Customers: Pay Up or Get Out! originally appeared on Fool.com.

David Hanson has no position in any stocks mentioned.You can follow David on Twitter. The Motley Fool recommends Costco Wholesale Corporation (NASDAQ:COST). The Motley Fool owns shares of Bank of America Corp (NYSE:BAC), Costco Wholesale, and PNC Financial Services (NYSE:PNC).

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