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Virtual Banks Using "No Fees" to Compete
It appears that the banks that were created branchless and are growing up via electronic commerce will use the fact that they charge no fees as a competitive tool.
Compubank, the first virtual bank chartered by the Office of the Comptroller of the Currency, and E*Trade, a pioneer in branchless banking, both announced programs that offer low or non-existing fees.
And further, since these banks don't have their own automated teller machines, they are offering refunds on some of the ATM fees that other banks will charge their customers. Compubank offered to refund its customers four ATM surcharges (up to $1.50 each) per month. The bank also announced free electronic bill-paying services and reductions in fees for returned checks, stop payments and outgoing wire transfers.
E*Trade, which has been around for ten years, transacting its business via telephone, facsimile, ATMs, and the Internet, announced refunds on four transactions per month for Yahoo! Finance customers. The bank offers a free checking account that includes free electronic bill paying (as well as free printed checks) and even offers interest for balances over $2,500 at rates that increase with balance size.
To know your competition, check out what else these virtual competitors are offering at www.compubank.com and www.etrade.com.
Copyright © 1999 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 9, No. 3, 3/99
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