The average annual price for
‘active’ users of retail banking services decreased by 2 percent to
€70.3/$95 globally in 2008, with price levels ranging from €54.3 in
Asia-Pacific to €76.6 in the Europe non-eurozone region, according
to the sixth annual World Retail Banking Report from
Capgemini, UniCredit and Efma.

The latest World Retail Banking
Report
from consultant Capgemini says retail banking fees are
declining. Prices fell 2 percent on average last year, continuing a
trend seen since 2005.

Published along with UniCredit and the
European financial management and marketing association (Efma), the
report concludes that the development of low-cost banking models,
clearer pricing encouraged by regulators and associations, the
impact of the internet and geographic price convergence, prices
will continue to decrease for the next five years.

It argues that banks will need to create value
in new ways, notably through differentiation on offers and
services, and two main forces will drive this challenge. First,
banks will need to extend the scope of their activities to
non-financial products (real estate, services, insurance, etc).

Second, they will have to strengthen the added
value they bring to clients by personalising their customer
approach and developing their advisory capacities.

Nevertheless, the report stated: “The heart of
the retail banking business must be conserved: although revenues
will decrease in the short term, successful banks will bear in mind
that core banking activities are the backbone of their relationship
with their clients.”

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Average price down to $95

In 2008, the average price for
active users of banking services decreased to €70.3 ($95) globally,
down 2 percent year-on-year.

Prices decreased in most regions, down 1.4
percent in North America, 2.3 percent in Asia-Pacific, and 6.1
percent in the European eurozone (due mainly to “drastic declines”
in Ireland, down 33.3 percent, where packages were introduced, and
in Spain, down 7.2 percent).

Price convergence in the eurozone and North
America continued to increase: price discrepancies are at 31.7
percent (down from 32 percent last year) for Europe eurozone and
27.4 percent for North America (down from 33.8 percent).

In Europe non-eurozone, prices increased by
1.6 percent for active users.

Across all regions, payments continued to
represent the largest part of the fee structure, but the spectrum
varied from a high of 66 percent in North America to a low of 47
percent in Asia-Pacific (see chart below).

Asia-Pacific remains
heterogeneous

In terms of the latter market,
Asia-Pacific remains extremely heterogeneous, containing countries
with very different fee structures and pricing levels; the region’s
overall price decrease (down 2.3 percent) was caused by a decline
in payments revenues and a drastic price fall in India (down 34.7
percent).

Most of the countries surveyed in the report
now have pricing strategies in which internet services are less
expensive than branch services.

So called ‘internet active users’ paid €9.5
less per year than active users, and €31 less than branch active
users, for instance, according to the report.

Certain Nordic countries established extremely
attractive prices for online services to move clients towards the
internet whenever products were available. Frequencies of use
indicate that this pricing strategy directly influences customer
behaviour.

The nascent Single Euro Payments Area (SEPA)
continues to drive down prices in Europe eurozone, concluded the
report.

It stated: “The expectation was that SEPA’s
standardised payments structure across the eurozone would lead to
tougher competition and lower prices…

“The price of payment means has decreased
annually by 3.6 percent in Europe eurozone since 2006 and from
€60.9 to €57 this year, while it remained relatively stable (down
€0.7) in the rest of the world.”

The World Retail Banking Report
2009, published by Capgemini, UniCredit and the European financial
management and marketing association, is available free to download
at www.capgemini.com

Sources of fees for banks