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Banking fees are a constant source of grief for many customers. So it’s no surprise that removing what seem to be unnecessary fees could be an easy fix for better customer and member satisfaction. Patelco Credit Union, one of the largest credit unions in the Bay Area, did just that. Recently they  discontinued 39 fees estimated to save their members about $800,000 annually. Banking.com spoke with Patelco CU CEO Erin Mendez to learn more.

You recently discontinued 39 fees for your members. Why?

We believe in providing financial value to our members in a variety of ways. When we reviewed the list of fees for our services, we found 39 of them that didn’t align with our vision of doing what’s best for our members. And since we’re a not-for-profit credit union, our members and our shareholders are one in the same; therefore, we focus on member value.

Do you find that your lack of banking fees is a differentiator for you against larger banks?

There are several things that differentiate us from large banks, and a lower fee schedule certainly is one of them.  More personalized service, better rates and fewer fees than the big banks are at the core of what a credit union offers. Patelco prides itself on leading the way and setting an example of what a financial institution can provide while remaining financially sound. This is especially valuable to members at a time when banks are regularly adding and increasing fees.

What was the member response to this move?

Local response has been very positive. Patelco’s focus on members is part of the larger credit union movement that has traditionally been seen as a local partner to support the financial needs of members. In fact, a recent survey found Americans are losing trust in banks while moving more and more to community credit unions.

Have you seen increased revenues for the bank by removing fees?

It’s tough to isolate the fee elimination from the other initiatives we also implemented to improve member value.   We do know that this specific move has had a positive effect on member engagement and increased membership and accounts. We knew cutting fees would actually reduce non-interest income initially so this is part of a long-term approach to support members rather than seek short-term profits. Building lasting relationships is more important to us, and over time lasting relationships means higher participation in Patelco’s products and service by our members.  But again, since we’re not-for-profit and financially strong, we are less concerned with the potential of losing fee income compared to the more personal service we’re providing our members.

Increased account engagement?

It is too soon to really know for sure. Trust doesn’t happen overnight but we believe by cutting these fees, current and prospective members will see that we back our mission to support their financial goals with tangible action aimed at improving their financial well-being.

What do you think was the biggest trend for your members this year?

Saving money. This came in a variety of ways, but as expenses for rent and food continued to rise, members were taking stock of the loans and credit cards they had with other financial institutions and compared them to what Patelco could offer. That’s why our Switch to Save program was so popular this year. We helped members save more than $10 million in interest expense. We helped refinance and consolidate higher rate auto loans and credit cards they had at other financial institutions. The fee elimination was just one more way to connect and show our commitment to saving our members money. Removing the fees aligned with our mission to enrich our members’ financial well-being.

Do you think bank fees will be a big topic of discussion in 2015?

Fees will always remain a big discussion for financial institutions as they seek to increase non-interest income, especially in a low rate environment. But we believe in the value of enduring relationships with our members, and providing greater value to them will result in higher participation and lasting loyalty.

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James W. Gabberty

Gabberty is a professor of information systems at Pace University in New York City. An alumnus of the Massachusetts Institute of Technology and New York University Polytechnic Institute, he has served as an expert witness in telecommunication and information security at the federal and state levels and holds numerous certifications from SANS & ISACA.

Marisa Mann

Marisa Mann brings over 15 years of experience in consulting and financial services industries to the Solstice team, working on large scale enterprise initiatives across many technologies, including specializing in the digital space – Internet and mobile. Mann is passionate about mobile and the endless possibilities for the enterprise, delivering business value through strong brand recognition and driving to excellence in the consumer experience. Prior to Solstice, Mann worked at JP Morgan Chase, Diamond Management and Technology Consultants, Washington Mutual, Inc, and Accenture.

Zachary Ehrlich

25-year-old writer, and as a native San Franciscan, I am unreasonably loyal to Bank of America, if only for their superhero-like origin story, involving the 1906 earthquake and Italian fruit vendors.

Brad Strothkamp

http://www.forrester.com/rb/analyst/brad_strothkamp