Monday, March 7, 2011

Paperless Banking, Technology and the Human Factor

Technology can be a good thing. Of course, the big technology thing these days is the internet. Everywhere you look, it's internet this and internet that. Banking is no different. There is online banking, electronic payment, and now there's paperless banking.

Bank of America just sent me my latest monthly statement. And there sitting between my non-existent interest earnings for the month and the list of electronic withdrawals was a single line that said:

 Check Image Service Fee   $3.00

Let's rewind the clock shall we?

A few years ago, the banking industry lobbied Congress to pass Check21, legislation that changed the time honored process of check cashing. When you write a check, it eventually makes its way back to you with a cancellation mark to show that it was cashed. That canceled check is proof of payment. The banks claimed that check processing was too expensive and scanning technology was sufficient to protect consumers. A physical check was no longer required as long as an image of the check could be accepted legally in its place. And so it was that Check21 was passed (though the legislation did not require the savings to be passed on to the consumer).

Needless to say, this "Check Image Service Fee" seemed strange to me. After all if the banking industry wanted check scanning, why are they charging for it now? So I visited my local BoA branch office and confirmed that this is in fact not a fee to image (scan) your checks but rather to send you a copy of the images. Your check's images still exist on some computer at the bank. This is really a printing fee. In my case, this amounts to one side of one double sided page of my entire monthly statement. That's some expensive printing.

So I turned to Google and found some banking industry website that described this practice as "weening the consumer" to paperless banking. The $3 is artificially large enough to entice you and I to not want check images. How much do you want to bet that in due time, additional charges will show up to print any statement at all. The end goal is to be entirely paperless and this is the first salvo.

Truth be told, I'm no fan of receiving tons of paper from my bank or any other institution for that matter. So long as I can get access to the documents I want, when I want them, I prefer to save a tree. BoA told me that I can print out the scans anytime I want. But I do wonder - if some day I change banks and later realized that I needed an image for a particular check written years earlier, how easy will it be to get access to that image as an ex-customer?

So now I have this $3.00 charge but I don't feel like paying it. The very nice teller at BoA did two things. First she got rid of the charge since she says the company did a poor job of notifying its customers of the pending charge (I concur). Second, she tweaked a setting in my account profile stating that I no longer want those check images (I did what BoA wanted; Pavlov would be proud). I bet I could have saved some time by tweaking that setting myself online, if I poked around long enough. But saving myself a whopping $3 could only be done by a teller with the authority to perform the "fix". Which makes me wonder if this is just going to increase foot traffic at the branch offices to "fix" this and that. This would be ironic since many banks are now charging you fees each time you use a teller.

Years ago, I wrote a $9.00 check. On my statement it rang in at $900.00. That's the only time I can recall when I absolutely needed my canceled check to prove that some data entry person hit that "00" button twice when cashing my check. Likewise, looking back, I can only recall a few times when I absolutely had to have access to a teller, a real human being sitting directly in front of me fixing a problem. The other 99.99% of the time my bank was already as good as a paperless entity. So is the shift to paperless banking going to really affect me? Probably not; as long as I avoid the 0.01%.

About a week after my $3.00 surprise, I received another statement from BoA. This one is for a line of credit that I never use. I get a statement like this about once a year. It reads in part:

  Previous balance: $0
  New balance: $0
  Minimum payment due: $0

Hey BoA, I have an idea about paperless statements you may want to look into...