The Price of Trust - Part One

Why Community Banks Must Rethink Fee Strategies

Here's a paradox: retail customers willingly spend upwards of $180 per year on FinTech services yet expect their community bank to offer "free banking." 

The question for community banks isn't whether to charge for services. It's how to earn the right to charge for them. 

How We Got Here 

Not long ago, geography created natural moats for community banks. Customers chose relationships, not individual products. The checking account, savings, and credit card were all features; the bank was the product. 

Then came the 2010s. FinTech companies picked off individual products with superior experiences and lower costs. Suddenly, customers assembled their own financial services stack: checking from Chime, savings from Acorns, investing from Robinhood. 

The most successful FinTechs didn't stop at unbundling—they re-bundled services into tiered subscriptions customers willingly pay for. Mercury packages treasury management with business banking. Acorns bundles investing with education and banking services. 

Customers will pay for bundles, but only if they're built around their needs and it's clear what value they're getting.  

What Banks Are Discovering 

The shift from free to fee isn't theoretical. Some of Alloy Labs’ member banks are already making this transition—and learning surprising lessons along the way. 

$2B Bank Reprices Treasury Management 

One community bank recently transformed its treasury management pricing. The "before" picture was all too familiar: handshake agreements accumulated over years, complex fee schedules nobody could decipher, and pricing that didn't cover costs. They were trapped: couldn't invest in improvements because margins were too thin, but couldn't charge more because products weren't good enough. 

They made a decisive shift to clear, value-based pricing with simple tiers. Instead of nickel-and-diming customers with per-transaction fees, they made it easy to understand. 

The frontline staff was understandably nervous. How would customers react to price increases? 

The result? 85-90% of customers responded with some version of "That makes sense. Thanks for telling me beforehand." They moved on without drama. 

The loudest complainers? When the bank examined the data, these weren't their best customers—they had accounts at multiple banks and were already shopping around. They never deserved the “best customer” discount. 

The key takeaway that changed everything: "If they truly value it, they're willing to pay for it." 

$6B Bank Discovers Willingness to Pay Through Customer Interviews 

Another bank took a different approach: extensive customer research before changing anything. Through one-on-one interviews with commercial clients they learned that customers were willing to pay $30-$125 monthly for services that saved them time and improved efficiency. Not grudgingly willing—genuinely eager for graduated service tiers that would make their lives easier. 

But the research uncovered something even more valuable: pain points the bank didn't know existed. 

One example: their customer care team started tracking how often they received requests to temporarily increase overdraft protection or ATM withdrawal limits. The frequency was shocking. 

"We were inconveniencing this many people," the banker realized. "Can you imagine the people who just pulled out a different card to pay for whatever it was? Our interchange was down." 

These weren't complex technology problems requiring major system overhauls. They were simple policy changes that could dramatically improve customer experience—and increase revenue—simultaneously. 

These two examples reveal something crucial: the barrier to value-based pricing isn't customer resistance. It's internal belief. Do you believe your services are genuinely valuable enough to charge for? 

The Storytelling Gap 

Here's the uncomfortable truth: even with valuable products and reasonable pricing, community banks often lose to FinTechs on one critical dimension—narrative. 

Compare two approaches to treasury management: 

• Traditional Bank Approach: "Investment Sweep," "ACH Origination," "Remote Deposit Capture," "Positive Pay"—followed by pages of complex fee schedules organized by product category. To understand what you'll pay, you need to map your anticipated usage to a grid of per-transaction fees, monthly maintenance charges, and service tiers. 

• Mercury's Approach: "Strategic cash management made simple. Growth for the long term. Flexibility in the short term." 

  
  

Mercury doesn't lead with products—they lead with outcomes. Simple management. Long-term growth. Short-term flexibility. These are things business owners actually care about. The features are there if you want them, but they're positioned as enablers of outcomes, not as the product itself. 

Acorns goes even further, explicitly positioning against traditional banking with a simple comparison: 

• Us: Financial wellness system, automatic investing, retirement accounts included, educational content, no hidden fees. 

• Them: Traditional banking, manual savings only, extra fees for everything, no guidance, surprise charges. 

Notice what they're doing: they're not just listing features—they're creating a narrative about who they are versus who traditional banks are. They're giving customers a clear reason to choose them that transcends price. 

The difference isn't only better products—it's a better story. FinTechs lead with outcomes, use customer language, make pricing transparent, and create clear differentiation. They tell you why their pricing makes sense before they tell you what it is. 

Community banks have all the ingredients for compelling stories: local relationships, personalized service, community investment, expertise. But they communicate in banker jargon about product features and complex fee structures. 

This storytelling gap is costing community banks millions in lost revenue and customer loyalty. 

Coming up in Part Two: The Playbook.