The Price of Trust - Part Two

Why Community Banks Must Rethink Fee Strategies

The Playbook 

Knowing you need to change and knowing how to change are different challenges. Based on banks that have successfully made this transition, here's the playbook: 

1. Choose Where to Play 

You cannot serve everyone. This is the hardest truth for community banks to accept. 

Are you the bank for traditional businesses valuing personal service and in-person relationships? Tech-forward startups wanting everything digital? Retirees seeking simplicity and stability? Multi-generational family businesses balancing tradition and innovation? 

Make the strategic choice about which customer segments you're optimizing for, then design products and pricing specifically for them. A checking account designed for a 23-year-old should look nothing like one designed for a 73-year-old. 

When one banker was asked about charging for paper statements, the insight was clear: "If you are a bank and you're deliberately catering to elderly customers who don't like working with technology, they're not going to do electronic payments. A checking account that has free paper statements and free checks—that's a value proposition to that demographic." 

Know who you're for. Design for them specifically. Price for the value you deliver to them. 

2. Build Products that Offer Genuine Value 

You will struggle charge premium prices for commodity products, no matter how good your story. Through customer research—real conversations, not surveys—identify what consumes their time but doesn't require strategic thinking. What administrative tasks distract them from growth activities? What causes anxiety in their financial lives? 

Build products that solve these real problems. Bundle services around customer journeys, not your org chart. If your commercial customers struggle with accounts payable, cash flow management, and fraud protection, create a bundle that addresses all three—not three separate products they have to piece together. 

3. Tell the Value Story 

Translate features into benefits. Don't say "ACH origination"—say "pay vendors automatically, save hours every month." Use the language your customers actually use, not banker jargon. 

Make pricing simple and transparent. If your fee schedule requires a calculator and a decoder ring, it's too complex. Move toward tiered pricing that customers can understand at a glance: Basic, Professional, Enterprise. Each tier clearly shows what's included and what outcomes it enables. 

Show the "why" behind your pricing. Help customers understand not just what they're paying, but what they're getting and why it's worth it. "For $50 per month, we handle all your accounts payable and save you 10 hours of administrative work" tells a much better story than "AP automation: $50/month." 

4. Start Small and Learn Fast 

Don't overhaul everything at once. Choose one product or customer segment. Develop a new offering with clear value bundling. Price it confidently from the start—don't undercut yourself. Market it as a new option, not a replacement for what exists.

This gives customers choice and gives you room to learn. 

Gather feedback relentlessly. What resonates? What confuses people? What would they pay more for? What feels overpriced? Use these learnings to iterate quickly and inform your next product launch. 

This approach limits risk, enables rapid learning, creates internal proof points, and builds organizational confidence for larger changes. 

5. Manage the Cultural Shift 

Here's what rarely gets discussed in pricing strategy conversations: the hardest part isn't the pricing model, product design, or customer communication. It's the internal cultural shift. 

Relationship managers will worry that charging for services will cost them customers. Branch staff will feel uncomfortable having conversations about fees. Executives will face pressure from board members who remember when the bank's reputation was built on relationship banking and flexibility. 

You need to reframe the conversation fundamentally: charging for value isn't anti-customer—it enables investment in better products. Giving services away for free isn't customer-friendly—it's telling customers their business isn't valuable enough to invest in. 

Use data to build conviction. Share the research showing customers who pay for services are more loyal, not less. Celebrate when customers choose premium tiers, that's validation of your value proposition. Track non-interest revenue as a percentage of total revenue. High performers are around 20%, best-in-class approaches 30%. If you're significantly below that, there's massive opportunity. 

One banking leader put it bluntly: "I wouldn't underestimate the cultural impact of enforcing strategic pricing models and the blowback that you suddenly become 'not customer friendly' and 'just becoming like all the other big banks.' It's not a small effort to get there with a pricing discipline." 

But it's worth it. Because the alternative is slow commoditization and margin compression. 

The Competitive Imperative 

Interest rates are falling, and the next credit cycle is looming large. Net interest margins will compress. Fee income isn't just nice to have anymore—it's essential for profitability. 

But there's more at stake than economics. Free banking doesn't create loyal customers—it creates price-sensitive customers who'll leave for slightly better terms. When you undervalue your services by giving them away, you train customers to undervalue them too. 

Here's the opportunity: most banks are still commodity-focused, still competing on free checking and deposit rates. As one banker observed after extensive customer research: "It doesn't even require a significant amount of value to make that impact on customers. The rest of the industry is commoditizing themselves. So standing out does not take much." 

The bar is remarkably low. Customers have unresolved pain points everywhere. The industry has trained them to expect so little that modest improvements feel revolutionary. 

The banks that act now—that build genuinely valuable products, price them based on value delivered, and tell compelling stories about that value—will capture disproportionate advantage. They'll have the resources to continue innovating.

They'll attract the best customers. They'll build relationships based on mutual respect and recognized value. 

The banks that wait, that continue competing on "free," will watch margins compress, struggle to fund innovation, and gradually lose ground to competitors who learned to charge confidently. 

Your Next Steps 

Ready to start? Here's what to do: 

This week: Audit your fee schedule through a customer's eyes. Pull it up right now. Could a typical customer easily understand what they'll pay and why? If not, that's your first problem to solve. 

This month: Conduct 10 customer interviews. Use a structured script but let customers drive the conversation. Ask about pain points and what they'd be willing to pay for. Really listen. Analyze your customer segments—who are your most profitable customers and what do they genuinely value? 

This quarter: Design one pilot product for a specific segment. Bundle services that solve related problems for them. Price it based on value delivered, not just costs covered. Make the communication customer-focused, not product-focused. Launch it. Learn from it. 

Remember the fundamental principle: value creation precedes value capture. You can't charge for value you haven't created. But once you've built something genuinely better, you must communicate it clearly and price it confidently. 

That's how you earn the right to charge.