Think twice before you give away mobile services

Funny thing about interactive media. They’re not free. That, however, is not the funny thing. The funny thing is that, somehow, users think they’re free.

You can hardly blame them. Site after site serves up information and applications galore at no charge. The idea that someone paid millions of dollars to provide those “free” services is lost on them.

This is partly due to the fact that we’re not prescient. Had we been, we might have figured out that providing some free services would create an expectation for more free services, which would, in turn, make “free” the industry standard. And we might have foreseen that once users got it into their heads that there was no need to pay for interactive services, getting them to pay later on—and like it—would be next to impossible.

Mired in the days when there were fewer bank services on the table and loan revenue allegedly covered them all, many people haven’t adjusted to fees for checking and savings, much less more costly-to-provide financial services. Banks and credit unions that continue giving away their services enable clients to remain blissfully oblivious to the fact that providing services costs money, that someone has to pay for it, and that loan revenue alone doesn’t pick up the tab.

So it was that, in the early days of online banking, a few brave banks tried charging for it, but pressure from competitors that didn’t charge forced their capitulation.

Given the fast-growing, dog-wagging tail that mobile banking has become, and given that developing an app can cost upwards of one to five million bucks, the cold, hard reality is, we cannot keep giving this stuff away.

Some institutions beg to differ. They maintain that giving away mobile services will pay for itself in retention and growth. If that’s your strategy, more power to you—unless, this time, you’d care to exercise that bit of prescience we failed to exercise when, to our eventual detriment, we allowed free checking and savings and, later, free online banking to become de rigueur.

Right now, research and experience show the market is amenable to fee-for-mobile. This isn’t the time to wimp out. This is an opportunity, at last, for banks to acclimatize clients to the good-old-fashioned American principle of paying for what you get.

Trouble is, you can bet that not a few financial institutions will give away mobile services, just as they give away everything else. Let’s hope they don’t leave the rest of us little choice but to follow suit. Otherwise, in a few years, we’ll be right back where we are now vis-a-vis other services, saying, “Gee, we’re losing money, but how can we start charging for what we’ve trained the market to expect for free?”

Incidentally, training the market to expect something for free is tantamount to telling them it’s not worth paying for. Don’t think that’s serious? Look what happened to newspapers. Good luck to us all.

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