Frankfurt Bank customers in Germany have to be prepared for the fact that many current accounts will become more expensive this year. About half of the credit institutions are targeting fee increases for 2022 or have already raised the prices for checking accounts. This was the result of a survey by the consulting firm EY among banks and savings banks.
Specifically, 34 percent of the financial institutions are planning to increase the fees for current accounts. 15 percent have already done so this year.
In addition, the prices for transfers and credit cards are increasing at around 40 percent of the banks. EY had 109 credit institutions surveyed in January and February, with only the providers with private customers responding to the prices for accounts and cards.
A survey by the consulting firm Sopra Steria recently identified a similar development: According to this survey, every second bank is tightening the fee screw – by increasing prices or introducing new fees.
Current account prices have already increased significantly. According to the Federal Statistical Office, the fees increased by a total of 25 percent in the four years between 2015 and 2019. There are fewer and fewer free accounts with no strings attached, such as a minimum monthly deposit.
EY financial expert Thomas Griess points out that it has become more difficult for banks to operate profitably. “So the banks are still thinking intensively about new sources of income.” According to Griess, the background is that the interest income, which is so important for the industry, has melted away due to the mini interest rates in the euro zone and that financial institutions are being regulated more closely, which entails costs.
BGH ruling clarifies conditions for price increases
Recently, however, many financial institutions have issued fee increases or even stopped them. The reason is a judgment of the Federal Court of Justice (BGH) from April 2021. According to this, financial institutions must obtain the express consent of their customers for changes to the general terms and conditions (GTC), for example price increases (Az. XI ZR 26/20). The Federal Association of Consumers had sued the Postbank, which had raised prices several times in recent years.
Up until the verdict, banks and savings banks had usually increased the fees via the existing terms and conditions clauses. They assumed that customers would tacitly consent if they did not object to a change within two months. Since very similar general terms and conditions are used in the German banking industry, the BGH decision is considered to be decisive for the entire industry.
After the BGH judgment, some credit institutions have withdrawn previously announced or even recently implemented price increases. Others are likely to have pushed their projects back in order to first examine the exact consequences of the BGH decision. It is obvious that a number of financial institutions are now catching up on fee increases that have already been planned.
From the banks’ point of view, however, it is difficult to get all customers to accept the new prices. Even after months of contacting them multiple times – by post, online banking or in the branch – numerous financial institutions have only received approval from previously implemented fee increases from 70 to 90 percent of customers. The big question is how they deal with the remaining customers: whether the financial institutions will terminate them or accept that some pay less fees.
While most credit institutions are still reluctant to give notice, at least for the time being, Postbank, which belongs to Deutsche Bank, recently began terminating customers who do not agree to the current terms and conditions and prices as of April 30. Customers of Deutsche Bank and Norisbank also have to prepare for this step.
Acceptance of terms and conditions by continuing to use the account
Nevertheless, Postbank gives affected customers a little more time – and again relies on a kind of silent consent: If customers continue to use their account from May 1st, they automatically accept the current terms and conditions, Postbank explains in a customer letter. This can be done with a single bank transfer, card payment or withdrawing money from an ATM. EY also assumes that some banks assume so-called implied action if the account is used further, as study co-supervisor Robert Melnyk says.
The Berliner Sparkasse is one of the major financial institutions that have announced fee increases. It increases the price of current accounts by 1.95 euros as of July. The “Giro Flat Rate” account then costs EUR 8.95 per month. The Sparkasse had previously raised prices in 2016.
The strong competition in the German banking market ensures that account prices have not risen more sharply so far. According to a study by the consulting firm McKinsey, bank customers in Germany only pay an average of 135 euros per year for everyday banking services. The European average, on the other hand, is 256 euros.
At the same time, there will be significantly fewer bank branches in Germany in the future. Around 60 percent of bank managers surveyed by EY expect the number of branches to fall by a further 20 percent by 2025. 20 percent each expect the decline to be stronger or weaker.
However, a drop of 20 percent within three years would mean that the trend towards branch closures is not accelerating. The Bundesbank had around 24,000 branches at the end of 2020, ten percent fewer than a year earlier. In 2005, there were almost twice as many branches, at a good 44,000.
Financial institutions can save costs by giving up branches. Above all, however, more and more consumers are largely doing their banking digitally and no longer come to the branches at all.
More: Without consent to current conditions: Postbank terminates current accounts