While thousands of Americans unleash their anger at big banks in protests around the country, many more are registering their dissatisfaction at their keyboards.

In the wake of Bank of America's announcement that it is adding a new $5 monthly fee for debit card use, online-only banks are seeing a wave of new business.

On Friday PerkStreet Financial had twice as many new customers sign up as usual. The next day even more users signed up.

"The Bank of America news woke everyone up and spurred change,"
said Perk Street's CEO Dan O'Malley in a phone interview.

PerkStreet, which launched in late 2009, is part of a new breed of online-only bank--all aiming to capture consumers looking to escape fee increases at more established banks.

Bank of America (BAC) isn't the only institution to come under fire after raising fees. In a recent mailing to its customers Citibank said it would double the monthly service charge on EZ Checking accounts from $7.50 to $15, in November.

Citibank said it has been encouraged by the response of its customers and is using the opportunity to help them understand the diversity of account options, including no fees on debit cards or online services, said Citibank spokesperson Catherine Pulley. On Wednesday, Bank of America's CEO defended the bank's new $5 fee saying the bank has a right "to make a profit."

In contrast, a PerkStreet's no-fee checking account is free to open with a $25 minimum and earns debit-card rewards, including free coffee, music or cash. Online-only ING Direct's (ING) free Electric Orange Account earns .24% interest on accounts of up to $49,999. Free interest checking accounts at online Ally Bank have variable interest rates based on monthly balance, and no monthly fees.

Big banks defend the new fees and hikes as necessary to recoup revenues lost due to recently enacted consumer protection laws, but the consumer zeitgeist is quickly changing, as evidenced by the Occupy Wall Street protests. O'Malley said he thinks this moment will be remembered as a turning point for consumer banking. The American Bankers Association is pointing the finger at government regulations as being a root cause of its fee increases, even as the general perception on Main Street is that the new fees are just revenue grabs by greedy bankers.

Brick-and-mortar banks are seeing large numbers of customers shift to online banking, which has had an effect on the popularity of branch banking. For the first time since 1995, the number of branch storefronts in the United States dropped last year, according to the American Bankers Association. A recent ABA survey showed that 62% of banking customers prefer online transactions -- a huge increase from the 32% who felt that way in 2009. Spokespeople at Bank of America and Citibank couldn't be reached immediately for comment for this article.

Brick and Mortar Still Has Advantages

Online banks like PerkStreet, ING Direct and Ally Bank, all face certain common challenges, such as how to deal with actual paper checks, and how to give a human touch to customer service. Customer reviews on MyBankTracker, an open forum for customers to review financial products, showed that deposit turnaround and customer service are two of the biggest sources of complaints for online banks in general.


CNNMoney: BofA: We Have a 'Right to Make a Profit'

Catherine New is a staff writer at DailyFinance. You can reach her at catherine.new@huffingtonpost.com.



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Scott Mitchell

I run a site about online banks, http://onlinebanks.com and I can attest to the increased interest.

It's amazing that more customers haven't turned to the array of online options available. I think 2012 is going to be the turning point for online banks, as the rise of smartphones has made it dead simple to bank from your phone.

Good riddance brick and mortar banks!

January 09 2012 at 2:34 PM Report abuse rate up rate down Reply
J. Roy Brown

I have a neighbor who was told by bank of America that if he came up with around $4000 they would allow him to modify his home loan and avoid foreclosure. He did by selling his car and almost everything he had and after he gave them the money they still foreclosed on him. I have heard of several other similiar actions by banks. this is not working out like the government promised. I don't really support the protesters on wall Street but something is wrong here.

October 10 2011 at 9:51 AM Report abuse rate up rate down Reply
ginsyb

Big banks have been duping their customers and the public for decades. They have been about profit ever since they were created, but not nearly so as they have been for the last 30 years. An example is my father. He had several accounts (debit, loan, checking, savings) with BofA for over 20 years. All that time he was never informed he could have had a cheaper account because he was a senior (I'm talking checking account). He was charged a monthly fee of $20 for his checking account.. So the bank got to make at least $6000 off of him, while he had his account with them. Yes, he should have shopped around, but he was a senior, trusting that he would not be ripped off by his bank and grateful that he was recognized by bank employess whom he could chat with and befriend. Just saying

October 10 2011 at 7:05 AM Report abuse rate up rate down Reply
kimarkintl

Stop using the large corporate banks that FEE us to death. They do not have to lend money anymore they just raise fees and credit card rates.

The best solution to the problem is for the people to unite and pull their business from these banks. I can absolutely assure you that this is the only message that they understand.

October 10 2011 at 4:53 AM Report abuse +1 rate up rate down Reply
toosmart4u

It is just greed on the large corporations and banks. The government regulations were on credit card fees caused by the greedy banks. That is why large corporations like the GOP for them set their own policies. The financial melt down was due to no regulations on the banking industry. We cannot trust them.

October 10 2011 at 3:33 AM Report abuse rate up rate down Reply
qaqs9000

Today they aren't even journalists. Most just call themselves commentators. Like FOX wanabe news has hired all commentators so they don't need to do real news no fact checking and extensive spin doctoring to the whim of right wing nut jobs. Don't you just love it. And it provides the perfect excuse when you get caught in a brazen lie or two.

October 10 2011 at 2:47 AM Report abuse rate up rate down Reply
obabystar

Banl of America bought and took over ING months ago!!!

October 09 2011 at 11:49 PM Report abuse rate up rate down Reply
terry

Stupid reporter doesn't parse the term wall street banks from retail banks. Does the term investment bank ring a bell? Journalism degrees are apparently handed out at the local gas station now days.

October 09 2011 at 11:37 PM Report abuse rate up rate down Reply
1 reply to terry's comment
Googie Bergdorff

Unbelievable. Any moron can become a journalist apparently.

October 10 2011 at 1:29 AM Report abuse -1 rate up rate down Reply
1 reply to Googie Bergdorff's comment
Googie Bergdorff

Oops. I just noticed that it's just the headline/ link from AOL which characterizes this as a move from Wall Street to online banking, not the author or Daily Finance. So it isn't the writer's fault that AOL put a moron like Ariana Huffington in charge of the news and she hired a bunch of stupid lefties to characterize stories they link to.,

October 10 2011 at 1:34 AM Report abuse rate up rate down
cljvedelman

Join and use your local credit union. The banks can cram it. Dry up and blow away. I will NEVER open an account with them again.

October 09 2011 at 9:57 PM Report abuse +2 rate up rate down Reply
Paul Harris

I hear the economy is so bad that B of A and Citibank had to layoff 5 members of Congress!

October 09 2011 at 9:01 PM Report abuse +8 rate up rate down Reply