No. 8 - The cost of current accounts

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by Pietro Paolo Napolitano, Alessandro Scognamiglio* April 2017

In November 2016 the Bank of Italy published the outcomes of its last survey on the cost of bank current accounts. The survey estimates the average cost of households' current accounts on the basis of the fees and commissions other than interest actually charged during the previous year. Being the fifth survey, it can be used to evaluate the trend of costs of current accounts and their determinants since 2010.

This note shows the following main outcomes:

- The actual cost of a “representative” account was 85 euros as an average in the period 2010-2015 and 77 euros in 2015 (last available year).

- The cost diminished almost without interruption between 2010 and 2015, by 3.4 per cent on average. Such decrease was mainly due to lower fixed charges, in particular the annual fee. Another determinant of the cost reduction was a decrease in the variable fees, due to the decline in the average unit cost of transactions; indeed, the latter phenomenon more than counterbalanced the increase in the average cost due to a growth in the number of operations.

- During the five years observed, the actual cost for more recently opened accounts decreased more than the average. It reflects primarily the different composition of banking services used in this type of accounts; it is also due by commercial offers providing cheaper fees in order to acquire new clients.

- In the observed period the Comprehensive Cost Indicator (CCI) remained constantly and significantly higher than the average actual cost (157 compared to 85 euros), with no direct connection between the dynamics followed by the two indexes. CCI consists in an estimation of costs based both on hypotheses about customer behavior (which can differ from the actual behavior) and on hypotheses about banking services prices (which are set to the maximum charges advertised in the information sheets). Such hypotheses are responsible for the large difference between the two indexes.

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* Bank of Italy – Directorate General for Financial Supervision and Regulation.
Email: alessandro.scognamiglio@bancaditalia.it, pietropaolo.napolitano@bancaditalia.it.
Our thanks go to Paolo Angelini for having read the various drafts of this note and for his useful suggestions. We also wish to thank Vincenza Marzovillo and Maria Grazia Miele.

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