This is the first part of three+one’s Summer Blog Series . As there are five Tuesdays in August, I will be addressing the top five questions the nation’s public and Higher Ed financial officers ask me as I travel across the country. Today’s question:

Given there are less bank branches and more efficient online banking services, how come my banking costs aren’t going down?
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Over the last several months, Pete and I have had the opportunity to speak at a number of finance-related conferences. At each one this question has come up: “Given fewer bank branches and greater advancement in technology, will my banks costs go down?”

The answer is both “yes” and “no.”

First the “no.” Given the higher risk and increased compliance mandates established by the Dodd-Frank Wall Street Reform Act*, banks of all sizes have a batch of new costs to deal with.

While fewer bank branches and a reduced support staff do help, banks have had to add compliance personnel to meet new audit and “Know Your Client” demands. It will take a while for banks to fully adjust to the staggering costs of their new reality.

For the top-tier banks, the added costs of federal oversight are in the billions. Regional banks are seeing new costs in the millions. Even small community banks will be spending hundreds of thousands of dollars to fully comply.

Naturally, these costs are then passed on to their customers with higher checking/ATM fees and lending rates along with lower deposit rates.

Now for the “yes.” Bank fees will likely move downward as technology continues to advance thus making them more efficient. I also see banks benefiting from higher interest rate spreads—but all this could take four to five years.

*Already 22,000 pages thick and more are expected!

Stay tuned for next week when we continue our three+one Summer Series where we answer the question: “Why are banks no longer interested in my deposits?”