PNC Financial Services Group CEO Bill Demchak thinks customers should start viewing their bank like a cable or cell phone company, expecting to pay for services instead of getting them for free.
"For 30 years, we've basically conditioned customers to think banking is a free product ... It's in the Bill of Rights," Mr. Demchak said.
But the costs of increased regulatory compliance, record low interest rates and federal caps on overdraft and swipe fees have squeezed financial institutions to the point that they can't make a living under the current retail banking system, Mr. Demchak said during a financial services conference in New York City Monday.
"The model in which the industry has operated for decades is just not sustainable today," he said. "The old model is basically broken."
PNC has been moving in recent years to reshape its banking franchise for the future.
Pittsburgh's biggest bank closed 60 traditional branches across its multi-state footprint last year and expects to close another 200 this year as more customers bank electronically.
Through the first six months of this year, PNC eliminated 600 traditional teller positions, shifting many of those people to sales and call center jobs, Mr. Demchak told analysts.
The bank also is experimenting with lower-cost tellerless branches that rely on advanced-function ATMs to accept deposits and cash checks.
On the fee side, PNC announced in June that it would be phasing out free checking accounts over the next year.
Mr. Demchak on Monday wasn't specific about what new fees might be coming, but he previously had mentioned a charge of perhaps 25 cents for the convenience of making a deposit via mobile phone.
He promised PNC would be transparent in its pricing so that customers wouldn't be blindsided by charges for services they didn't want.
He also indicated that customers who meet "relationship criteria," traditionally those with big deposits or loan balances, would avoid many fees.
Pittsburgh-based PNC reported profits across all of its businesses of $2.83 billion for 2012, down from $3 billion in 2011.
Mr. Demchak, who took over as CEO in April, told analysts not to expect PNC to make any acquisitions in branch banking for the foreseeable future as it focuses on growing in the southeast with the recent acquisitions of RBC and Flagstar banks.
"It's hard to see where [acquisitions] are going to play a role on the retail side," he said. "If we execute on what we laid out ... there's no need to be any larger than we are, except through organic growth."
Patricia Sabatini: email@example.com or 412-263-3066.