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Financial institutions continue to suffer under depressed net interest margins and the resulting decay of their interest-based revenue sources. To survive and ultimately grow, both banks and credit unions have adapted to the economy through income diversification via fee-based, non-interest revenue streams. Most financial institutions have also made considerable investments in technology to enable them to offer additional fee-based products as well as operate more efficiently and profitably.
Both of these strategies are well founded, but rely on the financial institution’s ability to attract new account holders and to encourage a larger percentage of their account base to adopt cost saving, technology-driven services such as Direct Deposit, e-Statements, Check Cards and Online Banking. This is no easy task, given the highly competitive (and often generic) nature of the banking industry, the assets that mega-banks can apply to marketing campaigns, and the weak adoption rate of technology-based services.
To attract new account holders, virtually every financial institution attempts to develop a product that truly differentiates itself from its competition. Banks and credit unions have spent a number of years marketing a free checking service to entice the consumer to their institutions.
Free Checking
When free checking was first introduced, it represented a truly effective marketing tool. But now, with every other bank and credit union offering this product, it has become a commodity service that offers little or no competitive differentiation and serves questionable value in developing profitable relationships with account holders. For example:
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Free Checking account holders maintain an average account balance of $1,200
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They make about six debit card transactions per month
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Fewer than 35% actually use Direct Deposit
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1% receive an e-statement
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25% use online banking services
Furthermore, these free checking account holders only stay with their financial institution for about 5 years and generate an average of $215 in annual profit. This means that on average, each free checking account holder delivers a lifetime earning input of only $1,075.
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Technology-Driven Services
While many consumers have adopted to the concept of online purchasing, use of the internet for online banking services has been more of an uphill battle. Unfortunately, much of the cost savings (and bottom line improvement) associated with technology-based services depends on consumers adopting multiple online banking services.
Now, aren’t you ready for real differentiation, real earnings potential, and real return on your technological investments? It’s here. And it’s called Reward Checking.
REWARD CHECKING
Rewarding Customers with High Interest Rate Checkingand Refunds of All ATM Fees
Unlike common free checking accounts, Reward Checking is a free checking with no minimum balance high-rate checking account that is earned and maintained by meeting specific technology-based requirements. As an additional incentive, Reward Checking account holders are also reimbursed for all charges if they use other financial institutions’ ATM.
The Reward Checking program is flexible and can be tailored to fit your particular needs -- ensuring the right combination of Reward and Requirements. Because Reward Checking is tied to other required services, account holders are converted to the use of technology-based cost saving services that strengthen your bottom line. Commonly required services linked to Reward Checking include:
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Switching to Online Banking / e-Statements
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Making a minimum number of debit card transactions
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Using Direct Deposit / ACH
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Email Correspondence
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IVR Access
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Billpay
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Use of other institutional products (loans, mortgage, etc.)
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