By Greg Crandell
Money--or more precisely, the lack of it--is getting extra attention at my house. With two kids in college, a high-maintenance greyhound and a gas-consuming car, you could say finding more ways to spend less has taken on a greater importance. And I’m not alone.
Like most families, we’ve had to figure out what gets less money, less time and less attention. But having the kids drop out of school isn’t an option, the dog has to eat, and I’m not willing to bike to work--so we’ve found other ways to tighten the belt to better manage the family budget.
Financial institutions face a similar challenge in light of shifting interchange fee regulations. And much of the chatter seems to center less on cutting costs and more on increasing revenues … as in eliminating free checking, one of the most beloved of all banking services. An AP article I recently read, “Checking accounts set for unwelcome transformation,” makes the point. Quoted was Bart Narter, banking analyst with Celent: “Banks have two ways they can cope: they can cut costs or they can raise revenue. They are going to have to charge you for things that they used to give away.”
Not the news consumers want to hear. And if we think people are going to sit tight and just wave goodbye to free checking, we should think again. Many businesses stand ready to welcome people looking for alternative banking options--companies such as Walmart, PayPal, Amazon. Remember, they already have established, trusted relationships with many of these consumers, so stepping in to fill the void may not be that tough. Consider a First National Bank of Walmart, where disillusioned bank customers will find free checking and free bill-pay--plus 30 percent off an oil change and a 2-for-1 special on Frosted Flakes. It’s not too far-fetched.
Bottom line: Now is the time for credit unions to do everything in their power to provide members value and convenience--and that includes keeping free services free through tightening the budget belt. Here are some cost-saving moves you can put into practice right now:
- Move it. Shift your current online banking members to e-statements only--and make e-statements the default for your future online banking members. These tech-savvy members are comfortable using digital services and are already tracking their accounts online, in near real time. You already have their email addresses … so get it done.
- Type it. Increase the use of email and text messaging for sending notices and alert messages to members. Honestly, does it make any sense to snail-mail an insufficient funds notice or low-balance alert today? To me, it’s like mailing a photo of silverware to a person choking, with instructions to “cut your food smaller.” You’ll also save an estimated $0.75 each by emailing/texting messages rather than using the post office. Build your online database by collecting email addresses and requesting cell phone numbers when signing up all new members. And pursue all members for this service, whether online banking or mobile banking users.
- Sell it. Schools sell ad space on their scoreboards. Grocery stores sell ads on their receipts. Why shouldn’t credit unions use their e-statements or electronic newsletters to best advantage? Work with local partners to support your community. Reach out to business friends, sell some cheap ad space, or offer some special, Groupon-like deals. You’ll make a little money but, most importantly, you’ll be increasing member value.
Remember, for many consumers, free checking has long been considered a “given.” Finding ways to keep it that way--especially when your competitors are not--can set your credit union apart from the crowd while reiterating the value of credit union membership.
Greg Crandell is executive vice president of DigitalMailer. Reach him at 866.994.4900.
Considering how checking fits in with your other service delivery channels? Be sure to attend the CUES School of Product and Channel Management, Sept. 28-29 near Chicago.
Replace fee income with such alternatives as Cash Banking Solution.
