Bring Loyal Customers Back to Fee-Based Checking Accounts with Value-Added Benefits

Author: Mark Anderson

Take-away: Providing additional benefits will bring loyal customers back to fee-based checking accounts by adding value and security while helping you generate non-interest fee income. 

Understanding the Challenge

Free checking accounts have become a commodity. Consumers no longer feel allegiance to stay with a single financial institution for all their financial service needs, as lower interest rates, mobile apps, smart phones, digital banking and fees have become the differentiator of consumer choices and spending. At the same time, margins are tight and financial institutions are searching for ways to generate non-interest fee income.  

In response, financial institutions are seeking to bring loyal customers back to fee-based checking accounts. It’s a game changer for both consumers and financial institutions alike. Consumers receive services that help them manage and safeguard their financial integrity and wellbeing, and financial institutions increase non-interest fee income and derive a more profitable relationship with their account holders. 

And, the strategy has an added benefit of conveying the message of “we value you” to the consumer. In the past, financial institutions have tried to add fees to checking accounts, but most were unsuccessful. Only when consumers see real, added value will they be willing to pay for a service they’ve always received free. 

Four Reasons Why It Works: Bring Loyal Customers Back to Fee-Based Checking Accounts

As a financial institution, you might be wondering: Does this really work? Or, will my customers accept the new fee, or move their business elsewhere? The answer is: If the consumer perceives value, it works. 

Approximately 70 to 80 percent of consumers on average typically stay with their financial institution when they transition to a fee-based, value-added checking account. The remaining account holders remain at the financial institution in an alternative limited value account.  

Here is why this works: 

1. Maintain your market share and retention. With the Amazons of the world potentially offering more services for a fee, you could stand to lose market share by having consumers leave for a fee based account that is constructed to deliver more value. The perception of value is changing. Be in tune with what consumers value.  

2. Free doesn’t equal value. Consumers continually demonstrate that they are willing to pay more for  what they perceive brings them more value. Additional fee-based checking benefits might include  financial institution perks like no ATM fees, mobile banking, free online bill pay, discounts on safe deposit box, Netflix discounts or a pack of free checks, as well as third-party benefits including: roadside assistance, accidental death, identity theft coverage and credit monitoring, cellular phone protection, travel or leisure discounts and more. 

3. New account opening experience. When consumers are provided with services they did not expect  from their financial institution, a new account opening experience is born. Educate all employees on the program – from the C-suite down to the front desk employee. Everyone should have the ability to answer basic questions and promote the program to inquiring consumers. It also gives retail staff new, compelling talking points to discuss with potential account holders.  

4. Provide real value in the benefits. Know your consumer base and populate your benefits program  accordingly. For example, free credit monitoring alerts and roadside assistance may appeal to one  community, while discounted movie tickets, or cash back shopping rewards might appeal to another.  

How to Engage Consumers

Engaging consumers with legitimate added benefits and a better experience is the key to maintaining a happy, loyal customer base while meeting the current and future needs of your financial institution simultaneously. If you would like to find out how your bank or credit union can take advantage of fee-based checking with consumer benefits, contact us today.

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