Avoid the “checking account of the month club” headaches

Consumers are streamlining their finances into less accounts.  They want instant access to their entire financial picture by logging on to one website or through a single app on their phone to check balances and transfer funds.  If consumers’ needs are changing, so must we.

When a new member comes in to open a new account, this time is extremely valuable and may be the most time we ever spend with them one-on-one.  We need to make every minute count.   If your team is spending 10-15 minutes reading through the “menu” of checking account options, you are wasting valuable time.  Some credit unions are maintaining many accounts that come with different qualifications, varying benefits, a wide range of costs, and then overwhelming their members in regulatory fine print for each account. It’s too much! Consumers are seeking a free checking account, plain and simple.  Wouldn’t you rather spend that time asking about financial needs and building a relationship with your new member?

We recommend you avoid:

  • Checking products with multiple qualifiers that are often designed to benefit just a portion of the members, leaving the rest unhappy.  And reviewing all the necessary qualifications and benefits consumes valuable time during the new account opening process.   
  • Having more than three checking account options.  Narrowing down the options can be confusing to new members and again wastes valuable time.

The financial industry has conditioned consumers to think free checking should be available to everyone and that’s why changing to a fee-based account has been such a challenge.   We recommend to keep your account line simple and straightforward with two checking account options:  an interest-bearing account and an account that has no service charges.   Imagine the time you could save by asking a single question to qualify the new member: “Is earning interest important to you?”  

Use Time Wisely

The extra time can be used to ask about the member’s financial needs and assisting in moving over their other accounts as well.   Questions should revolve around financial products elsewhere and future financial needs.  

The new account opening process needs to center around the member, not your products.  If the member’s needs and your products happen to align, then you have the ideal opportunity to provide great service by presenting relevant, valuable products. Here is an example of a simple account opening process:

  1. Explain checking account options
  2. Discuss debit card and Reg. E options
  3. Ask questions and listen to uncover member’s needs
    • What other financial products do you have elsewhere?
    • It’s recommended to have an emergency fund of two months’ salary. How would you rate yourself on your emergency fund?
    • Are you planning on borrowing money in the next six months?
    • Are you happy with your current retirement saving strategy?
  4. Offer to assist with moving direct deposits and automatic payments as well as savings, money markets and CDs from other places.
  5. Set up future contact and build the relationship with the best way and time to reach the member.

Use Revenue Streams

Of course, all credit unions need to drive profit, and your job is to contribute to this goal while providing first-class member service. Compressed margins create a need for non-interest income, so how do you create the perfect marriage of excellent member service and profitability? We recommend you find that revenue through offering benefits for which members are willing to pay, and to which they are happy to opt-in.  One example of how you can achieve this is through debit card products.  Many of our clients offer three debit card choices:  

  1. A basic free debit card
  2. A Gold debit card that comes with many benefits and services for a monthly fee
  3. A Platinum debit card that offers even more benefits for a monthly fee

And this works remarkably well for these clients.  Many of the perks that come along with these premium debit cards are for services, benefits and even merchandise your members want and need, and are likely paying for elsewhere – such as emergency roadside assistance, prescription savings, convenient access to small-dollar loans, extended warranty and cell phone protection.  On top of that, these premium cards are powered by a rewards platform, so members can earn points for their expenditures that can be redeemed for household goods, electronics, gift cards and even vacations.

In a survey conducted by Mercator Advisory Group, almost 70% of debit card holders used their cards more often due to rewards.  (Mercator Advisory Group, “Consumers and Debit in the U.S.: Rising Demand for New Services.”)  Another survey polled U.S. consumers’ top reasons for switching financial institutions, with the number one reason being “New financial institution has better rewards or offers.”  Surprisingly, this even beat “New FI has higher interest rates for savings/CDs/checking” by two percentage points. (Mercator Advisory Group, “Omnichannel and Brank Banking: Remember and Reward Your Customers.”)

If your members are already paying for such benefits, wouldn’t you prefer to keep that revenue for your credit union? And wouldn’t your members prefer the convenience of dealing with their own credit union rather than multiple service providers?  

When it comes to checking account choices, keep it simple to streamline the account opening process and make it as easy as possible for prospective members.  But with debit card options, why offer just one?  Can you imagine a credit card company that offered only one card option? There’s no reason why debit cards shouldn’t offer the same type of premium benefits that your members expect from a credit card. It’s time to start thinking differently.  Consolidate your checking products so it’s easier to open new accounts.  Give your members the option to choose the services and benefits they want and need, so they can rely on you more, and less on other service providers.  You’ll make their lives easier, develop stronger member relationships, and you’ll see the difference in your bottom line.

Cindy J Draper

Cindy J Draper

Cindy J. Draper is a Retail DDA Strategist and Director of Training at Velocity Solutions. Cindy has over 20 years of experience in the banking industry. She has worked her ... Web: myvelocity.com Details