Of all the dozens of products banks sell, few are as essential as the primary accounts of its customers. When I say “primary account” I mean the bank account you use to receive your paycheck, pay your bills and take cash out from. When you think of your “bank account” this is the account that comes to mind.
Since the inception of banking, people have pretty much picked a bank for convenience’s sake, or been assigned one by their parents, never to change banks once in their life. But in the last decade or so with the rise of FinTech and digital banking, people are approaching their primary account with a bit of flexibility.
As digital disruptors have emerged, they are leveraging their leaner operating costs to offer compelling, easily attainable offers aimed at customers interested in switching their primary account. I was just recently poached from the bank I’ve been with since I was a child when a digital upstart pitched a simple promotion — $100 if I switch my payroll deposit to their checking account which, oh by the way, has no fee associated with it.
A couple of emails later and my paycheck was now deposited directly to this new digital bank, and I was on the phone with my previous institution scaling back my plan. I’m probably not their most valuable customer in the world, but I was still a little surprised by how little they seemed to care. I was a customer of two decades who was increasingly a more profitable cog in their machine and they let me go without so much as a whimper.
My point is this — old banks are having their primary account lunches eating by up and comers. But they don’t have to settle for that. Here’s how traditional institutions can grab (and hold onto) the primary account market:
What Makes a Compelling Primary Account?
The trick of offering a primary account incentive, capturing the interest of your customers and keeping them loyal is far from simple. There are complex motivating factors for every customer, and of course your banks profitability to consider.
Not everyone is as simple as me. “No fees? $100? I’m in.” Other people require a bit more persuading, or perhaps a different kind of bonus (like RBC’s iPad, for example). Here’s what you need to consider when ensuring sustainable primary account relationships with your customers.
When first constructing your incentive, you need to consider the factors that make an account “primary.” No factor carries as much weight as direct-deposit payroll, because employees are naturally going to be hesitant to tug on the sleeves of accounting every time they want their payroll switched to receive a new bonus. Once it’s switched, you can bet on some sustainable business.
There’s other factors though. Offering “no fees” while encouraging certain behaviour is a good way to appeal to a new base of customers accustomed to low/no fee banking. By combining no fees on the condition of using several bank products, you can still encourage desirable customer behavior.
When it comes to capturing a customers interest, you need to react fast to market conditions. Is another bank putting out a hot primary account driving promotion? Has a disruptor bank erupted onto the scene offering absurdly low fees and high interest? If you don’t want your lunch to be eaten it’s important to be nimble when it comes to capturing customer interest.
You also want to actually give your customers what they want. That means high quality bonus incentives, which can be costly. To maximize profitability, it’s essential you look for low cost solutions to your product offers. FinTech products (like Zafin, for example) can greatly reduce IT costs for banks looking to be at the top of the heap while remaining profitable.
Here’s the thing — my first ever bank, one of the largest in Canada, lost my business now and probably forever. They couldn’t keep me, and frankly didn’t even try. It’s one thing to get someone to switch their paycheck, but if a new job opportunity comes along, or a particularly enticing competing offer, they might leave like me.
Banks need to be able to track customer behavior and act on it accordingly. If my old bank had reached out with a decent offer, maybe a small fee reduction around the time they could see me beginning to use their services less who knows — I might have stayed.
The way we bank is changing. Customers are comfortable switching between institutions on a whim. I know — I was one of them. But that doesn’t mean you can’t capture and keep their business with an enticing offer.
The right technology will help you drive primary account relationships. Get in touch with us today to find out how.
Zafin (@zafin) is a leading financial technology provider that enables banks to form richer, more personalized client relationships. Built from the ground up for financial services, its platform empowers banks to enhance revenue and operational efficiency. Founded in 2002, Zafin sits among North America’s top FinTech companies, and is trusted by retail and corporate units at some of the largest banks worldwide. Headquartered in Toronto with global offices, Zafin has a proven track record with a 100 percent client retention rate as validation.
Cam is the Digital Communications and Marketing Coordinator at Zafin. With a background in journalism and a passion for blogging, Cam strives to tell compelling digital stories. At Zafin he will share the latest trends and news in the FinTech world, and share the Zafin role as leader in the industry. Follow him on Twitter @CamSmoth
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