BIRMINGHAM, Ala.—It takes the "wow factor" to dislodge members from checking accounts they hold at FIs outside the credit union, says Dennis Dollar.
The former NCUA chairman and Dollar Associates principal holds that opinion because checking accounts are sticky. Dollar contends it takes something extra to persuade members, who already like the credit union, to bring over their checking relationship.
"It is a service penetration issue that requires a reason that matters in order to bring about a change," Dollar told Credit Union Journal.
Dollar, and several CU executives, discuss the approaches needed to increase checking penetration with existing members and persuade bank customers to bring their business over.
1. Reward Members
Dollar points out that despite credit unions prioritizing checking accounts in recent years, with more than four million new accounts opened since 2010, less than 50% of members use credit union checking accounts.
With room for growth, Dollar sees "reward checking" programs, although they come with costs, proving to be the most effective at increasing checking penetration. "Earned interest, ATM surcharge refunds, iTunes dollars, charity contributions, no-holds deposits all of these are being used in one form or another to drive checking growth."
Dollar added that robust mobile applications, video capture of deposits, dynamic bill pay and text notices all "have come of age and are quickly becoming part of the price to play in the checking competition arena."
2. Members Want Cash
The $3.6 billion Redstone FCU, Huntsville, Ala., is focusing on convenience and value with the launch or five new checking accounts, said CEO Joe Newberry.
Of the five new offerings, two give cash back for use of debit. Relationship Checking lets members earn five cents with the fifth purchase they make each month via debit. Bonus Checking returns a nickel on the ninth monthly debit purchase.
"Our Relationship Checking account offers the most value of any checking account available in our market," Newberry said. "Members will be able to enjoy more features than ever before, including Popmoney and the ability to choose their debit card design. But what really makes the checking products stand heads above the competition is the cash back."
Marketing materials say, "It's Raining Nickels."
Ken Jost, senior assistant vice president of marketing said, "Redstone's checking accounts had remained relatively unchanged for nearly ten years and we needed to generate attention."
3. Staff Hard At Work
In West Palm Beach, Fla., the $114 million PBC CU is generating checking interest via staff incentives for checking sales.
"Checking equals a PFI relationship," said SVP/COO Shannon Duran, who noted that electronic bill pay is making those sales easier. "We have a switch kit we are trying to automate to make it easier for members to make the change."
If new members come on board and don't sign up for checking, PBC promotes checking early in the relationship. "As they say, in their first 90 days a new member is most likely to change," Duran said.
4. High-Yield Interest
High-yield checking may be in the future for the $18 million Cornerstone Community CU in Des Moines, Iowa.
"We have considered these accounts but have not felt the need for implementing one at this point," said CEO Gary Key. "There are several banks and larger CUs that are offering 2.99% to 3.25%. But we are paying more attention to other products to drive new members, such as mobile banking, free debit cards, remote deposit, member referrals, and very competitive rates on loans and CDs."
Key said the credit union offers staff incentives to generate checking account and debit cards sales.
5. Checking On Cruise Control
In Tallahassee, Fla., Tim Cook, CEO of TMH FCU, says checking promotions and offerings will stay the same. The $50 million CU has five different checking accounts, with a mix of free accounts and those that carry fees.
Cook said no changes are in the works due to the credit union's focus on loan and membership growth.
