Anyone who has autopay for monthly bills, direct deposits or automatic debits knows how much of a pain it is to transfer all of those transactions as part of a switch to a new bank or credit union. But a small number of institutions are turning to concierge services that can ease the onboarding process, providing another enticement for people who may be angry at their bank and looking for a reason to bolt.
"The hassle of unwinding relationships with a current bank is a big hurdle to getting more business from consumers," says Mark Littleton, president of credit union development for $240 million-asset TIC Federal Credit Union in Columbus, Ga., which serves seven counties.
The firm, which like a lot of credit unions and community banks is seeing an uptick in interest amid the ongoing controversy over large bank fees, just signed up to use SwitchAgent, a service that helps consumers switch banks by shifting any online bill payments they have set up, such as mortgage payments, Social Security payments, gym memberships and other recurring automatic debits, from old accounts to new accounts.
Branch employees provide an authorization form that requests account information necessary for Deluxe to make changes with creditors and payers. The new account holder lists any pre-authorized transactions and supplies it to Deluxe by phone or online.
Deluxe hosts the service for the credit union, which doesn't charge for its use. TIC is currently training its staff on how to offer the service, which it's targeting at prospective new members and current members without a checking account at the credit union. "We hope to gain more members who have a series of pre-authorized regular transactions, ACH, auto pay, things that the banking industry calls 'sticky' services," Littleton says.
The service also includes a proprietary biller database and a patent pending algorithm that tracks the schedule and distribution of billing notification on the customer's behalf, which is designed to keep the consumer's old account from becoming overdrawn or open for too long. Consumer transfers can take time because both the old and new accounts must stay open while various recurring payments are moved over. The algorithm attempts to time the payments and transfers in order to allow the consumer's old account to be closed out as quickly and accurately as possible.
"In this environment, it's more critical than ever to not just acquire new customers but to anchor them," says Susan Eick ,vp of programming innovation for Deluxe, which launched the new service about a week ago. Its clients also include Tennessee Bank and about a half dozen other financial institutions, with another 15 under contract.
Some of the transfer service still happens manually. But the credit union hopes that since transfers are part of Deluxe's core business and involve tasks that consumers don't frequently perform — such as looking up websites and addresses for various payments and executing the relationship migration — there will be a substantial benefit for consumers. "It's not as much about the process happening faster than it is about the consumers not having to spend their personal time doing it," Littleton says.
Marc DeCastro, a research director at IDC Financial Insights, says there's not a prevalence of this type of concierge service presently, but that the environment for such a product may be improving. DeCastro says that similar services have been offered in the past, but didn't "take off."
"Banks were hesitant to push these types of solutions because if you think about it, it's just as easy for the other side to do it," he says.
"Now fast forward to today, five to ten years later, it's a different situation. There's more of an opportunity for this to become successful. There's a feeling that people want to switch banks," says DeCastro, adding concierge service is also a branch transformation play, adding another service for consumers.