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If banks can track borrowers' interest rates and terms, how hard can it be for them to track which borrowers are serving in the military?
July 28 -
Bank of America Corp. will offer interest rate and principal reductions to military borrowers under a new mortgage modification program it announced on Thursday.
March 10
By boosting its offerings to military personnel, JPMorgan Chase & Co. may find itself maneuvering against USAA Federal Savings Bank, which has set the gold standard for serving customers in the armed forces.
To succeed, JPMorgan Chase must have the right remote-banking technology in place to appeal to what is often a far-flung audience.
JPMorgan Chase announced on Monday an expansion of its offerings for military members and veterans. It launched a premium checking account for active-duty military personnel and veterans. This expands a set of services it began offering to just active-duty military members in July.
"This is part of a much broader strategy that we have to recognize those who have served," Jon Wilk, head of marketing for consumer banking for JPMorgan Chase says. The company is not explicitly targeting USAA with its new product, he says.
USAA, of San Antonio, has long been considered the leader in the military market. It has pioneered such concepts as unstaffed branches with video links to live representatives. It was also one of the first financial services organizations to initiate remote deposit capture for its more than 8 million members.
"Serving military members may be a new campaign at other banks, but it's the core mission at USAA," a USAA spokeswoman wrote in an email. "Military values are in our DNA, making us uniquely qualified to serve military families."
JPMorgan Chase has spent recent years adding functions such as mobile payments and check capture, which make banking easier for customers in remote locations.
Certainly JPMorgan Chase has the necessary technology to serve military customers spread throughout the globe, Alan Mattei, a partner for Novantas LLC, says. Like military customers, more than 25% of large-bank customers depend on mobile, online and telephone services.
"Chase is one of the more technologically advanced banks out there, and if they put their minds to it, they can crack the code for [military] customers," Mattei says.
For veterans, JPMorgan Chase's checking account comes with no minimum balance requirement, free checks and a free safe deposit box. There are no fees on money orders, official checks, travelers' checks and gift cards. JPMorgan Chase also waives its fee on up to four non-Chase ATM withdrawals.
Active-duty military members with direct deposit pay no fees on all non-Chase ATM transactions and for wires. They also pay no foreign exchange fees for overseas debit and ATM transactions.
Even if JPMorgan Chase is successful attracting a part of USAA's audience, the number would be small and questionably profitable, as military members are not known for their large salaries, Mattei says.
And the bank's outreach and messaging will have to be pitch-perfect, experts say.
"The biggest challenge will be around branding and messaging to this group," David Albertazzi, a senior analyst for Aite Group LLC, says.
By improving its offerings, JPMorgan Chase is also trying to repair its image after wrongfully overcharging or foreclosing on the homes of active-duty personnel, experts say.
"One question I have is if [Chase] is getting into this as a result of the negative press which it received with this group," Mattei says.
A number of the top banks, including JPMorgan Chase got into trouble earlier this year for foreclosing on military homes, in violation of the Servicemembers Civil Relief Act, which protects active-duty military members against civil proceedings. JPMorgan Chase agreed to pay $56 million in a class action in April for violations.
"Chase has a proud history of honoring the military and veterans and we will continue to be an outstanding partner to the military across all our businesses," a Chase spokesman says.
Other banks have tried to burnish their reputations with the military market recently.
Citigroup Inc. announced on November 11, Veterans Day, that it had hired 150 veterans in 2011 and had plans to hire 500 more in the next 12 months.
Similarly JPMorgan Chase said it is part of a 16-member group of big companies seeking to hire 100,000 veterans by 2020.
