When Larry Brown, the chief executive at Bank of Little Rock, first heard the name Kasasa, he thought the conversation had turned from rewards checking to what's for dinner.
"First impression: I wanted to know if it came with chips," Brown said, jokingly.
Funny name or not, Brown liked what BancVue pitched: a bundle of four products, including a high-interest, free checking account that would be offered by community banks and credit unions nationwide, all branded under the Kasasa name. The third-party vendor contends that offering the same products under one brand can help small banks like Brown's better compete for deposits against larger rivals.
The $168 million-asset Bank of Little Rock was among the first banks to sign up for Kasasa, and Brown says he couldn't be happier with the results.
It rolled out Kasasa's checking product — called Kasasa Cash — May 1, and in just the first two months total deposits rose more than 10%. Kasasa customers also generate more interchange income for the bank because they use debit cards, on average, for 25 purchases per month, compared with about 17 debit purchases per month for the bank's regular customers.
"It's proven to be a very effective product in terms of attracting interest," Brown said.
The word "Kasasa" is not found in the dictionary; it's a made-up name that BancVue settled on after a series of market tests.
But BancVue CEO Gabriel Krajicek is hoping the odd-sounding word will become a household name among customers of community banks and credit unions. Krajicek said that BancVue, of Austin, created Kasasa Cash and three other affiliated products because it was looking for "a game changer" to help small institutions regain some of the market share they have been losing. In 1994, banks with less than $1 billion of assets held 31% of total deposits in the United States, according to the Federal Deposit Insurance Corp. Today, their share of the market is just 14%.
"What Kasasa does, is it puts everybody's dog into the hunt," Krajicek said.
Bob Meara, a senior analyst at the Boston research firm Celent, agrees — to a point. He doubts Kasasa will help community banks win back much market share, but said products like it can help them make more money on retail accounts by encouraging online banking and debit card use. Kasasa "is clever and will move the needle a little bit … but more in terms of customer profitability than in raw market share," he said.
Here's how Kasasa works: Banks pay BancVue a fee to set up, manage and market the Kasasa line of products, then use the cost savings to offer higher-than-average rates on the accounts. The account comes with no minimum balance, free online bill pay and reimbursement of ATM fees, up to about $30 per month, as long as customers make a minimum amount of debit card purchases per month, have at least one automatic bill payment or direct-deposit transfer and receive bank statements online.
BancVue began offering a high-rate checking product several years ago. But banks and credit unions that signed on could come up with their own name for the product and market it themselves. With the latest twist, those that sign on will use the Kasasa name. The intent is to build customer recognition across the country, much like a credit card brand.
Through August, 10 banks and one credit union had begun offering Kasasa Cash, and BancVue is hoping to recruit more through group seminars it will be hosting for many of its 620 clients.
Of the 11 participating institutions, nine couple the product with one of the other Kasasa offerings: Kasasa Saver, a high-interest savings account; Kasasa Giving, a component of the checking account that directs a portion of the interest earned as well as a cut of debit purchases of $10 or more to a charity; and Kasasa Tunes, where users can earn up to 10 free iTunes downloads a month.
Banks in the Kasasa program can share the marketing costs with BancVue and other participating banks. Bank of Little Rock, for example, has teamed up with First Arkansas Bank & Trust to market Kasasa in Arkansas.
In the spring, Bank of Idaho in Idaho Falls gave away $1 bills with Kasasa stickers on them at minor league baseball games. Park Price, Bank of Idaho's president, said the campaign raised the bank's profile and helped to roughly double its rewards checking deposits to $32 million since early May. "It was certainly a lot better than handing out a T-shirt or a pen," he said.