Bank of America Corp. is hoping to build on the success of its Keep the Change program by expanding the 5,000 affinity card relationships it got in January by buying MBNA Corp. to include affinity mortgages, insurance, and other products.
Susan R. Faulkner, a senior vice president and a sales and service executive at Bank of America, said last week that its planned "affinity banking" program would use the same "integrated product and distribution model" as its popular Keep the Change program.
The Charlotte company said 1.15 million new customers have signed up for the program, which rounds up the price of any debit card purchase to the nearest dollar and deposits the extra money into customers' savings accounts. Another 1.15 million current customers also signed up for Keep the Change, which was introduced in October.
It is available only to customers who have checking and savings accounts and use a debit card. Ms. Faulkner said it could not have been developed "if we had been operating in silos."
Bank of America wants to use the no-silos concept to create its affinity banking products, she said.
"We'll be able to take the MBNA affinity relationships we have today, combine those with the Bank of America retail product and distribution capabilities, and create a very dynamic new growth engine," she said at a New York conference hosted by Forrester Research Inc. of Cambridge, Mass.
For example, she said customers could sign up for Boston Red Sox credit card, debit card, mortgage, home equity loan, and insurance policy. Bank of America said recently that such linked products could include lower mortgage rates or insurance premiums for people who use their affinity cards frequently.
"The possibilities are endless, and our customers have already shown us that this is what they want," Ms. Faulkner said.
Chris Musto, an analyst with Keynote WebExcellence, a division of Keynote Systems Inc. of San Mateo, Calif., said that managing such rewards programs would be harder than tracking Keep the Change transactions, which make use of Bank of America's core processing system.
"The back-end providers and processors - and, for that matter, online-account-management vendors - tend to be different for affinity programs than for basic account management," Mr. Musto said. As a result, "what you often see is that rewards programs are handled separately online from account management."
Furthermore, applying affinity branding to banking products would require B of A to link many of its business units, Mr. Musto said.
In any case, though someone might be willing to have five credit cards - one connected to the favorite baseball team, one to the alma mater, and so on - few other products lend themselves to this approach, Mr. Musto said. "I'm not going to have five checking accounts."
Citigroup Inc.'s Thank You program also draws from various business units. The program was introduced as a cards program in July 2004 and expanded to retail banking products in April 2005.
The 9.3 million people currently enrolled receive rewards points for each product they own and can get extra points by using certain features, such as online bill payment
Paul Kadin, the marketing director for Citibank North America, said it had to create "a whole organization" to manage the program "as an entity and a business unto itself.
"There was a good amount of work to integrate across a bunch of bank systems to make this happen," Mr. Kadin said.
Citi has no plans to add affinity relationships to the program, he said.
The program "is working, and people are happy with it," Mr. Kadin said.
Mr. Musto said the Thank You program is notable for using "a network that extends across sites at Citi that do not otherwise talk to each other."
"Citi cards and Citibank's retail bank run on different platforms," he said.
Cathy Graeber, a principal analyst at Forrester, said that B of A's plan to expand affinity relationships to other products is "a very innovative play."
"If people are loyal to that affinity, it might make them more predisposed to listen to that offer" for another product connected to the affinity brand, she said. And if B of A can "just get to a second product with a customer, that improves retention over time."
