ABA Banking Journal - September/October 2016 - (Page 40)
a Competitive Edge
Banks find synergies in promoting local merchants,
delighting their customers and boosting debit card profitability.
BY MONICA C. MEINERT
verybody loves to be rewarded.
Whether it's a free cup of joe at a local coffee
shop or a special sales discount at a favorite store,
getting a little "thank you" from a business can go
a long way in boosting customer satisfaction and loyalty.
Bank customers are no different-in a recent survey by
CGI, consumers ranked the desire to be rewarded for their
business as their "top want" from their financial institution,
and 72 percent said they would consider switching banks if
they found another institution offering better rewards. And
yet, just over a third of consumers say they are currently
satisfied with what their bank is doing in this area.
For banks struggling to attract and retain millennial
customers aged 18-35, that statistic should be a particular
wake-up call-in a 2015 Accenture study, millennials
identified high fees and poor loyalty programs as the top
reasons they are dissatisfied with their banks. Combine
that with the fact that millennials switch their bank at
nearly double the average of other generations, and it
makes a compelling case for offering a rewards program.
'Cashing in' on customer engagement
In 2013, Macatawa Bank-a $1.7 billion institution with
26 branches in western Michigan-saw an opportunity
to use debit rewards to grow customer loyalty, increase
card usage and deepen existing customer relationships.
As some of the bank's national and regional competitors
backed away from their rewards offerings after the financial
ABA BANKING JOURNAL | SEPTEMBER/OCTOBER 2016
crisis, Macatawa started up a program through UChoose
Rewards, the card-linked platform offered by Fiserv-
ABA's endorsed core processing service provider.
"It seemed a little counterintuitive to what was
happening in the marketplace at the time," admits
Jill Walcott, the bank's chief retail banking officer, but
"we thought this may be a differentiator for us. We
put in a program that rewarded customers for their
debit card activity, but also gave us the flexibility to
reward them with points when they did additional
business with us, like a loan or deposit product."
Unlike most programs which allow customers to redeem
points for gift cards or merchandise, Macatawa's program
gives customers the option of redeeming their points
for cold, hard cash. "We wanted to make sure we were
offering something the customer wanted," Walcott adds.
The bank saw results quickly-just over a year after the
program launched, 21 percent of eligible cardholders
had registered and today, the bank has more than 30
percent enrolled. Using the detailed metrics provided by
Fiserv each month, Walcott says the bank was able to
track card usage among enrolled consumers compared to
non-rewards customers, and noticed consistent increases
in both the average transaction value and the average
number of transactions. "Usage increased 54 percent six
months after an existing cardholder enrolled. Their spend
increased by 59 percent and our interchange income per
month for those cardholders increased by 70 percent."
Table of Contents for the Digital Edition of ABA Banking Journal - September/October 2016
CECL FROM THE INSIDE: A CONVERSATION WITH FASB’S RUSSELL GOLDEN
WHERE ‘HABITS OF ECONOMY’ WERE SHAPED
CARD-LINKED REWARDS GIVE BANKS A COMPETITIVE EDGE
ABA COMPLIANCE CENTER INBOX
FROM THE STATES
CORPORATE SOCIAL RESPONSIBILITY
INDEX OF ADVERTISERS
ABA Banking Journal - September/October 2016