ADDING ON ID THEFT PROTECTION

Not too long ago we tried to use our company credit card and were informed that it had a hold on it. In our younger years, we would have responded with an immature outburst of anger, punctuated by a stream of profanity. This time, we hung up the phone, took a deep breath and then threw the phone so hard we now have to use the tip of our pen to dial the "9" key. After calling our bank, a woman in customer service annoyed us further by deliberately being pleasant and helpful on the phone. To top it off, she explained to us that our credit card did not work because, get this – she was protecting us from someone stealing our identity. We were furious and the only thing that stopped us from closing out the account and pulling every non-interest bearing cent from it was the fact that she was right and had just saved us $3,000 in errant charges. ID protection never looked so good. In the quest for deposits, one idea that bankers should consider is the effectiveness of "add-on" account products. These additional "perks" can include travel rewards; local merchant discounts; movie tickets; and check fraud, payment card and identity theft protection. While travel rewards remain the most popular, one of the fastest growing segments is to add identity theft protection. Banks reporting success with this approach have either created a special bundle of products with ID theft protection included, or by selling it to existing accounts as a way to generate more revenue. The average price charged by banks is $11.99 per month, which includes a personal credit report from all three major credit reporting agencies, education, daily monitoring, alerts, access to remediation specialists, quarterly credit bureau updates and up to $10k in ID theft insurance. Banks that sell this service report that about 13% of their deposit accounts subscribe. The service achieves its highest success rates when sold through a dedicated sales force for the first 6 months and then rolled into the overall product line and bundled going forward. BofA, Wells Fargo, Wamu and PNC all have similarly structured products and all report penetration rates of between 10% and 22%. These add-ons can be adapted to small and medium sized businesses and spun as more of a credit building and monitoring tool. While ID protection and other add-ons aren't for all banks, the concept of selling additional services to generate fees (or adding services to attract non-interest rate sensitive customers) is a good one.