BID® Daily Newsletter
Aug 6, 2009

BID® Daily Newsletter

Aug 6, 2009

WHAT LADY LIBERTY CAN TEACH US ON BANKING


Lady Liberty turned 125Ys old this week and she looks darn good. More important than looks however, is her substance. The woman has taken the world's tired, poor, hungry, angry and tempest-tossed and has allowed them to breath free. In doing so, she has shaped America's identity as a nation of the second chance. She has stood for the notion that sometimes people screw up and just need a little freedom to make things right.
In similar fashion, banks have discovered the same thing. Instead of a Statue of Liberty, several banks have found success with a card or promise to make things right. The product attribute goes by different names at banks - "Stuff Happens," " The Opps Pass," "Skip-a-Fee" or "Waive It." Essentially, this allows the account holder a limited opportunity to get one of the following fees refunded: overdraft protection transfer, stop payment, NSF, return item fees or foreign ATM. Banks allow the refund of these fees either one time, 3x or once annually. Some banks record it on their system, while others just give out signed passes/cards that have to be brought into a branch for manager approval (think cross-sell opportunity). While largely a retail attribute, it is also used effectively for commercial customers.
While we don't have any firm evidence, the product should aid in customer loyalty, as it places an element of control into the account holder's hands. What we do have is evidence that by providing a special card, banks have taken a stronger stance in how they handle fee waivers. Banks that use such passes report a drop in fee waivers from 40% to 10%. Customers can decide when and how to use the waiver, which helps in the payment of future fees without complaint. For the average bank, this can result in a sizeable increase in fee income.
Legend has it that once you tour the inside of the Statue of Liberty you see her everywhere, as she follows you around looking out for you. Now we don't know if it is true or not, but if you can create the same marketing campaign for your bank - that would be a pretty nifty monument to service.
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