A 2020 study by Cornerstone Advisors and Strategycorps recorded a seven percent (7%) increase in the number of consumers identifying FinTech challenger banks as their primary financial institutions. These gains were offset in decreases in the number of consumers identifying mega banks and credit unions as playing that role in their lives. Forward-thinking leaders at […]
The post How journey orchestration can help community FIs square off with FinTech challenger banks appeared first on FinLedger.

How journey orchestration can help community FIs square off with FinTech challenger banks

By  Miriam Cross April 09, 2021, 2:40 p.m. EDT
4 Min Read
REGISTER NOW
Exclusive discounts, cell phone insurance and roadside assistance are benefits more typically folded into credit cards than into checking accounts. But Howard Bancorp hopes that bundling these and other non-traditional perks into its checking accounts — and an app that makes them easier to use — will reinforce their value for existing customers, entice a younger audience and increase account activity. In March, the Baltimore community bank replaced its checking accounts with three new ones, titled Essential, Extra and Extra+. Customers of Extra and Extra+ can access a suite of services, which includes the aforementioned discounts, cell phone and roadside benefits, along with identity theft restoration services, a health savings card, travel accidental death insurance and an extended warranty service. There is a $7 monthly fee attached to the Extra account, while a $15 monthly fee accompanies Extra+, although it can be waived by meeting average balance or other conditions. One question, for Howard Bank and the other banks and fintechs testing subscription models, is whether customers who've grown accustomed to free checking will be willing to shell out $7 to $15 a month for a specific set of extras. Early results are promising. In the month after Howard converted 10,000 existing customers to the Extra account, from around mid-February to mid-March, more than 90% chose to stay. In the same timeframe, 59% of new accounts were for Extra or Extra+. The bank hasn’t advertised these new products widely yet, beyond within its branches and on the website. Customers of the new accounts get the fullest array of benefits by downloading a separate app, HBExtras, which can also alert the user when they are near local retailers that have partnered with Howard to offer coupons to its customers. Customers will get a link via email or text to download the HBExtras app through the App Store or Google Play. “Customers typically don’t embrace change, but we thought this was a risk worth taking to try to reengage a certain portion of our checking portfolio,” said Drew McKone, chief deposit officer at the $2.6 billion-asset bank. With this offering, Howard Bank is tapping into Americans’ enthusiasm for rewards and mimicking challenger banks like Varo, N26 and Revolut that offer perks easily accessible through an app. It’s unusual to see traditional banks offer such perks bundled together and offered as a package with a checking account, said Caroline Vahrenkamp, who leads research at Raddon, a research and analytics company in Schaumburg, Ill. Besides inspiring existing customers to upgrade their accounts, the fees for such services could be a valuable source of non-interest income for banks. “I don’t think it’ll move the needle to get people to your institution, but it could re-engage with the people you have and make sense on the balance sheet,” said Vahrenkamp. “Some of these services have perceived value but not a lot of actual cost to the institution.”
Howard Bank is hoping for several outcomes. One is to make these new accounts more attractive to current customers, who may be willing to pay $7 per month for services that would cost far more to piece together on their own. Another is to reel in a younger audience who are comfortable using apps and mobile banking, “a demographic we’ve had difficulty appealing to in the past,” said McKone. Engaged customers are more likely to actively use their debit cards and other banking services, and consider Howard their primary relationship. The HBExtras app is white-labeled from BaZing, a product of StrategyCorps, which is a company in Nashville that helps financial institutions enhance their checking accounts. The StrategyCorps website claims that accounts with mobile rewards see higher account balances, more debit card swipes and higher frequencies of overdraft or non-sufficient funds annually. Daniela Hawkins, managing principal at technology and management consultancy Capco in Charlotte, N.C., notes that the mass affluent world of credit card users will probably still find traditional credit card rewards more appealing, because they offer similar perks alongside cash back. But “It’s a great value proposition to add on these features that you traditionally find with a credit card,” she said. “Folks who may not qualify for a high-value credit card can now get these features linked to a checking account.”
She feels that the identity theft service, roadside assistance and travel accident insurance are table stakes, but the cellphone protection is a big one. “People drop their cell phones and crack the screens all the time,” she said. A slew of benefits, including cellphone protection, are baked into BaZing’s general offering. But banks can also customize their app by sourcing mobile coupons from local businesses, which McKone plans to do in June — and perhaps forge banking relationships with new clients simultaneously. When customers turn on the geolocation feature on their phone, the app will alert them to nearby deals. Because these deals are redeemed at the point of purchase within an open loop system, no user information is passed back to the merchant. McKone chose StrategyCorps’ BaZing because its profitability model didn’t depend on Howard acquiring new accounts; instead, StrategyCorps only gets paid per account in the Extra and Extra+ program. “We liked that StrategyCorps was compensated on our success and not on the anticipation of our success,” said McKone. The company has worked with nearly 350 financial institutions throughout the U.S., generally ranging in size from $250 million to $30 billion of assets. As long as banks watch out for potential competition with their own rewards credit cards, “I could see more community banks and retail banks picking this up over time,” said Hawkins. Over half of all credit unions with less than $250 million of assets are run by women, but those institutions continue to be merged out of existence. A group of 13 women who lead such organizations have banded together in an effort to ensure their survival.

Howard Bank tests subscription model account. Will customers pay for it?

Getty Images for TechCrunch
OBSERVATIONS FROM THE FINTECH SNARK TANK
A recent study from Cornerstone Advisors and StrategyCorps estimates that 12 million US consumers are now customers of online bank Chime. Oddly, it’s been a while since Chime itself announced its customer count after releasing press releases heralding multi-million increases every couple of months the past few years. The last announcement was a year ago, when it said it had 8 million customers. I have no idea why it would have stopped the announcements as it—and other challenger banks—grew their customer base by 50% through the pandemic. Fifty percent growth on 8 million customers is a whole lot more new customers than growing 50% from a base of one million or 500,000 customers, however, and Chime is now dominating the challenger bank space by a wide margin. Number of challenger bank customers
Source: Cornerstone Advisors, StrategyCorps
Challenger Banks’ Growth as Primary Bank
Not all challenger bank customers consider the fintechs they do business with their primary provider, but an alarmingly large—and increasing—number of people do. In January 2020, just 4% of Gen Zers and Millennials considered a checking account from a challenger bank their primary account. By December 2020, that percentage had grown to 15%. Across all US consumers, 11% consider a digital bank their primary institution. The digital banks have, in the aggregate, 17% share of secondary accounts and 30% of consumers’ third accounts. Megabanks Were the Big Losers in 2020
The big losers in 2020—in terms of share of consumers who consider them their primary institutions—were the megabanks (Bank of America, JPMorgan Chase
MORE FOR YOU
Source: Cornerstone Advisors, StrategyCorps
With roughly two-thirds of its customers considering the company their primary bank, Chime’s nearly 8 million primary customers effectively makes the challenger bank the fifth largest bank in the country (in terms of primary customers, that is—certainly not in terms of assets, deposits, or revenue). Number of primary bank customers
Source: Cornerstone Advisors, StrategyCorps
Other challenger banks don’t have nearly as high a percentage. Just half of Varo’s customers considers the fintech their primary bank, and across the rest of the digital bank landscape, the percentage is similar to Varo’s. Chime’s Featurization Strategy
Conventional wisdom—and even some of the challenger banks’ own advertising—holds that fintechs win customers because they provide a superior customer experience and have better mobile banking tools. It’s more than that. Chime competes with a “featurization” strategy. The fintech certainly offers a good user experience and touts no fees to attract low- to middle-income consumers. But there are three features of the company’s product offering that are key to its success:
1) Early access to money. Nearly a quarter of Chime customers said they chose the fintech as their primary bank because it offers 2-day early access to their direct-deposited paychecks, as well as to government stimulus and tax refund checks. 2) Spot Me. This product feature lets Chime customers make debit card purchases that overdraw on their accounts with no overdraft fees. Chime customers with monthly direct deposits of $500 or more are eligible to enroll. According to Chime’s website, “limits start at $20 and can be increased up to $100 or more, based on factors such as account activity and history.”
3) Credit-builder credit card. Chime’s predominantly low- to middle-income consumers aren’t in the crosshairs of the big credit card issuers’ marketing efforts. According to Cornerstone, 15% of Chime’s primary banking customers either have the card or are on its wait list. To get the card, a customer must have a Chime Spending Account and have set up their direct deposit with Chime. Improving Financial Health and Performance
These features add up to something important: Perceptions of financial impact. The Cornerstone studied asked consumers the extent to which their primary bank helps improve the performance and health of their financial life. There was a virtual tie at the top between four providers: USAA, Capital One, Chime, and Bank of America. Primary bank impact on financial health and performance
Source: Cornerstone Advisors, StrategyCorps
There are a certainly a number of reasons why other challenger banks aren’t keeping up with Chime (e.g., marketing). One big factor, though, is that other challenger banks’ customers don’t perceive that those firms have the impact on their financial health and performance to the extent that Chime customers do. This should be a wake-up call not just for challenger banks but for a lot of banks and credit unions. It’s not that consumers say their primary bank detracts from financial performance and health. It’s that the biggest chunk of consumers says their primary provider has no impact on their financial health and performance. This is not good news for the banking industry. In my top trends for 2021 post here on Forbes I wrote:
“Financial health will be regulated. Look for the new administration to require banks to monitor and improve their customers' level of financial health. Todd Baker and Corey Stone recently proposed some ideas . The first of their three-stage proposal would require providers to ‘make available to regulators data that regulators can use to analyze and measure changes in customer financial health.’”
What’s Next for the Digital Bank Space? Chime’s challenger bank competitors may lag in the number of customers and primary status penetration, but there’s a trend in the digital bank space that is diminishing the importance of this gap: Specialization. New entrants in the space aren’t competing on an alleged “superior customer experience”—they’re competing on specialization or segmentation. Challenger banks like Bank Boulevard (which caters to black consumers), Daylight (focusing on LGBT consumers), and Panacea Financial (serving physicians) are carving out defensible market niches by focusing on the unique needs of definable segments of the market. In some respects, challenger banks have become the new “community” bank. It’s just that the communities they serve aren’t geographic communities, but affinity-based communities. And in other respects, considering the growth in challenger bank customers, it’s the traditional community banks that have become the new “challengers.”
Follow me on  Twitter  or  LinkedIn . Check out my  website .

Challenger Bank Chime Reaches The 12 Million Customer Mark

"In This Together" campaign lets banks and credit unions provide savings on prescriptions and eye and hearing care. News provided by
Share this article
BRENTWOOD, Tenn., April 16, 2020 /PRNewswire/ -- StrategyCorps, the industry leader in providing value-added retail checking strategies and products, is helping financial institutions nationwide support their customers or members beyond just basic banking needs. With its "In This Together" campaign, StrategyCorps is giving a health-related benefit to financial institutions' customers and members that can save them money on prescriptions, eye care, and hearing care. Since 2001, StrategyCorps has delivered to hundreds of financial institutions and millions of their customers and members benefits like pharmacy/vision/hearing savings (along with other benefits like local merchant discounts, cell phone insurance, roadside assistance, travel, dining and more) in value-added retail checking products. These benefits have saved these customers and members millions of dollars on their everyday purchases and activities. Mike Branton, partner at StrategyCorps, said, "In this time of the COVID-19 pandemic and economic uncertainty, where financial institutions are doing all they can to help consumers and small businesses, StrategyCorps wanted to find a way to do our part." "Our bank and credit union clients provide a full package of money-saving benefits that are already benefiting their customers and members during this crisis," continued Branton. "We wanted to extend the money-saving ability of our health-related benefit to all consumers of all U.S. financial institutions, beyond just our client base." Financial institutions interested in providing this health-related benefit to their customers/ members, including a link to post to communicate how customers/members can access this benefit, can learn more at https://strategycorps.com/in-this-together-fis/ . "We have to be 'in this together' to successfully weather the storm of health and economic related issues caused by this pandemic. This free benefit supplied by financial institutions could help many consumers in need save money on essential and necessary purchases of prescriptions, eyewear and hearing care. " 
About StrategyCorps 
StrategyCorps  helps financial institutions grow core deposits and retail checking relationships with innovative and energizing solutions that differentiate their checking products and enhance customer/member connection. Nearly 350 banks and credit unions employ our analysis tools, white-labeled reward products, and mobile solutions for high-performance checking products. Media Contact:

StrategyCorps Providing Free Health-Related Benefits to All Financial Institutions to Offer to Consumers as Response to Crisis

News provided by
Share this article
NASHVILLE, Tenn., Feb. 17, 2020 /PRNewswire/ -- StrategyCorps, a Nashville-based company, has been named one of the 2020 Best Places to Work in Financial Technology. American Banker's annual program identifies the best employers in financial technology and provides organizations with feedback from their workers. Employees from a wide selection of fintech companies were surveyed about their job satisfaction and work environment to determine the results of the competition. StrategyCorps Awarded 2020 Best Places to Work in Financial Technology
StrategyCorps is an industry-leading provider of consumer checking analytical and mobile reward solutions, designed to help financial institutions enhance engagement, improve satisfaction, drive loyalty and boost profitability. The company offers a suite of benefits, including generous paid time off, 401k, flexible work time, as well as medical, dental, and life insurance. With its sales and client service teams based throughout the U.S., Nashville based staff are equipped to support these teams with the latest technological and communication tools wherever and whenever they are working. This work/life balance allows StrategyCorps to attract the most talented individuals in the Nashville area and around the country. They also believe their success is due to their unique company culture which is committed to maintaining a positive and motivating company culture that breeds collaboration and innovation. "We have a culture where all of our employees are empowered to participate and contribute to a wide variety of business initiatives. We work hard while still promoting a healthy work-life balance. Benefits and perks play a major role in making work rewarding; however, our biggest asset is an inspirational company culture that values collaboration and support between team members," said Mike Branton, Partner at StrategyCorps. The StrategyCorps team has grown significantly over the last year and they will be continuing to add employees with projected record-setting growth in the coming year. About StrategyCorps 
StrategyCorps was founded in 2001 with the goal of helping financial institutions grow core deposits and fee income while giving them exciting ways to differentiate their checking products and enhancing household profitability. Today almost 350 banks and credit unions leverage StrategyCorps's unique profitability analysis, white-labeled reward products, and mobile solutions. The Nashville-based company is privately held with field offices throughout the United States. For more information about StrategyCorps, visit www.strategycorps.com . Media Contact:

StrategyCorps Named 2020 Best Places to Work in Financial Technology

ApexEdge develops and online platform that offers bill negotiation, subscription cancellation, enhance suite, and privacy protection solutions. It is based in Hopkinton, Massachusetts.

ApexEdge

Moven, formerly Movenbank, is a mobile money service that helps users spend, save, and live smarter. Users can load, transfer, spend, and track money using mobile devices. The company's tools provide users with instant feedback on transactions and spending patterns.

Moven

MSP Consulting is an consulting firm and advisor of merchant payment services.

MSP Consulting

sherpa technologies

NCR Corporation

StrategyCorps helps banks and credit unions nationwide enhance their checking accounts with mobile rewards like local discounts, cell phone protection, roadside assistance and other in-demand services that bring value to people's lives. And with CheckingScore analytics, financial institutions can easily understand how to use customer data to protect and grow their relationships with customers.

Name	Dave Crook
Work History	NCR Corporation
Title	Managing Partner
Status	Current

Wells Fargo Success Story

3M Success Story

Platform Overview

StrategyCorps

Executives

StrategyCorps Management Team

1 Team Member

Discover the right solution for your team