When Free Checking Is No Longer Enough

When-Free-Checking-Is-No-Longer.pngCity National Bank is a perennial industry leader in retail checking performance. By adopting free checking earlier than most banks in the region, City National helped grow its customer base by appealing to many types of customers in their communities looking for a no-fee checking account. Despite the success, City National realized there was a major market opportunity that was being missed—the chance to attract and appeal to the overlooked value buyer, those who gladly pay a fee for things they feel provide some form of commensurate value in return.

While this buyer type may sound strange for a mature banking market that has been dominated by free strategies, it is a large consumer segment that other top retailers have already capitalized on. More than 125 million Americans pay fees to save at Costco and Sam’s Club or with Amazon Prime. Nearly 100 million pay monthly fees for cell phone insurance and roadside assistance services. Providing value like these money-saving and protective services can be applied to checking products to attract these types of customers and grow relationships. It also helps with a new problem for the banking industry— regulatory initiatives that have reduced overdraft fees and other checking account-related fee income.

“There are customers looking for something more out of their checking account,” said Tim Quinlan, senior vice president at City National Bank in Charleston, West Virginia. “Customers are more willing to pay a monthly fee if they feel they’re getting more than basic banking benefits.” To provide this, City National implemented StrategyCorps’ BaZing checking program. For $5 per month, customers who choose a BaZing account— which the bank brands as City Gold—receive protection benefits like roadside assistance, identity theft protection and cell phone insurance. They also receive shopping, dining and travel discounts with participating local merchants and national retailers, plus traditional checking benefits like check discounts and surcharge-free ATM access. “We want our customers to be excited about their relationship with City National,” Quinlan said.

CityNational.png“City Gold has been a big part of that solution: ‘Wow. I get all these extra benefits and services.’ They feel like they are getting a good deal with us.” When helping a customer determine the right checking account, City National employees are extremely disciplined in educating the customer— without a high-pressured sales pitch. They start each conversation about opening a new account by telling customers about City Gold rather than just having the customer select from a list of checking types. The bank understands that City Gold is not for every customer. But when the fit is right, that customer who chooses City Gold ultimately develops a deeper affinity for the bank.

“We believe our employees should have fun and be excited about offering the product to the customer,” Quinlan said. “We want to make sure we present all the options and that they feel they received great service, not that they were sold something.”

That not only builds customer loyalty but also referrals. “When customers get excited about an additional service they enjoy at their bank, they tell another customer,” Quinlan said.

City National employees also successfully sell City Gold by being active users of its benefits themselves and telling their own personal experiences about the product.

The BaZing program also provides banks with a way to participate with the local business community by allowing local merchants to offer discounts on the BaZing network. Local businesses that want to join the BaZing discount network do not have to pay a fee—they simply offer a discount. They don’t even have to be a City National business customer to participate. Bringing this type of relationship opens the door to a deeper connection between the bank and a key business in the area. City National is seen as a partner that can help these local businesses grow.

“Successful banks like City National are always looking for customer friendly ways to grow fee income. By offering products that fit with customers’ mobile lifestyles, they have succeeded in delivering real value, savings and security that customers will pay for,” said Dave Crook, a partner with StrategyCorps.

The alliance between City National and BaZing’s parent company StrategyCorps will soon mark a decade. Neither firm looks the same as it did in 2005. City National has grown to one of regional prominence, while StrategyCorps has significantly grown and expanded the discounts and other services offered through BaZing.

City National has proven that keeping a sharp eye on serving the value checking buyer with quality products and coaching and motivating employees to meet goals makes it possible to boost customer satisfaction and significantly improve fee income generation on a customer-friendly basis.

Sandy Smith