Six Ways CFIs Can Reward Good Financial Behavior
(In today’s blog post, eight-year Buzz Points veteran Senior Client Relationship Manager Chris Remington shares the six ways community financial institutions can reward good financial behavior)
Successful relationship building is a key driver of growth and engagement for community financial institutions and their cardholders! Community banks and credit unions that focus on cardholder satisfaction and relationship building, beyond just the dollars and cents, can truly make a difference in their cardholders’ lives.
Oftentimes when we think of community financial institutions, we think of loyalty and community spirit. Community financial institutions (herein referred to as CFIs) are actively engaged in their community, acting as financial stewards of their members, ensuring they can lead successful, profitable lives and keep the money within their community. These institutions have a unique relationship with their cardholders, often retaining accounts for life and driving a type of loyalty that is uncommonly meaningful. Buzz Points has the tools to help maintain this relationship, and help it thrive. Here are 6 ways CFIs can reward good financial behavior, and campaign ideas for each type of behavior:
Points for Savings
Modern banking is strongly supported by the mutually beneficial relationship between deposits and loans. CFIs can provide loans for their community, allowing new business and home development. Consumers are provided a safe place to keep their money, often earning interest on their deposits. Interest is well… interesting, but what if CFIs could provide additional value beyond the change?
Balance-based Point Awards provide that flexibility. Imagine earning 2,000 points a month for maintaining a target balance – those points can be used for gift cards, travel, financial rewards, even sweepstakes entries toward a big prize!
Points for Refinancing
There are many reasons for consumers to refinance a loan – obtaining a lower interest rate, shortening the payback time, or tapping into equity. Whatever the reason, the added flexibility makes a borrower’s goals much easier. While this can lower the long-term interest income for CFIs, it also keeps consumers happy in an environment where switching institutions takes minutes. Between the accountholder satisfaction benefits and the additional application fee + closing cost revenue, it often makes sense for CFIs to actively promote refinancing.
Awarding points for refinancing a loan or mortgage can add an additional sense of value for consumers while increasing short-term fee revenue for the CFI.
Points for Financial Counseling/Planning
One of the most effective ways to increase the number of products per household is with a custom plan from a CFI’s financial advisor. Simply put, CFIs offer a wide variety of programs and solutions that most consumers probably have never considered or knew about. Whether it’s a younger student navigating their financial future, or an established professional looking to grow their wealth, the opportunities to consult are available – all it takes is getting the appointment scheduled.
By offering reward points for simply scheduling an appointment with a financial advisor, the door is open for selling new products or services on the spot – or down the road. Plus, the hands-on consultative approach is a great way to strengthen the CFI/consumer relationship!
Points for Opening a Credit Card
Interest income, fee income, interchange income – there are obvious incentives for CFIs to jump into the credit card space as issuers. They are great for consumers also – more flexibility, more security, and establishing credit are three immediate perks. But in a world with thousands of credit card options, why should a consumer sign with their CFI?
Make it worth their while with a three-pronged reward point approach. Award a small amount of points for the act of applying (immediate value), award a larger sum for approval and a set number of transactions (larger value plus establishing good habits), and then reward points for each transaction (to shape long-term behavior).
Points for Making Credit Card Payments
There are multiple factors like job loss, surprise expenses, or plain-old fiscal irresponsibility that can lead to a mountain of credit card debt. It is a tough spot to be in as a credit card issuer AND as a primary financial institution – that’s your revenue, but it’s also a living person’s burden. It is possible to help while provide additional value, and still be able to collect.
Set up a payment plan that awards points with each successful payment. The points issued are a fraction of a fraction of the interest income, and the additional incentives are a key part of keeping the debt repayment consistent. There is also room to refer the debtor to your internal financial counselors, which opens the door for more solutions (and rewards).
Points for Opening Youth Accounts
The thrill of opening a birthday card with cash inside is (almost) universally known. Yes, there is an immediate joy in buying new toys or video games, but what about financial success for the future? Advertise youth savings accounts as a fiscally-sound alternative for new parents. Managed correctly, parents (or grandparents, or aunts or uncles) can set the little one in their life up for financial success before they can even walk.
Offer point incentives for opening and maintaining youth checking accounts. This point award can be a significant one. Executed correctly, it can create a cardholder for life – before they have the chance to get wow-ed by a megabank or start-up bank in their teen years!
With these tools at their disposal, community financial institutions can differentiate themselves in a hyper-competitive space and create members for life. For even more tips on driving cardholder engagement through successful relationship building via the Buzz Points program, check out our Idea Book!
I hope you see the value in these services as much as we see the value in providing them to you.