No fees, no regrets

September 17, 2013
in Strategy

5 reasons why fee-free banking was right for First West—and might be right for your credit union

According to a recent Maclean’s article, there’s a sleep crisis in North America and technology is partly to blame. I’m not usually tempted away from 40 winks by my smartphone or laptop. No, for me, business decisions are sometimes the culprit robbing me of slumber, like when we wrestled in 2012 with whether or not to take the leap into offering a new fee-free chequing account. Fast-forward to today and we’ve just hit the one-year anniversary of the launch of our Simply Free Account™—and I’m a believer in the product. But I wasn’t sold on it easily. At a glance, products like this look very tipped in favour of consumers. No question there’s immediate value for them, but the truth is, they aren’t the only winners. Here are five reasons why a fee-free chequing account that’s available to everyone can benefit your credit union.

  1. Leverage one of your most in-demand—and most profitable—products.
    Costing very little and having a healthy margin compared to other products, chequing accounts are always one of most profitable products credit unions offer—and nearly everyone needs one. Why not attract new members with a no-strings-attached offering, boost your interest income, and create more opportunities to increase you share of wallet? The uptake of our Simply Free Account™ has made a strong contribution of new mortgages and loans to First West.
     
  2. Support efficiency efforts.
    Credit unions don’t operate in a vacuum—the marketplace is dynamic and our corporate histories reflect that, becoming more complex over time. Which means there’s a good chance your organization has some complexity in your product lineup. That complexity can translate into inefficiency when it comes to supporting your products.

    Our free account is helping us simplify our product lineup and product support. There’s no confusing fee structure for members to navigate or need to explain the service charges on their statements. With our Simple Free Account™ that’s over and done with. And that increases our efficiency by freeing up time to focus on other things, while fostering a great member experience.
     

  3. It’s a powerful way to reward—and foster—member loyalty.
    Traditionally, credit unions have rewarded their members with patronage programs or dividends. There’s nothing wrong with those, but our board and executive team wondered if there was more, something different, we could do to thank our members for their loyalty, yet still be diligent when it comes to managing the business. Was there another way to express gratitude beyond giving points or payouts?

    Enter no monthly fee chequing. Plus, we took it further by including free Interac  e-Transfers—the only financial institution in Canada currently to do so. It’s our way of saying to members, “we believe your deserve the best, we want you to have the best—thank you for choosing us.”
     

  4. It’s a catalyst for change and cultural transformation.
    A no-monthly-fee bank account is still pretty rare, largely because letting go of a significant source of fee revenue isn’t easy. It’s bold. It’s risky. Some might even call it crazy. And that’s sort of the point. It sends a message to your organization that it needs to do things differently, that the status quo is change. The market demands it. Your organization’s survival depends on it. For us at First West, the decision to offer a no-monthly-fee option marked a significant shift in thinking and has become something of a rallying point as we work to transform our business. Launching the Simply Free Account™ was a powerful statement to our staff and members that we’re dead-serious about transforming our business and attracting new members (including youth) and supporting our employees in those efforts.
     
  5. Game changers are required to compete.
    Every so often a truly innovative product or service comes along and changes the game—for everyone. Apple’s iTunes store has forever changed the face of the entertainment industry. Or consider Nokia’s camera phones, the first widely available mobile phones with digital cameras.

    But what’s really interesting is that neither Apple nor Nokia were the first, the original innovators. Apple didn’t create the MP3 digital audio format that caused peer-to-peer file sharing to spread like wildfire in the 1990s and made an online digital entertainment store a legitimate possibility. Nor did Nokia create the first mobile phone with a camera (a number of lesser known companies had done it before Nokia’s cameraphones hit the market).

    But what they did do was capitalize by making these innovations successful in the marketplace and commercially viable. What that did was change the game for everyone else. And so much so that their products have become standards, completely shifting the course of their industries.  Just think about it. When was the last time you saw a cell phone without a camera? A rare oddity. Or remember the last time you purchased a music CD in a brick-and-mortar store? So long ago you probably can’t. And chances are pretty high you’ve streamed or purchased at least a few movies online. Yes, Apple and Nokia pushed the bar of consumer expectation higher—a camera in a cell phone and the iTunes experience are now just table stakes in the business. If you can’t match it, you can’t compete, you won’t draw customers. It’s the same with a no-fee account offering: the forerunners have done it and so you won’t be the first (we weren’t), but before long, consumers will validate the value and it will be table stakes required of everyone to stay competitive.

Roughly one year in and we’re extremely happy with our no-monthly-fee account and its contribution of thousands of new members since launch. But there’s no question the thought of a no-monthly-fee account is unsettling at first. It feels risky, almost a leap of faith. But a deeper look reveals such a product has great long-term potential and won’t turn out to be a sleeper in your product offering.

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