Why Size Doesn’t Matter: Community Banks’ and Credit Unions’ Growing Leverage Over Big Banks

Posted on Mon, Dec 15, 2014

Community banks’ and credit unions’ opportunity to acquire new accountholders grows as the number of dissatisfied accountholders increases at big banks. Although advertising budgets at big banks exceed those of smaller financial institutions, community banks and credit unions can win market share by focusing on maintaining reduced fees, building stronger relationships and providing valuable services for which accountholders are searching.

Maintaining Low Fees

Dodd-Frank financial reform law limits big banks on debit card processing fees for merchants; however, it exempts community banks and credit unions with assets less than $10 billion from this limitation. In order to subsidize losses from decreased merchant fees, big banks increased accountholders fees by removing free checking and limiting reward programs. 

In a Bankrate poll, 72% of consumers said they would switch banks over a fee hike. With the recent fee increases by big banks, opportunity grows for community banks and credit unions to gain market share by promoting their debit card reward programs and reduced fees, such as a lower overdraft fee.

Building Strong Accountholder Relationships

Unlike megabanks, which have millions of accountholders across the country, community banks and credit unions have the flexibility to individualize accountholder interactions by establishing valuable relationships and providing quality service. Stronger accountholder relationships enable financial institutions to increase accountholder retention and acquisition.

Maintain_Accountholder_Relationships

Offering Tech-Savvy Solutions

National banks claim that community banks and credit unions don’t have the technology to meet tech-savvy accountholders’ needs; however, through partnerships with service providers, local institutions can compete effectively with comparable product and service offerings. Financial institutions of any size can offer a mobile checking account through products like nowBANKING without the high cost of internal development. With advanced features such as mobile picture bill pay, identity theft recovery and mobile deposit, local financial institutions can offer tech-savvy accountholders services they will use and appreciate. 

Tech_Savvy_Accountholders

Size doesn’t matter when it comes to banking. By maintaining low accountholder fees, cultivating strong accountholder relationships and providing valuable services, your financial institution can grow accountholder acquisition from megabanks’ market share. To learn more about growing your financial institution’s profitability and strengthening the bottom line, download our webinar, “Top Shelf Ideas to Increase Your Bottom Line: Growing Interchange Income While Reducing Expenses.”

 

Tags: cash back reward programs, Increasing Market Share and Profitability, Reward Programs, Customer Acquisition and Retention Strategies, Pinnacle Financial Strategies, Debit Card Programs, accountholder acquisition