Navigating Beyond the “Free Checking” Era in Business Checking

By Dave DeFazio

The era of simply offering a free checking account for business checking customers is done.

And community FIs’ biggest competitors - megabanks and digital banks - are well aware of that. They’ve been busy adding value to their business checking accounts, especially in the past few years.

Unfortunately, it’s not the same story for many community FIs. They’re still stuck in the “free checking” era. That’s not going to cut it any longer, and it’s actually ignoring a major source of potential revenue for community FIs.

Why? Business checking accounts bring in about 20% of interchange revenue. And only 7-9% of business accounts drive a majority of that revenue.

That means, there’s a significant opportunity to get community FIs’ best customers more involved in driving revenue and maximizing their primary accounts.

In a new webinar Raise Your Business Payments Game, payments guru Tom Gerry sits down with me to discuss how community FIs can regain their relevance in business checking and outcompete the big players.

In this free ranging discussion, audience participants - decision makers at banks around the country - get involved and share their own experiences with reinventing their commercial accounts.

For example, when asked why the audience thinks there’s less debit card income from SMBs at community FIs, one participant notes that offering a debit card to business customers isn’t an automatic process for smaller FIs. But it is for megabanks and even digital banks.

Another guest then observes that of the business accounts that have debit cards at their bank at least 77% are using them at least once a month. That’s obviously not the norm but it’s an example of how an engaged business checking cohort can be a game-changer.

The fact is, the competition knows the revenue-productivity power of business checking and they’re tailoring account benefits to attract that behavior. Sadly that isn’t happening much in the community FI sector. In general, they’re just trying to “out-free” other banks.

And now that growing deposits on the retail side has become more difficult and expensive, it’s absolutely imperative that community FIs find a smart way to keep growing deposits to fuel earnings. 

In this free webinar, they also discuss:

  • How SMBs can be a powerful tool in boosting non-interest income
  • Creating the kind of SMB checking account that will drive more valuable primary relationships
  • Building SMB accounts that provide value for both the business owner and their employees and deliver more than the megabanks while still growing earnings for community FIs
  • What you need to know about the latest Reg II changes in July

We’ve also just released a survey we commissioned with Cornerstone Advisors where we spoke with more than 1000 SMB leaders to ask about their banking relationships and how community FIs can find important competitive advantages in developing refreshed business banking programs to attract more commercial accounts.

If you’re interested in the survey, which is the perfect complement to this webinar, download it for free here.

New Banker Deposit Survey Results!

StrategyCorps partner Dave DeFazio downloads banking apps for fun. On the weekend. And talks about them at dinner with his family. Armed with a passion for banking strategy, StrategyCorps partner Dave DeFazio has found great success and satisfaction in exploring the intersection of data, marketing, and technology. 

At StrategyCorps, Dave works directly with financial institutions to design, build, and implement a variety of checking solutions in an increasingly mobile-centric world. Dave’s extensive financial services experience and continuous research in the field help him ensure each product and service meets the needs of today’s financial institutions.

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