Regions Financial began creating a suite of
alternative payments products, Now Banking, primarily targeting the
unbanked segment but soon discovered customers across all
demographics using it. Regions spokesperson Mel Campbell tells
Charles Davis about how and why Regions has
expanded the Now Banking platform throughout its entire retail
footprint
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When Regions Financial began creating a suite
of alternative payments products, it might have been easy to assume
that is was to serve the unbanked customers in its retail
market.
A funny thing happened along the way: the bank
began developing its Now Banking package of expedited bill pay,
reloadable debit cards and check cashing services, only to discover
that customers in all demographic segments, and not just unbanked
customers, began using the products.
Mel Campbell, a Regions spokesperson, says,
“We have seen three distinct customer segments emerge for Now
Banking.
“A third make $25,000 or less, a third up to
$75,000 a year, and a third $75,000 and above, so we have people at
all demographic points using Now Banking. There are people that
have just gotten really serious about eschewing debt and paying on
a cash basis, and these products are becoming a part of their
overall financial management picture.”
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By GlobalDataRegions views the market for its Now Banking
suite as its “pay as you go” customer segment, a result of the
bruising recessionary climate of the past few years that has many
mainstream customers taking a much tighter grip on their daily
finances.
After a successful pilot of the program last
year, the bank recently expanded the Now Banking platform
throughout its entire retail footprint. During this time,
Regions Now Banking was also integrated into the
company’s online banking platform and ATM network.
Regions Bank operates approximately 1,700
branches and more than 2,000 ATMs in the South, Midwest and
Texas.
Its customer research found that 30% of
existing Regions customers had used those services in the prior 90
days. The survey also found that 41% of surveyed consumers said
they were somewhat or very likely to use one of those products in
the future.
“A lot of customer research brought us to this
point,” Campbell said.
“A lot of our focus on customer service led us
to the conclusion that expedited bill pay, reloadable debit card
and check cashing services, all form a response to today’s banking
consumer, as well as to consumers in need of banking services.”
To design the Now Banking package, Regions
executives studied the pricing and services offered at competitor
banks and the Wal-Mart Money Center, as well as at major payday
lending stores.
The result is a range of alternative banking
products priced competitively when compared to traditional
providers. Regions charges 1 percent to 3% of the underlying check
amount for check cashing, and 5 percent of the check amount for
money orders.
The Regions prepaid card costs $4 to buy and
has a $5 monthly fee unless direct deposit is set up. Bill-pay
services provided by Western Union and Wal-Mart cost anywhere from
$4 to $20, and most payday lenders’ charges are considerably
higher.
Overall, Regions’ fees are about one-third of
those charged by liquor stores, payday lenders and pawnshops.
Now Banking customers can cash all
approved checks with immediate funds availability; load funds and
make purchases with a general purpose reloadable Visa prepaid card;
and transfer money and pay bills through Western Union; all with or
without a Regions Bank deposit account.
All Regions Now Banking customers
also receive an invitation to participate in a series of
complimentary online financial education courses through a
partnership with Everfi – a leading provider of online financial
literacy courses.
“Since introducing Regions Now
Banking last fall the response has been very positive and we
are proud to be the only large bank offering all of these services
under one roof,” Campbell says.
“We are combining Now Banking with a lot of
financial education as well, and we’re certainly interested in
bringing people into a banking relationship, and helping people
build credit histories as well.”
Regions last year began offering
direct-deposit loans in which customers borrow against their next
directly deposited paycheck. Customers of good standing, who have
done business with the bank for nine months or more, can borrow
half of an upcoming direct deposit, up to $500, via an online
platform.
Now Banking represents a major strategic
direction for the bank and comes at a time when of its competitor
banks are looking to offload customers deemed unprofitable, by
increasing checking account fees and other prices.
No US bank offers the range of alternative
products Regions does, and the industry will be watching closely to
see whether the program generates significant new revenue, and more
importantly, where the bank can migrate a meaningful percentage of
those unbanked and underbanked consumers into banking
relationships.
Wells Fargo, Key Bank and US Bancorp also have
introduced alternative financial services products and are
increasingly trying to appeal to customers that their industry has
largely ignored. KeyCorp, for example, has been offering some
alternative financial products since 2004.
The Cleveland, Ohio-based bank offers check
cashing, money orders and other services, along with financial
education classes, through its KeyBank Plus program. Wells Fargo
offers a secured credit card that requires collateral for consumers
with bad credit or no credit history.
In 2011, Wells Fargo teamed up with
Spanish-language media company SaberesPoder to offer financial
education classes across 13 cities in the US.
Such offerings come as banks have to work
harder to find new business. New regulations have reduced the
revenue that banks can earn from popular debit card operations,
interest rates are lingering at all-time lows, and customer
appetite for new loans remains weak.
For Regions, Now Banking is as much about
serving its existing customer base than anything else, Campbell
says.
“We’ve really expanded our view of this market
as we have learned from our customers. This is about giving
consumers choice when it comes to their everyday financial
management,” says Campbell.
