BancVue’s national branded co-operative product Kasasa, designed
to level the playing field with megabanks in the US, is showing
growth in its network strength. BancVue CEO Gabe Kraicek talks to
Charles Davis about how Kasasa is changing the
nature of competition among community banks
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Three years ago, BancVue, a financial services
marketing and product development firm focused on community banks,
began touting its most ambitious rollout ever: Kasasa, a national
branded co-operative designed to help level the playing field with
the megabanks.
Gabe Kraicek, CEO of BancVue, says if he has
learned anything it is that launching a national brand is a lot
harder than he thought.
“We thought we’d convince people based on our
data and the experience our partners have had, and that people
would be signing up in droves,” he says. “However, it took two
years to really turn the corner. We got a lot of ‘great idea… but
call us when you are national’.”
Now, however, an increasing number of
BancVue’s more than 600 financial institution clients are adopting
the product. Kasasa now boasts of 130 financial institutions in 38
states, and Kraicek says his earlier goal of 200 now “sounds like a
layup”.
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By GlobalData“Now we talk about 1,000 Kasasa partners
within the next five years,” he says.
If growth continues as projected, Kasasa will
soon represent a branch network larger than Bank of America, Chase
or Wells Fargo and have a $100m marketing budget that will rival
the media spend of any megabank.
The bigger the Kasasa network grows, the
better for its members – all of which put their entire marketing
budget into one collective fund – and the more able they will be to
compete against regional and national rivals.
“If they were one bank, Kasasa would represent
the 18th largest branch network in the country and the 15th largest
media budget among financial institutions in the United States,”
Kraicek says. “It’s about levelling the playing field a bit.”
By arming community banks and credit unions
with a megabank-sized R&D budget and marketing campaign, and by
tapping the collective brains of hundreds of bankers, they’ve come
up with some of the most popular banking products in the
marketplace.
The latest wrinkle: Kasasa 360, an integrated
online and mobile banking dashboard, complete with the aggregation
and personal financial management tools featured by the national
players.
Kraicek says that the product is a direct
result of feedback from customers, particularly those stolen away
from the big banks.
“They told us that they loved the personal
service and small-bank feel, but they really missed a high-end
online banking package,” he says.
“So we worked to create a user experience that
closes the gap between the community bank and the megabank.”
Beyond deepening the account holder
relationship and increasing client retention, the Kasasa 360
platform has been designed to help participating community banks
and credit unions drive greater revenues and facilitate more
cross-sales activities.
Kasasa 360 joins the other products in the
line-up including the core product, Kasasa Checking.
The account, which Kraicek said has been the
driver of the programme’s growth, comes with no minimum balance,
free online bill pay and reimbursement of ATM fees up to about $30
per month, as long as customers make a minimum amount of debit card
purchases per month, have at least one automatic bill payment or
direct-deposit transfer and receive bank statements online.
Kasasa also offers a high-interest savings
account, Kasasa Giving, a component of the checking account that
directs a portion of the interest earned as well as a cut of debit
purchases of $10 or more to a charity; and Kasasa Tunes, where
users can earn up to 10 free iTunes downloads a month.
All Kasasa products are free accounts, with no
minimum balance, no monthly fees, free online banking and
nationwide ATM fee refunds.
It’s a product set that allows Kasasa partners
to go toe-to-toe with the big banks in their market – banks that
differ from state to state and region to region.
Kraicek says that geography matters only in
the messaging – community banks everywhere are squared off against
deeper-pocketed competitors, and only by what he calls “competing
together” can they respond effectively.
“We have to think about this from the local
market upwards. So if we have one Kasasa institution in a state, we
aren’t buying ads statewide, we are buying the market,” he
says.
“But, as we get two or three or more
institutions in a state, or a region, we can do much more powerful
things.
“In Cleveland, we have seven Kasasa partners,
so we pooled about five of each of their overall marketing budgets
and became a sponsor of the Cleveland Cavaliers’ NBA franchise.
That has a huge pop – it’s the thing national
banks do all the time, that a community bank never would have
dreamed of doing.”
Kraicek says that similar networks of Kasasa
partners are emerging in other hotly contested retail banking
markets.
“We will be doing a whole lot more of that as
we go,” he says. “The next step from state clusters is bigger
regional plays, then ultimately national competitiveness. Community
banks can still compete against one another in many ways, but they
can’t simply go at one another and let the big guys get a
pass.”
Ultimately, Kasasa is about changing the
nature of community bank competition. Kraicek says he is seeing
Kasasa partners reaching out to one another to team up, recruiting
new members to the cooperative to compete more effectively with
entrenched retail powerhouses.
“I believe in competition, but when you are
competing in ways that make no sense, when are you fighting
yourself when community banks have 30-odd per cent of the market,
it requires a bit of a mind shift from 20 years ago when community
banks owned the majority of market share in a lot of places,” he
says.
“It took a lot of work to get clients thinking
this way, because it’s really a new way of thinking about community
banking.”
