by
Catalyst Corporate | Aug 19, 2022
Gen Z and Millennials are avid subscription users and strongly oppose fees. At least nine out of 10 Millennials use a subscription service of some kind. Gen Z, on the other hand, spends the most on subscription services, averaging about $377 per month, according to a recent WeThrift survey.
Financial institutions might be wondering how this applies them? To hold onto these younger consumers, it may prove helpful to consider a subscription-based strategy as well. Credit unions may have tiered account packages for checking and credit cards, but still primarily rely on transaction fees overall.
“We live in a subscription-based society,” said StrategyCorps Partner Dave DeFazio. Financial institutions bundling perks for a small fee creates an “Amazon Prime” of checking accounts. Credit unions and banks can offer free accounts, as Amazon does, but when members opt to buy an “Amazon Prime” type of account, they also receive added benefits. These subscriptions are often designed as “market premium memberships” that package time- and worry-saving features with a predictable cost instead of surprise charges, according to Protocol.
Opportunity for growth
The upside of a subscription model is that it allows credit unions to personalize the member experience. The Spotify-Hulu partnership, for example, allows users to obtain individualized product bundles to help increase client retention.
Joan Clark, Vice President of Product at Segmint, weighed in on this concept during an episode of a Banking Transformed podcast. She said one of the ways she sees credit unions and banks benefiting from subscription models is to group all consumers’ existing subscriptions onto one of their payment solutions.
Furthermore, she pointed out that most consumers put subscription services — like video streaming — on their credit and debit cards. Yet, this isn’t common with other bills for cell phone services, utilities or insurance payments, which are also subscriptions.
“Those recurring payments can also be lumped into this type of behavior that we want to encourage,” Clark explained. “The more a financial institution can capture repetitive purchases, the more likely they are going to be the primary financial institution for that member.”
Combatting the overdraft evolution
In 2021, a publication by Ally Bank claimed they were “eliminating overdraft fees once and for all.”
While doing away with overdraft fees completely isn’t likely to happen, restructuring accounts to offer more benefits and reduce such fees is occurring. In September 2021, StrategyCorps conducted a survey with over 400 credit unions and banks, asking how they plan to generate replacement revenue – 57.8% of respondents said they would offer new products and services that generate fee-based revenue.
StrategyCorps, known for their delivery of analytical insights and strategic financial services solutions, has partnered with Catalyst Corporate to offer credit unions the BaZing mobile rewards program since 2015.
BaZing is a successful vehicle for combatting the overdraft evolution and helping credit unions grow checking account subscriptions. The BaZing app provides members with a collection of non-traditional, value-added benefits to further boost checking account loyalty. Some of the many benefits include roadside assistance, health savings, fuel rewards, and cell phone protection.
To learn more about how the BaZing mobile rewards program may be able to help enhance the profitability and appeal of your checking program, contact us today.