financial services

Economy-Weary Customers Seek More Bank Rewards


With the economy remaining tepid, consumers are looking for "rewards" for as many purchases as possible, according to Mintel Comperemedia.

The Chicago-based company reports that in the first three quarters of 2009, nearly a third of checking-focused direct mail offers (31%) promoted rewards for everyday banking. This compares to just 13% of offers tracked in 2007.

Taking a cue from credit card issuers, many banks have started offering rewards for daily purchases. "Consumers feel tapped out financially, so they want more bang for their buck," says Susan Wolfe, VP of financial services at Mintel Comperemedia. "Banking rewards programs are yet another deal for bargain-hunters to find."

Most programs allow consumers to accumulate points based on their purchases that can be banked and then cashed in for merchandise or gift cards or services for everything from spa visits to hang-gliding lessons.



Citibank's extensive rewards program -- the "ThankYou Network" -- leads the industry in innovation. "Designed to develop and nurture customer relationships, Citibank's program is unmatched in depth," Wolfe says. Citibank heavily promotes the "ThankYou Network" in customer mailings and as part of its acquisition strategy.

Other banks -- such as Citizens and KeyBank -- offer rewards programs, but they often focus on just one activity, like debit usage. One notable exception is Capital One, which launched a rewards checking account in late 2008. Capital One allows customers to combine rewards from credit and checking to earn points faster.

Rewards are available through other banks if they participate in the program sponsored by Visa or MasterCard. Visa offers the Visa Extras program and MasterCard offers the MasterCard Debit rewards program. Chase, M&T, PNC, and TD Bank are among the banks that participate in the Visa Extras program.

"In 2010, I believe we'll see banking rewards programs begin to grow in number and scope," Wolfe says. "As the industry recovers from recession, banks will look for ways to make their customers more loyal and profitable. Rewards programs will likely be part of that solution."

Mintel Comperemedia expects to see a lot of changes in banking overall, given the new government regulations on how overdraft fees can be assessed, Wolfe says.

The main change will be fewer free checking accounts. Customers will only qualify for free checking if they maintain a minimum balance or have a number of other products through the bank. Banks wish to move to "relationship banking" where they are managing multiple accounts and products for customers because there is more profit, she says.

"We also expect to see more aggressive debit card marketing because an increase in debit card use would help the banks make up some of the lost revenue from overdraft fees," Wolfe tells Marketing Daily.

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