REWARD Checking

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Market Review on Reward Checking Programs
Presented by David J. Prost BancVue,
Ltd. August 25, 2008
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Agenda

• The Battleground in the War for Deposits
• The Competition and What Theyre Offering
• What a Credit Union Needs to Compete
• Why Reward Checking
• Solution Considerations

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Agenda

• The Battleground in the War for Deposits
• The Competition and What Theyre Offering
• What a Credit Union Needs to Compete
• Why Reward Checking
• Solution Considerations

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Community FI Deposits Have Decreased by 50 in
the Last 17 Years
Source FDIC Data
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8 of 10 Checking Accounts are Opened at the 20
Largest Banks ABA News, December, 2006
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53 of Credit Unions Lose More Members than They
Gain Each Month Dennis Dollar Former NCUA
Chairman
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71 of Online Americans Cite the Internet as
Their Preferred Method of Shopping for Financial
Products Mediamark Research Intelligence,
2008
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Online Acct Opening Adoption Forecast
- Javelin Strategy Research, Sept 2007
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1 in 5 Households Have a Net-Only Institution
Banking Relationship Bank Technology News,
February, 2008
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Low Cost Acquisition
What Is Your Cost Of Acquisition For Checking
Accounts?
Online 143
In Branch 328
Over The Phone 250
- Forrester Research, July 2008
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Agenda

• The Battleground in the War for Deposits
• The Competition and What Theyre Offering
• What a Credit Union Needs to Compete
• Why Reward Checking
• Solution Considerations

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80 of accounts are opened at the top 20 banks
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Online Threat (Its Real)
1 of 5 Households in US has a Direct Bank
Account. - William McCracken, CEO
Synergistics Bank Technology News, Feb 2008
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Real Threat Starts Here
and Gathers Momentum Here
Apply Now
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Agenda

• The Battleground in the War for Deposits
• The Competition and What Theyre Offering
• What a Credit Union Needs to Compete
• Why Reward Checking
• Solution Considerations

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Must-Have Weapons in the War for Deposits

• Age/Passionate Interest/Lifestyle-Targeted
  Compelling Products
• E-Marketing Branding
• E-Commerce, i.e., Apply Now
• Learned Consultation Guidance

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Rate Shoppers
Other
Your Market
Parents Grandparents
Gen Y
Philanthropic
Patriotic Americans
Does Your Credit Union Have Products that Target
by Age, Passionate Interest and Lifestyle?
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Agenda

• The Battleground in the War for Deposits
• The Competition and What Theyre Offering
• What a Credit Union Needs to Compete
• Why Reward Checking
• Solution Considerations

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• Free Checking Account with No Minimum Balance
• That Rewards Members
• With Nationwide ATM Refunds High Dividends
• If Fee-Boosting, Cost-Saving Criteria is Met.

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Cost of Funds
Reward Deposits Generate 54 More Profit
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Adoption of Technology
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Profit Per Account
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Reward Checking vs. Free Share Draft Member

• Carries 5x Balance
• Stays with Their Credit Union Twice as Long
• Generates 2x More Capital
• Utilizes Technology to Significantly Greater
  Extent
• Becomes a Raving Fan of Their Credit Union

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Agenda

• The Battleground in the War for Deposits
• The Competition and What Theyre Offering
• What a Credit Union Needs to Compete
• Why Reward Checking
• Solution Considerations

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Solution Considerations

• Compelling Products
• E-Marketing E-Commerce
• Learned Consultation Guidance

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Solution Considerations

• Compelling Products
• E-Marketing E-Commerce
• Learned Consultation Guidance

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Rate Shoppers
Other
Parents Grandparents
Gen Y
Patriotic Americans
Socially Conscious
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Solution Considerations

• Compelling Products
• E-Marketing E-Commerce
• Learned Consultation Guidance

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REALSite Results

• helped us open over 20 accounts online PER DAY
  over our first four weeks of rollout!
• - Allegacy Federal CU

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www.freetuneschecking.com
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Solution Considerations

• Compelling Products
• E-Marketing E-Commerce
• Learned Consultation Guidance

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Learned Consultation
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Bonus Rate Impact

• Financial Institution B
• 1.6B FI
• 25 Months on Program
• 52MM RC Deposits
• 29.3MM (56) New
• 8,474 RC Accounts
• 4,632 (55) New
• -0.56 COD

• Financial Institution A
• 1.3B FI
• 23 Months on Program
• 16.7MM RC Deposits
• 7.6MM (46) New
• 2,308 RC Accounts
• 812 (35) New
• 0.34 COD

Higher Rate
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Bonus Cap Impact

• Financial Institution B
• 1.5B FI
• 44 Months on Program
• 166MM RC Deposits
• 86.3MM (52) New
• 18,880 RC Accounts
• 11,207 (59) New
• -2.20 COD

• Financial Institution A
• 1.1B FI
• 18 Months on Program
• 123MM RC Deposits
• 45.6MM (37) New
• 7,827 RC Accounts
• 1,811 (23) New
• 2.74 COD

Higher Cap
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Marketing Impact

• Financial Institution A
• 851MM FI
• 14 Months on Program
• 302MM RC Deposits
• 171MM (57) New
• 20,233 RC Accounts
• 12,206 (60) New

• Financial Institution B
• 1.5B FI
• 24 Months on Program
• 48MM RC Deposits
• 20.3MM (42) New
• 3,373 RC Accounts
• 1,217 (36) New

50 More Branches
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Training Impact

• Financial Institution A
• 375MM FI
• 58.7MM RC Deposits
• 33.2MM (57) New
• 4,138 RC Accounts
• 1,681 (41) New

• Financial Institution B
• 245MM FI
• 2.4MM RC Deposits
• 531K (21) New
• 187 RC Accounts
• 41(22) New

10 months on Program
7 months on Program
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Consider This . . .

• Bonus Rate Off By 15 Basis Points on 20 Million-
  30,000/Year or 2,500/Month
• ATM Refunds Off By 3/Account on 2,000 Accounts -
  72,000/Year or 6,000/Month
• Disintermediation Off By 1.2 Million at 2 -
  24,000/Year or 2,000/Month

Learned Consultation PAYS!!
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Q A
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Market Review on Reward Checking Programs
Presented by David J. Prost BancVue,
Ltd. August 25, 2008