SALEM, Ore.—Heritage Grove FCU is lowering the “boom” on local checking accounts with a new offering it expects will steal away Millennials in this market, as well as a growing number of consumers who don’t want checks or overdraft fees.
Heritage Grove has introduced an online “boom” account, a reloadable debit card that offers few frills and no overdrafts, much like the online checking accounts popping up from other providers, such as Walmart’s GoBank and Chase’s Liquid account.
The introduction of the boom reflects CUs’ growing need to provide more efficient transaction accounts in the face of increasing revenue pressure, and the influx of competitors’ online offerings, like Walmart’s product. Odysseas Papadimitriou, CEO of WalletHub and CardHub, Washington, emphasized how online accounts bolster the bottom line by relying on a “very low cost structure.”
The boom, developed by the $100-million CU, is accessible online via free mobile and Internet banking, including free mobile and online bill pay. Members take e-statements and can transfer money to the card via their smartphone and in branch. While not required with the account, members can also transfer money via direct deposit.
The account also does not charge fees, including no reload fees. On its website Heritage Grove stacks up boom against GoBank, Green Dot and Chase Liquid in a chart that shows the other accounts’ fees, including reload charges, then a column with all zeros under the boom (see below).
“We mapped the positive and negative attributes of our current product offerings as well as some of the more prominent bank and credit union competitors in our market. The idea being to create new value by adding positive discriminators like free features that other competitors charge for – while removing negative attributes like overdraft fees,” Heritage Grove CEO Jim Mau told WillametteLive.com, adding that a large number of young members no longer requesting checks influenced the move.
Market Differentiation
After several iterations and prototypes, Mau and his team determined that a debit card with no overdraft fees, no direct deposit requirement, no paper checks, and no paper statements would provide the credit union with the best market differentiation.
“We are the only credit union in our market space that I am aware of with this type of product,” he said. “One local credit union executive recently told me that he believes plastic cards are destined for extinction. I agree that overall plastic use will begin to decline eventually with the rise of mobile payments, just like paper checks have with the rise of debit cards.”
Heritage Grove’s market has many small employers that do not offer direct deposit. By removing the requirement for direct deposit, the credit union contends it has created an opportunity to connect with a valuable source of potential members: local retailers and their customers.
“Instead of forcing options via fees, we have opted to emphasize the positive attributes of boom debit,” Mau told WillametteLive.com. “By requiring e-statements, we lower our per-account costs and focus our offering on people who are willing to receive their statements and other account communications electronically through our Internet banking platform.”
