By Ray Birch
TUCSON, Ariz.—Consumers are willing to pay for a checking account that offers a number of bundled services, but they are more willing to sign up if local merchant discounts are part of the package, according to one CU.
Hughes Federal Credit Union has introduced a new Checking PLUS Local Business Partner Program that offers CU members discounts to local businesses. It is a new element to the Hughes’ recently released Checking PLUS account and the credit union continues to accept applications from local businesses that want to be a part of it.
“This is a bundled checking account and consumers are willing to pay for this,” said marketing manager Dani Gomez, who added that the first three months are free with the account, after which $5.95 monthly is charged.
Gomez said that the credit union immediately saw the advantages of moving to a bundled checking account that offers several services, such as identity theft protection, for a low price.
“We have signed up thousands of new accounts—new members—from this since we launched it at the start of the year,” said Gomez. “But what’s more, we are seeing almost as many existing members upgrade from free checking to this product.”
Consistent With Other Findings
The results jibe with the findings of checking expert Ron Shevlin, director of research at Cornerstone Advisors, who in a previous CUToday.info report pointed out his recent study shows consumers are willing to pay for a bundled account over free checking.
Dani Gomez
In the report, Shevlin insisted that it’s time credit unions drop free checking—not only to compete with fintechs but to give consumers what they want. He emphasized that the long-held assumption within credit unions that free checking is a loss-leader that drives deeper member relationships and attracts greater deposits is actually a myth that is not supported by the research or data.
“Across every generational segment, fewer consumers are interested in a free account, as opposed to a bundled account for a small monthly price,” he said.
‘Icing on the Cake’
At launch, the Checking PLUS package paid .15% interest and also offered cell phone repair coverage, ID theft restoration, travel discounts, 5% back on all travel spend, movie and attraction discounts, and discounts on selected gift cards.
But Gomez said the $1.1-billion credit union felt the local discounts is what was really needed to add a lot of punch to the program.
“This was the icing on the cake,” she said.
Local merchants have been invited to participate without any charge, but are required to provide Hughes’ members with an attractive discount, such as 5% of a purchase. So far 25 merchants have enrolled, said Gomez, with the first-year goal to be 100.
“They get a great deal and merchants realize this,” said Gomez. “We give them some advertising materials, we place a link to their website on our site and we promote them via our social media sites.”
With a lot of foodies in the its region, Gomez hopes to add a lot more local restaurants and grocery stores to the program.
“We think that will further enhance the attractiveness of the account,” she said.
A Way to Stand Out
Hughes is focusing on family-friendly businesses that have been in place for at least two years.
“We want to make sure if we promote a discount that the company will be around to deliver it,” she said. “Now that does not mean if a new hot spot comes to town we won’t enroll them immediately.”
The credit union has two business development reps who are working with local companies.
“When businesses enroll, which is very easy for them to do right on our website, we stop by and give them a welcome packet,” she said.
Gomez said the credit union decided that it needed to stand out more in the local community and that the new checking offering is not matched in the region.
“There is nothing like it here,” she said.
Hughes also wanted a stronger tie-in with the community.
“We are well known for our community involvement, and we wanted to step that up. This product has done that. There is a great deal of local pride here and we want to do our part to help further drive the local economy,” she said.