Some community banks have partnered with fintechs specializing in ways to make saving easier for customers. Here are two community banks that are growing deposits by offering personal micro-saving services through different fintech partnerships.
By William Atkinson
As a growing community bank, $660 million-asset ChoiceOne Bank in Sparta, Mich., found that its primary challenge was maximizing revenue. It needed help acquiring low-cost deposits, increasing loans and creating long-lasting relationships.
In the past, the community bank had primarily relied on its branch network and traditional marketing tactics like signage to attract new customers.
While many of its consumers still prefer in-person banking at a branch, more and more of them are seeking to bank digitally, making it critical that ChoiceOne Bank look beyond its previous methods of engagement. One area it looked at was how customers were—or weren’t—saving money.
of millennials have a savings account, though 58% have a balance of less than $5,000
“We realized that traditional passbook savings accounts and Christmas Club accounts are things of the past,” says Adom Greenland, the community bank’s chief operating officer. “They have gone the way of the dinosaur. They required customers to come into the bank and physically make deposits. No one wants to do that anymore, especially people of the younger generations. Even the older generations are preferring to handle their banking transactions via their phones.”
Kathleen Craig, a former Michigan community banker who is now the founder and CEO of HT Mobile Apps in Dexter, Mich., realized during her time in banking that the bank had savings accounts sitting on its books. Several of these accounts were under $500, inactive and costing the bank money. “I also realized that Christmas Club accounts were very expensive, because they were so labor-intensive,” she says.
Craig understood that there needed to be a way to encourage customers, especially young ones, to save money for things that appealed to them and that would be cost-effective for banks. The result was a savings app called Plinqit.
Following a keynote address she gave at a technology conference, Craig was approached by a board member from ChoiceOne Bank who expressed interest in Plinqit. The meeting was serendipitous. Greenland happened to know Craig through other banking channels and her reputation in the industry.
“When she came up with the concept for Plinqit,” Greenland says, “we reconnected on this idea and began to discuss how a traditional bank like ChoiceOne could participate in a way that was sound, that would also meet all the requirements of our compliance department and that, of course, would provide our customers with new options. Philosophically, we realized that the Plinqit app was a fabulous idea.”
ChoiceOne Bank launched its partnership with Plinqit in January 2018, becoming the first bank in the nation to offer the app to its customers. The app enables customers to securely link their Plinqit account to their checking account, make a savings goal and automatically set aside money at a rate and schedule of their own choosing. Opening the account is easy, taking less than five minutes. “Customers can create several goals with Plinqit: saving for Christmas, saving for vacation, etc.,” Craig says.
The Plinqit app has a “build skills” module that includes educational pieces, videos and quizzes related to financial literacy and other money topics, such as mortgages. By passing these quizzes and referring friends, customers can earn small cash rewards that are then applied to their savings goals.
“In order to publicize Plinqit, we have used all avenues,” Greenland says. “Our tellers and sales staff in the bank tell our customers about it when they visit. For example, when we had Christmas in July, we offered customers a $10 incentive to join Plinqit.”
The community bank uses social media, emails, direct mail, handouts at town parades and even guerilla marketing at coffee shops to get the word out about the app. “Overall, our goal is to have fun with our marketing efforts and emphasize to customers just how easy and fun Plinqit is,” Greenland says.
Compared with traditional savings accounts, Plinqit is typically lower in cost to operate. The app has also facilitated cross-selling for the bank. Already, the majority of Plinqit users have reached their savings goals and have created new ones in order to continue saving.
“We have found Plinqit to be extremely popular, because it provides our customers with what they want,” Greenland says. “It is also very sustainable and cost-effective.”
To date, ChoiceOne Bank has seen about $150,000 in deposits through Plinqit, according to Greenland. “Even more important than that is the exposure we are receiving as a bank that is expanding its offerings to its customers and community as a whole,” he says.
What is the best way for a community bank to get started with an app like Plinqit? “The best way is to start with your own employees, so that they can become familiar with the concept and become more comfortable with it and how it works,” Craig says. “You can then expand to your customers.”
Then, beyond that, you can even expand to people who aren’t customers yet. She adds: “People don’t need to be customers of the bank in order to utilize Plinqit, so this can be an excellent way for a bank to make contact with noncustomers.”
“This can be an excellent way for a bank to make contact with noncustomers.”
—Kathleen Craig, HT Mobile Apps
A personalized saving tool
Another community bank getting actively involved in the savings app trend is $1.2 billion-asset Lincoln Savings Bank, a 117-year-old commercial and rural agricultural lender in Reinbeck, Iowa.
In 2013, as marketing director of the bank, Mike McCrary, now a first vice president and relationship manager, started looking for ways to help the community bank better compete digitally in the face of what some new fintech companies were doing at the time.
McCrary realized that the fundamental strengths of community banks are local knowledge, connections and customer support. However, he also realized that any new significant growth potential would need to come from the digital world, which was becoming particularly appealing to younger customers.
His search led him to a company then called Social Money in Des Moines, Iowa. Later acquired by a company called Q2, the company had expanded an open-API core platform and was seeking a bank with which to partner. Within that timeframe, Q2 also acquired Social Money client Qapital, a mobile personal finance app based in New York City with roots in Stockholm.
“We met with them, liked their vision, background and team, and decided to pursue a partnership,” McCrary says, adding that they partnered in 2014 “and have been growing with them ever since.”
According to McCrary, Qapital’s founders observed a common problem among customers: Life is full of temptations around every corner. “We often make decisions without really understanding the opportunity costs,” he says.
To help deal with that challenge, Qapital brought in chief behavioral economist Dan Ariely, a professor of psychology at Duke University, who applied his learning about people’s relationships with money to Qapital. “People who use it don’t think about accounts or statements,” McCrary says. “They think about goals and things they want, and then find that achieving these are a lot more within their reach than they ever thought.”
Qapital’s goal-driven, rules-based approach encourages users to save for things they aspire for, such as vacations, weddings and down payments on homes. The app does this by turning everyday habits and “guilty pleasures” into opportunities to save, McCrary says, usually without the customer even having to think about it. The way the app works is that users start by establishing goals. Then they create ways to fund it. Many choose a round-up rule that saves the difference between a charge and the next highest dollar amount.
“Customers can also connect Qapital to all sorts of other apps, such as connecting to ESPN, and reward themselves each time their teams win with a contribution to their goal,” McCrary says, adding that the saving possibilities are nearly endless. “We are very happy to be the bank of record for Qapital, and the issuer of their debit card.”
William Atkinson is a writer in Illinois.