BankFirst has partnered with a fintech company to help consumers track their spending on subscription services, as well as help the community bank grow interchange income and marketing opportunities.
By Elizabeth Judd
Location: Columbus, Miss.
Assets: $1.8 billion
These days, it’s not unheard of for a single household to be paying for three or four separate subscriptions to a streaming service because various family members signed up on different credit or debit cards. With so many subscription services available, from Netflix to Hello Fresh, all those recurring payments are hard to remember and track. The problem of managing a jumbled web of recurring fees is a problem that community banks are uniquely positioned to solve. Or at least that’s the belief of WalletFi, a four-year-old subscription management fintech in Raleigh, N.C., and of $1.8 billion-asset BankFirst in Columbus, Miss.
Marc Miller, CEO of WalletFi, says his business was born of “a personal pain” of reapplying for subscriptions and services after a few of his bank cards were lost, stolen or had expired. “We’re hearing more and more about the subscription economy, especially post-COVID,” he says. “The way that we consume services has shifted permanently to a subscription-based, recurring payment model.”
Miller points out that the average American has “something like 13 recurring payments, which is a huge number.” Nowadays, he notes, streaming services, Amazon Prime, utilities, mobile services, life insurance and even high-end purchases like a Mercedes can be financed on a subscription basis.
Customers can only effectively manage a dizzying number of set-it-and-forget-it payments if they have a way of knowing what payments they’ve committed to, Miller says. WalletFi simplifies this by untangling messy payment data and separating out the recurring payments. A community bank like BankFirst can then make customers’ lives easier by listing all recurring payments when someone gets a new debit card or wants to take advantage of a promotion that encourages debit card use.
“Knowing what customers had set up on their old cards gave us the ability to make sure they didn’t go into arrears on a payment or have a payment declined. It also helped the bank maintain those ongoing, recurring charges.”
—Leon Manning, BankFirst
Why recurring payment data matters
When consumers put recurring payments on a debit card, it’s a “goldmine” of interchange revenue for banks, says Leon Manning, BankFirst’s director of marketing. He notes that in an era of extremely low interest rates, community banks are hungry for this interchange.
From March 31, 2019, until April 1, 2020, BankFirst’s recurring debit card payments for its 33,000-plus debit card holders accounted for 10.4% of total charges, with annual interchange worth $219,799. Put another way, the community bank’s interchange income grew 6.4% from 2019 until 2020 thanks to the WalletFi partnership, which is now nearly two years old.
During this same time period, the number of BankFirst’s mobile wallet transactions expanded threefold, with a 2,500% increase in the average mobile wallet transaction ticket amount.
Recurring payment data can also help community banks seize new opportunities.
Over the past 18 months, BankFirst made two acquisitions, gaining 3,500 new debit-card customers, Manning says. WalletFi extracted three months of payment data for these new customers so that when BankFirst mailed out welcome letters, it could provide the names and contacts for all recurring transactions that might then be transferred to the new debit card.
“Knowing what customers had set up on their old cards gave us the ability to make sure they didn’t go into arrears on a payment or have a payment declined,” Manning says. “It also helped the bank maintain those ongoing, recurring charges.”
Bundling fintech benefits
When it comes to partnerships between community banks and fintechs, the sum is often greater than the parts.
Manning has forged another fintech partnership to help him deal with a different recurring payment headache: canceling unwanted subscriptions. BankFirst partnered with Billshark, a bill renegotiation service in Hopkinton, Mass., backed by Mark Cuban, star of Shark Tank and owner of the Dallas Mavericks. Billshark uses data supplied to BankFirst by WalletFi to renegotiate fees on recurring bills and even to cancel subscriptions on a customer’s say-so.
1 in 3
Americans bought an additional subscription as a result of COVID-19. The most popular: Hulu, Amazon Prime and grocery delivery
In addition to WalletFi and Billshark, Manning is working with Boston-based Saylent Technologies to scour debit card spending data and uncover which cards have not been activated or are underutilized to increase volume of spending. At the same time, he uses ClickSWITCH in Minneapolis to automate the migration of new accounts to BankFirst.
With data and services provided by these fintechs, Manning can get a higher uptake on rewards offers to customers who use their debit cards more than 18 times each month.
Having the new data also allows him to market more efficiently. As a one-man marketing shop, he relies on data patterns identified by fintechs to enhance bank revenue. “I love having the data to make informed decisions,” Manning says.
One idea he’s exploring is contacting customers whose monthly transactions dip to see whether their circumstances have changed and if they need additional help. Another idea is to work with local restaurants that bank with BankFirst to help provide targeted incentives to customers who regularly use their debit cards for dining out.
“The goal of community bankers has always been to help their customers know more about their financial lives and provide them with the tools to more effectively manage them.”
—Marc Miller, WalletFi
Banking on personalization
It may sound counterintuitive, but partnering with one or more fintechs can be a way for a community bank to provide far more personalized service, according to Miller.
“Personalization was always a differentiator for community banks. They knew their customers, but COVID disrupted all that, because customers are not visiting branches anymore,” Miller says. He maintains that when it comes to banking relationships of the future, data will be used to bring back the “personal” touch.
He is especially interested in how millennials and Gen Z can be served through targeted data. That’s because these younger demographics are generally more open to having banks use their financial data to benefit them. Miller is convinced that fintechs like WalletFi can help community banks burnish the personal touch that they’re famous for.
“The goal of community bankers,” he says, “has always been to help their customers know more about their financial lives and provide them with the tools to more effectively manage them.”
Elizabeth Judd is a writer in Maryland.