Actionable Insights From APT's Retail Practice
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Chase tries to get back on consumers' good side, but at what cost?

February 19th, 2010 | Posted by Will Weidman in Financial Services | Uncategorized - (Comments Off on Chase tries to get back on consumers' good side, but at what cost?)

A recent article in the Washington Post discussed how credit card issuers are not just trying to comply with new regulation but “are trying to change their image as well by aligning themselves on the side of consumers with new programs to help them manage their money.”

Chase recently made its Blueprint program available to 20 million of its cardholders. Customers who enroll in Blueprint can “choose a list of everyday expenses such as groceries or medications to pay in full each month. In return, Chase waives the interest on those charges – even if the customer carries a balance from other purchases”. (more…)

Avoid Citi's Big Mistake

February 15th, 2010 | Posted by Jatin Atre in Financial Services | Uncategorized - (Comments Off on Avoid Citi's Big Mistake)

Citibank recently announced it was planning to begin charging a monthly service fee for about 1 million accounts that previously had free checking. Not so fast, said New York Attorney General Andrew Cuomo. Citigroup now has to delay its plans until 2011 since “Mr. Cuomo’s office didn’t believe Citigroup provided customers with adequate notice about the new fee.”

Citi should thank Mr. Cuomo. What would have happened if he didn’t block their decision? The answer is that nobody really knows. It’s possible that most customers wouldn’t have noticed or wouldn’t react negatively. It’s also possible that attrition would have skyrocketed.

It is clear that retail banks need a new strategy for free checking. A recent article in the New York Times details the rise of free checking in the 90s. It helped bring customers in the door and eventually “became a commodity.” However, the fees that propped this product up and made it profitable are now disappearing.

The challenge is that customers have become used to free checking and now expect this service from their bank. How will they react when it goes away? Banks need to be very smart and targeted in how they approach free checking in the future. (more…)