Why Banks Bundle Products For Consumers

Author: BankFeeInsider.com     Sunday, September 07, 2014 12:00 AM

In recent years, bank bundling has become a commonplace way for banks to offer discounts to consumers. This process works in much the same way as product bundling through a cable company, where premium stations and even Internet services may be included in an all-in-one package, with deeper discounts offered for bigger packages. In the case of bank bundles, packages may include services like credit cards, savings, checking accounts and individual retirement accounts.

Advantages For The Banks

According to the article “Product Bundling Pays Off For Banks,” on bai.org, fee bundling helps banks retain and acquire more customers while leading to increased fee-revenue.

Bai.org conducted a national analysis that included responses from 1,500 bank customers. This market study asked two questions:

  1. Are customers who pay for one service likely to pay for other services?
  2. Are customers who use one service likely to use other services?

The answer to both of these questions a strong yes. Customers like an all-in-one package that allows them to get more than one service through a single institution. Particularly attractive to clients seem to be the packages that that include credit score reports and identity theft alerts combined with a checking account. According to bai.org, one such case of bundling credit score reports, identity theft alerts and checking accounts increased bundled account sales by 60% at East Carolina Bank, based Engelhard, NC.

Advantages For Consumers

From the consumer end, bank bundling done right can save money while providing the convenience of a one-stop shopping service. Bank bundles allow consumers to get more financial services for a lower price, according to the article “Make A Bundle By Bundling Bank Accounts?” on bankrate.com.

Bank bundles that include more products offer higher rewards. In addition, customers that retain their bank bundles for a long time will see a greater financial impact over time. These packages are a good way for customers to establish a relationship with their bank, leading to loan opportunities and other financial products down the road. The longer that a bank and a customer maintain a mutually beneficial relationship, the more rewards a client stands to reap in the future.

Consumers who commit to bank bundles should always be aware of the restrictions on their bundle, and read the fine print carefully. Before signing on to any bank bundle, consumers must assess their own personal financial needs and priorities. By knowing what they want, consumers can shop for the best bank bundle available, maximizing savings and convenience.

Sources:

1. http://www.bai.org/bankingstrategies/marketing-and-sales/marketing-and-promotion/product-bundling-pays-off-for-banks

2. http://www.bankrate.com/finance/banking/make-bundle-bundling-bank-accounts.aspx

Source: http://www.bai.org/bankingstrategies/marketing-and-sales/marketing-and-promotion/product-bundling-pays-off-for-banks http://www.bankrate.com/finance/banking/make-bundle-bundling-bank-accounts.aspx