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Fifth Bank Failure of the Year - Allied Bank in ArkansasBancVue Is Again Offering Free Gas to Promote Kasasa and Reward Checking
BancVue is repeating its free gas promotion that it did last year. The promotion is part of BancVue’s marketing campaign to spread awareness of Kasasa, its national brand of free checking and savings accounts. These types of promotions should grab the attention of many people who may not pay much attention to checking accounts.
This latest gas giveaway promotion takes place in 38 cities in several states on August 28-29, 2013. They're giving away $20 of free gas for the first 200 cars at each participating gas station. It starts at 9:00am and lasts until 11:00am on Wednesday and Thursday. Full details including a map showing all the locations are listed in this Kasasa promotions page. This might be an easy $20. There are no requirements to open the account to get the free gas.
That Kasasa promotion page lists the gas giveaway sponsors. These are the banks and credit unions that are Kasasa providers (or plan to be). We have seen a few new Kasasa providers over the last couple of months. Hopefully, this marketing campaign will attract more banks and credit unions to offer Kasasa in addition to attracting consumers.
According to the Kasasa promotion page, $152,000 in gas will be given away to consumers. That’s an increase from $80,000 in gas that was given away in last year’s promotion. Last year BancVue said there were more than 300,000 Kasasa accounts. This year that number has increased to 400,000. It’s good to see Kasasa is growing. I would like to see it to grow more, especially in certain areas of the country. It appears that the growth hasn’t been evenly spread across the country. As you can see in the list of Kasasa providers, there are still states with no Kasasa providers like California, and there are several large states with just one or two providers.
The main way Kasasa and reward checking accounts are able to pay out high interest rates and still be profitable for the banks is from debit card interchange fees that merchants pay when consumers use their debit cards. One risk for Kasasa and all reward checking accounts is a reduction in interchange fees. That almost happened in 2011 when the Federal Reserve implemented new regulation that capped interchange fees. Fortunately, that has not impacted community banks and credit unions. However, there are worries that regulations and court decisions will eventually lower interchange fees even for small banks and credit unions. This might explain why Kasasa hasn’t grown more. Bank executives may be hesitant to invest in this when there is uncertainty with debit card interchange fee revenue.
Another reason why I think Kasasa hasn’t grown more is due to the name. The vast majority of people are never going to remember that Kasasa is a brand of free checking and savings accounts. I think the name has not been appealing for both consumers and bankers. That may have discouraged some banks from offering Kasasa. BancVue still offers reward checking accounts without the Kasasa brand, but it seems like BancVue is putting most of its investment dollars into Kasasa (as this latest promotion shows).
Finally, Kasasa and BancVue reward checking accounts are not the only reward checking accounts from banks and credit unions. Many have developed their own reward checking accounts. This can be less costly for the banks since they won’t have to pay BancVue monthly fees. Our reward checking rate table includes BancVue reward checking and Kasasa Cash accounts, and it includes non-BancVue reward checking accounts. One downside with some non-BancVue reward checking accounts is that they sometimes have monthly service fees.
If you're new to reward checking, my blog post, 10 Common Traits of High-Yield Reward Checking, should be useful.
Free gas, free checking, no min bal, high interest rates, atm refunds nationwide, supporting local communities, banking that isn't all about corporate stock prices.
Gee wilikers, don't throw me in that briar patch. :-)
First, the name Kasasa. We know it’s not a traditional banking name. But that’s the point. Kasasa is a challenger brand and had we gone with something more traditional like “Power Checking” (just as an example), it would not have cut through the clutter. Like or hate it, “Kasasa” tests very high in consumer recall. We have tons of data to support it, but I think the best evidence is that we are talking about it now. Would you be reading this, or would I be typing it, had we chosen something generic like “Super Checking?”
Kasasa is memorable because it’s different. Sure something more conventional might have been easier to get the first banks and credit unions to buy into, but our goal is giving them marketing that gets results. And the name “Kasasa” is absolutely part of what makes it work. As the results have been proven over the last four years, the name is one of the brand’s biggest assets.
Second, you mentioned interchange regs being a threat to the account type. Well obviously like all checking accounts, some of the profit is based on interchange. But consider this, in Kasasa Cash, the high interest Kasasa version of REWARDChecking, only ~18% of the profit for the FI is from interchange. Even if you completely removed interchange from the model, Kasasa Cash is still more profitable than a traditional free checking account for the bank or credit union. In reality, a reduction in interchange would likely trigger slight reductions in interest rates (or in a rising rate environment, slower increases in rates). That said, the rates would still be the best a consumer can find in the market. So yes, reductions in interchange stink for the financial institutions and the consumers, but Kasasa will remain the best you can find.*
Third, your last paragraph speaks to how certain non-BancVue rewards style accounts have fees. When we created Kasasa it was, in part, a direct response to this issue. There are so many different types of rewards accounts out there. Some have hidden fees. Some have “gotcha” fees if you don’t qualify. We created Kasasa to let consumers know that when they see that brand, they can count on it (1) being free, (2) having no minimum balance, (3) providing rewards, and (4) only being from a community financial institution. Instead of having to read the disclosures of every reward account out there, the consumer can just look for “Kasasa” and know they have one of the best accounts in the country.
Thanks for the article! Take Back Your Banking, free gas event, is going amazingly well by the way! We appreciate you writing about it.
*The profitability information is based on the account type only. It does not factor in total relationship value of the consumer who typically utilizes several other products from their primary financial institutions. Factoring that additional value in, even more solidifies Kasasa’s place as a powerful contributor to the financial institution’s well being even without interchange factored in.
You ask “what is BancVue?” Unlike Perkstreet (now defunct) and Mango, BancVue/Kasasa partners with many different community financial institutions. We aren’t trying to be the “face” of the bank/CU in the eyes of the consumer. Instead, we believe that the community bank or the credit union themselves must preserve that place in the minds of the accountholder.
Kasasa was created as a ***product*** brand to be offered only at community financial institutions. Kasasa is somewhat like “Rolex,” which is sold at local jewelers, because Kasasa is a product that is offered only through the community FIs that participate. It’s the pretty standard wholesale/retail model that is common in most industries. Our innovation is brining this proven marketing and product development technique to the financial services industry.
Think about it…if community banks and credit unions sold shoes, metaphorically, they’d be cobblers. They make their own products. Our idea with Kasasa is to pool the resources of many community financial intuitions to create better products and to market them with scale-driven tactics that give more marketing bang-for-the-buck.
Like we said in the previous post above…we created the brand to help consumers know that when they see “Kasasa” they can trust that the accounts are always free, have no min balance requirements, aren’t teaser rates, etc. We want consumers to know that when they see Kasasa they are seeing a product brand they can trust from a local FI that cares about the community and provides great personal service.
As for how we are paid, it’s a lot like most financial technology providers. We get a flat fee plus a per account support fee. We also coordinate the cooperation of the participating financial institutions’ marketing budgets to pool the resources for larger advertising purchases as well as national promotions (like the one described in the article).