Kasasa Program Helps Consumers Leave Big Banks While Facilitating Industry Collaboration

The height of Bank Transfer Season had many credit unions scrambling to keep up with demand from consumers wanting to switch from a bank to a local credit union. Some branch operations were overwhelmed for weeks on end as frontline staffers worked to sign up new members.

While more than 50,000 people in the Northwest joined a credit union in the fourth quarter last year, not all bank customers switched from their big bank to a credit union last fall. Some stayed put. According to a recent study by Consumers Union, the advocacy and policy arm of Consumer Reports, entitled, “Trapped at the Bank: Removing Obstacles to Consumer Choice in Banking,” much of that consumer inertia can be directly attributed to how complicated it is to switch accounts.

“We found that indeed it can be a hassle to move one’s money,” the report states in its introduction, “because, simply put, it takes time and money to move your money.”

According to the report, “despite mass protests, widespread media coverage of bad bank practices and organized efforts like the ‘Move Your Money’ movement, the bulk of consumers have stayed put, in many cases because of a perception that moving one’s money is a hassle,” the report states.

Consumers Union goes on to suggest several policy changes and has called on the Consumer Financial Protection Bureau (CFPB) to step in to eliminate difficulties associated with changing financial institutions.

But what can credit unions do to ease that burden in the meantime?

Some credit unions and credit union business partners have developed products that make switching easy. Bank Transfer Day itself increased the visibility of the “switch kit” niche. Switch kits are member-facing products, typically housed online, that work to package up and simplify the transfer process.

One such product, a switch service from BancVue called Kasasa, has begun winning over credit unions in the Northwest. According to Kim Faucher, vice president of marketing for Northwest Resources Federal Credit Union in Portland, Ore., with Kasasa, potential members can join the credit union, open a Kasasa checking account and fund the account online without needing to come into a branch.

“Online account opening for Kasasa comes free with our service agreement with BancVue,” Faucher says. “It has been a wonderful product for us.”

Making the switch easy and then moving these new members beyond a simple savings account quickly is essential to beginning a full-service relationship. While Northwest Resources made the decision to begin using Kasasa weeks before Nov. 5, 2011, it did not have Kasasa up and running on Bank Transfer Day. Even still, in the six months it has been set up, the credit union’s checking penetration has increased by a full 2 percent.

Kasasa was created in 2009 by BancVue CEO Gabe Krajicek as a tool to help smaller community-based financial institutions compete with big banks. Once a bank or credit union joins Kasasa, the company helps the institution establish Kasasa-branded accounts and takes over marketing and promotion. The financial institutions pay setup fees as well as ongoing fees, which are all pro-rated based on asset size.

The credit union members still work directly with their individual credit union, but the credit union, through Kasasa, gets the added benefits of scale associated with being part of a much larger network.

For example, Northwest Resources and St. Helens Community Federal Credit Union, which also utilizes the Kasasa product, have been able to merge resources on certain advertising campaigns. Add to this Kasasa’s national branding program, and suddenly the two credit unions have increased their marketing scale with a minimal expenditure of resources.

The program is customizable, too. Credit unions have the option of using the Kasasa brand or their own brand, adding or removing features, or even upgrading to one of BancVue’s other products, including a member rewards checking and an ATM fee refund program.

And BancVue doesn’t just offer programs attractive to small credit unions. According to Faucher, BancVue’s Rewards Checking product was lauded by her CEO Jim McCarthy, who was part of its launch several years ago at TwinStar Credit Union in Olympia, Wash.

“The product was a huge success for TwinStar in gaining new members and getting the checking account PFI relationship,” said Faucher. “So, Jim wanted us to look into it for Northwest Resource.”

“It’s been received well,” said Verity Credit Union’s Shari Storm of BancVue’s Rewards Checking and ATM fee refund services, which the credit union has implemented. “Our members love it. It allows members to not worry about what ATMs they use.”

For many of the credit union issues associated with Bank Transfer Day, it seems BancVue has created a solution with its Kasasa and Rewards Checking products. The only real questions are how long it will take credit unions to adopt this and similar models, and if it will be in time to take advantage of the continuing consumer movement from banks to credit unions.

 

Editor’s Note: As the one-year anniversary approaches, Anthem will continue to examine the impact of Bank Transfer Day next week through a look at how credit unions in the Northwest have leveraged Bank Transfer Day, an exclusive interview with Bank Transfer Day founder Kristen Christian, and analysis of last fall’s impact from a legislative and political perspective.

 

Questions or Concerns? Contact Matt Halvorson, Anthem Editor: mhalvorson@nwcua.org.

Posted in Around the NW, Community Impact.