Author: Jerry Federico, JFederico@profitstars.com
Highlighted by recent industry discussion are the millions of “unbanked” individuals and families. The “unbanked” are often portrayed as not wanting to have banking relationships or having the inability to “qualify” for accounts. But, the success of non-financial organizations providing “bank like” services to this demographic contradicts these preconceptions.
With the use of a “prepaid”, or probably better defined as a “stored value card” program, your financial institution can gain deposits and profitable customers, while helping your community improve the quality of life for these individuals and families.
Let’s be clear, there are many “prepaid card” programs that do not match up to the market, have failed, and/or have been too costly to be successful. By considering the following guidelines, you can provide a true win/win program for your financial institution, your existing customers and your new customers:
The features of the program need to be competitive with the successful programs available today. This means using mobile devices to provide text messages of deposits, purchases and balances. It means the ability to issue additional cards to family members and having the ability to customize controls on those secondary cards. It means providing on-line bill-pay services, allowing your customers to pay all of their bills without the expense of money orders.
Now think what this program will mean to your community. You will be providing financial services to those who often spend one to three percent of their income just to get their payroll checks cashed. This can easily add up to $250 to $1,000 yearly in check cashing fees. With your program, you will be providing these customers with an FDIC insured account and a card that is accepted at literally millions of retail businesses. These customers can now go online to make purchases, benefiting from the many online discounts available only to those who have a method of electronic payments.
These programs will bring benefits to your community and profitable customers to your financial institution. These relationships will allow you to offer other banking products in the future, for additional income opportunity.
Year 2013 will be the year of the stored value card. You owe it to yourself to investigate these programs.
In my next post, I’ll address how your business customers should be your first ally in launching your stored value card program.
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