Banks that roll out a premium product should give some thought about what makes the product “premium.” We all have platinum or elite level checking accounts, and some banks go farther and have a premium fee and loan product. Bankers tend to think of a premium bank product as one that has more bells and whistles than your standard product offering. However, as can be seen below in the latest survey on the topic, more attributes is just a small piece of the puzzle. In this post, we take a quick look at what customers want from a premium product and how that might differ between Boomers and Millennials.
What Else Makes Up A Premium Product
Having more features is a clear winner when it comes to designing a product. Almost half of the survey respondents said that they would pay a premium for superior functionality.
However, in addition to better performance, 38% of participants wanted those features to be packaged in a superior design and come from a well-known brand. This is an area where we can all improve in banking. We often don’t think about upgrading our marketing materials, website, customer service, and materials we use for our banking products.
Almost as important, we also don’t map out and think about the customer experience. While we have worked with a few banks to collaborate on mapping the customer journey and seeing where you can reduce steps and enhance the experience, it is rare that a premium checking account product offers a superior experience than compared to a basic account. Adding an extra 200 items to be processed for free plus ID theft protection does not fundamentally enhance the experience.
What Millennials Think
If you get more granular in the data, one interesting trend emerges that is a less for bankers – Millennials will pay extra for a product, but they place more value on the status and scarcity value of a product when compared to a traditional bank customer. They not only want a distinct brand, but they want that product brand to have some exclusivity about it.
Putting This Into Action
The difference between a premium bank product and a basic product is slight within the banking industry. For most banks, when it comes to a premium checking account, you are talking only about $5 or $10 extra per month which might entitle the customer to waived out-of-network ATM fees, free Travelers Cheques and two extra basis points in rate. Banks could do so much more. A premium checking account can be so much more as it is one of the most profitable accounts in both the retail and business line up. Not only are fees greater and balances higher, but performance is better in both up and down interest rate environments.
If banks were to put some more energy in creating unique elements to their checking accounts while limiting the account’s availability and creating a unique product brand similar to what American Express did with their Centurion a.k.a. Black Card. Here, Amex has customers paying $2,500 annual fees for perks that they either already have (such as premium travel status) or already get with a Platinum Card. What Amex really sells is exclusivity, a better customer experience, and an enhanced brand. While your bank may not want to go that far, it might be worth charging an extra $25 per month for a checking account that can set your bank apart.
Submitted by Chris Nichols on April 27, 2017