You can read NetBanker’s article about it here.

Good point about “right-channeling.”

Can you explain interchange fees and how that makes money, especially when you’re rebating ATM fees? I don’t know enough about how that works.

The question financial institutions are facing about Rewards Checking isn’t one of differentiation anymore. It’s a question of competitive survival. They are asking themselves, “Do I *have to* offer this now, just to stay in the game?”

As consumers, we should all love this. It’s great for us.

First off, yes, it isn’t differentiating when “everyone is doing it”. But “everyone” ISN’T doing it. The reality is that when you offer a widely-used consumer product, achieving that degree of differentiation is nearly impossible. But I would contend that it IS differentiation if it places you in one bucket versus another (ie, high-yield product provider).

The problem, then, with so many of the implementations isn’t the Bancvue product, it’s the fact that many of the banks deploying simply tack it on to their existing set of products, and give branch and call center reps little guidance for helping customers understand if it’s right for them.

As for “what makes Rewards Checking doable”, there are at least two other factors (beyond forfeiting ATM rebates and high interest) that make the account attractive to banks: 1) lower cost to serve by right-channeling transactions out of higher cost channels, and 2) interchange fees on debit card transactions. The CUs and comm. banks that have implemented the product can certainly speak with more data and experience on this than I can, but my understanding is that profitability of the product does not rely on customers not meeting the requirements.

Maybe differentiation has to be some common point that is different but pervades most products. Maybe it is a different process. It seems most products are just an evolution of something before it or it is so new it just takes a long time to come into the mainstream.