‘Rewards Checking’: Bancvue’s Ubiquitous Differentiator

Financial institutions across the country are duking it out over high-interest checking accounts, the ones paying upwards of 6.25%.

These high-interest checking accounts were a differentiator for a brief while when they first came out. Today, there are multiple financial institutions offering the exact same account in every city in America.

Take Portland, where at least three different community credit unions are slugging it out. There’s Rewards Checking from Rivermark. There’s Remarkable Checking from Oregon Community. There’s Fusion Checking from Advantis.

Which one to pick? “Hmmm, I’ll go with this one. They’ve got the best rate.”

Fusion Checking was the latest to enter the market, so that’s probably why they had come in with a higher return.

All these accounts are identical in every way except the rate. They all offer a high interest rate and free ATM refunds, with no monthly fees. They all require 10-12 debit transactions, and you must access online banking and receive electronic bill payments every month.

There are minor variations with only slightly different requirements, such those that require direct deposit. Oregon Community offers a derivative it calls FreeTunes Checking, where you can get four free iTunes downloads each month in lieu of earning interest. At least that’s a little something different.

Reality Check: Trying to create differentiation around any financial product or service is tough. Once anything is successful, everyone will be doing it.

There’s one company behind this widespread high-interest checking phenomenon: Bancvue. They are the folks that first introduced Rewards Checking (as it’s commonly called), and they’ve been marketing it very aggressively. Earlier this year, Netbanker reported that there were over 400 Bancvue accounts, and that Bancvue adds 30 customers every month.

Bancvue’s website is a slick Flash tour that does a fantastic job selling the Rewards Checking solution. There’s language all over the place touting how Rewards Checking can “truly differentiate you from the competition,” and asking questions like “Aren’t you ready for real differentiation?”

The company’s “distinctive” claims were very true in the beginning — before everyone had Rewards Checking — but probably not anymore.

The folks at Bancvue shouldn’t take this the wrong way. Bancvue isn’t to blame. They’re doing exactly what anyone else would do in their shoes. They have a hot product and they are selling it to everyone who will buy it. But is it the best thing for their bank and credit union customers?

Key Questions:

• What would have happened if Bancvue had offered exclusivity in certain markets, as Currency did with Young & Free?
• Reverse-engineering a Rewards Checking account seems pretty straightforward, so what value does Bancvue provide? Wouldn’t an intelligent CFO be able to crunch the backend numbers to make them work?

Bottom Line:

• It’s not “differentiating” when everyone is doing it.
• If your financial institution deploys a Bancvue-style product, please, do yourself a favor and don’t use the generic name, Rewards Checking. There’s already way too many of those. Just Google it and you’ll see.