Bolder Thinking Blog

Why banks should get bundling

August 20th, 2019 | Christina Han

Why piece together a multi-product relationship when consumers expect to get everything at once? The majority (60%) of consumers are open to the concept of bundling their finances.

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Bundling has become the new norm for many industries. In the world of streaming services, Mintel 2018 Telecommunications Trend “The Great Re-bundling” identifies how, as consumers subscribe to more streaming services, providers develop new approaches to bundling to enable better customization and integration of content. Insurers have also hopped on board; Through cross-sell communications, insurers emphasize trust and previous customer service experience, which comes from bundling policies with the same provider. Mintel research on property and Casualty Insurance found that over 70% of consumers maintain multiple policies with the same company, thus highlighting bundling products and service lines as an industry standard for insurance providers.

How can FSIs offer bundled services? 

Banks can create innovative ways to bundle by creating a rewards ecosystem, rewards for customers working towards financial goals, and in-person consultations as an added value. 

A rewards ecosystem

Right now, the banking landscape is leaning into preferred rates (savings, cash back, mortgage), points for additional account openings, and card-on-file. With banks like Citi rewarding customers across products, FSIs are expanding what generates rewards beyond spending. 

Rewards for managing debt

Banks’ bundled services should reward customers for paying down debt and building savings. According to Mintel research on lifestage marketing in financial services, nearly 60% of consumers believe that financial institutions should help them achieve their financial goals. With consumer debt growing at alarming rates, FSIs can enhance customer relationships by rewarding them for paying down various kinds of debt. 

Rewards towards financial goals

FSIs have an opportunity to provide customers a way to work towards their financial goals while securing their deposits. Banks can automate cashback rewards on spending towards a mortgage, paying down outstanding debts beyond card balances, and working towards different savings goals. 

In-person consultations

According to Mintel research on retail banking and credit unions, 67% prefer to talk to bankers in person, but only 35% consult with a financial advisor. Banks like Capital One are attempting to relieve this pain point with its cafés, offering a less intimidating way to speak to someone about one’s finances. By establishing approachability for customers, banks can include face-to-face appointments as an added value to their bundled package.

Banks who are doing it right

Citi

Citi is testing a program to offer Citigold customers a variety of incentives including Hulu, Amazon, or Spotify accounts. 

In a growing subscription economy, Citi is exploring ways to reward its customer base outside of the standard cash bonus. By aligning its rewards structure to its customers’ lifestyles, Citi showcases extended customer relationships as its main priority.

KeyBank 

The Cleveland-based bank introduced three new banking products: no-fee overdraft protection, a 2% cash-back credit card, and a debit-linked savings program, all built to help customers save and pay down debt. With a bundle of products intended to reward the customer for working towards its financial goals, KeyBank sets a prime example for other banks looking to reward their clients and show appreciation for their relationships.

BMO

BMO promoted a 1,000 bonus miles when opening a BMO Air Miles checking account. With this bundle, the bank assures customers “with multiple ways to get miles, everyday banking has never been this rewarding!”

Bank of America 

Bank of America Cash Reward members can receive a Preferred Rewards Bonus, with different reward bonuses at each tier of its Preferred Rewards Banking program.

What’s next in the bundle battle?

Banks have an opportunity to create bundle packages for their products and services, extending the customer relationship and being a one-stop-shop for everything finance-related. Consumers will see a variety of bundled rewards across product lines. For example, added credit card rewards for opening banking accounts. Banks will also prioritize transitioning these bundled services to their mobile apps and digital platforms.

Christina Han

Christina Han

Christina is an Associate Research Analyst at Comperemedia, responsible for writing proactive, syndicated, and custom reports providing marketing insights across a range of industries, with a special focus in direct mail and email marketing strategies.