Nonbank players threatening to steal the market in prepaid cards.
DEPENDING ON THE EXTENT OF UNDERBANKED AND UNBANKED HOUSEHOLDS in their markets, banks should give serious consideration to adding general-purpose prepaid cards to their checking product line, says Genie M. Driskill, chief operating officer of Synergistics Research, Atlanta.
A recent survey by the company entitled, "Relationship Strategies for Checking Accounts," showed that while only 2 percent of customers are currently using prepaid cards in lieu of checking, an additional one-fourth express the likelihood of doing so in the future. Both current usage and intent is stronger among 18-to 34-year-olds.
Driskill notes that a number of players--particularly non-bank organizations--are actively marketing general-purpose prepaid cards to the unbanked and underbanked as a viable alternative to a checking account. Recent activity in this area includes a joint venture involving American Express and Wal-Mart that has introduced a prepaid card called Bluebird. "Depository institutions should not cede this place in the market to nonbank players," says Driskill, "as many of these households may indeed become customers for traditional banking products as they improve their financial status over time."
Among those likely to adopt prepaid cards, baits and other financial institutions are the top location where these cards would be purchased, indicated by four in 10. One-third might purchase a prepaid card from a supermarket or grocery store, while an equal number identify department or discount stores. (www.synergisticsresearch.com)
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|Title Annotation:||MARKETING NEWS|
|Publication:||ABA Bank Marketing|
|Article Type:||Brief article|
|Date:||Jun 1, 2013|
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