| By Jim Bruene on June 15, 2010 6:26 PM | Comments (1) |
Two thousand is the largest banking premium I've ever seen, although Chase's out-of-pocket costs are probably less than $500. The offer was made last week via email (see first screenshot) to existing business-banking customers not already enrolled in Chase Quick Deposit, a scanner-based remote check-deposit service.
The details:
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From: Chase Bank
To: Business Banking clients
Date: 10 June 2010 (1 PM)
Offer: Two years of free remote deposit services (Chase Quick Deposit), normally $50/mo, plus the $855 Panini 50-50 business-class scanner to power it. Total retail value = $2,055
Fine print:
-- Users must deposit at least 10 checks per month to maintain fee-free service
-- New Quick Deposit users only; not valid for current or previous users
-- $500 cancellation fee if discontinued within 12 months
-- Offer good through July 31, 2010
Notes: This offer does not appear to be available to the general public. On the bank's website, the current offer is a free scanner with a 2-year contract at $50/mo.
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Analysis: It's definitely attention-getting and will drive new remote-deposit business. But I'm a bit surprised Chase is giving away both the razor and the blades (see note 1). Perhaps the bank is testing different offers. But it will be two years before Chase finds out what percentage of its users convert to paying customers. Of course, they are also banking on an account-retention lift to repay the significant cost of the offer.
Email from Chase offering free remote deposit services (10 June 2010, 1 PM)
Landing page
Users accepting the offer must first log in to their account to enroll
Notes:
1. Offer made to a single-service (DDA) small business checking client converted from WaMu.
2. For more info, see Online Banking Report: Micro- and Small Business Online Banking (published Oct. 2009)
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Jim: Great job spotting this and posting for all to see.
Truth be told, there is far more money to be made by a Financial Institution on the deposits and balances that come from RDC than on the fees from RDC. Study after study (Celent, Aite, Tower, etc.) has shown clients with RDC keep more in balances at their RDC Bank, AND average per-client balances have grown substantially with RDC- providing banks since implementing the service vs. balances prior to implementation.
Think about it: A bank takes-in deposits and retains balances. As a result of the deposit multiplier, every $1 in deposits turns into at least $2 in loans. If the bank makes just a 4% spread between cost of funds and the amount they charge for the loan, then an additional $10,000 in balances equates to at least $800 in earnings. Add-in other cash-management fees and product / service cross-sells, and that 1 business client who increased their balances by just $10,000 is generating over $1,000 in income per year.
See for yourself by using our free RDC Calculator: http://remotedepositcapture.com/calculator/bank.aspx .
We've said for a very long time that RDC is not about fee income. RDC is about the deposit, and deposits are the very lifeblood of any financial institution. Banks can earn far more from the "balance and deposit" side of RDC vs. fee income. It looks like Chase has figured this out.
Regards,
John Leekley
Founder & CEO
www.RemoteDepositCapture.com