Everybody loves free checking. It’s accessible and has a powerful membership draw.
However, premium checking could be just as strategically important, if not more. It provides value to members while also driving revenue for the credit union.
Should your credit union offer premium checking?
Maybe. It’s definitely worth consideration.
Offering a higher-tier, paid membership that delivers guaranteed, tangible value could make a difference. Let’s dive into what it looks like.
What Is Premium Checking, Really?
Premium checking is a subscription model where a checking account is bundled with valuable perks and protections for a small, predictable monthly fee.
Instead of a basic account good for transactions, the account confers additional benefits. (We’ll get into what those benefits looks like soon.)
This strategy allows the credit union to generate reliable non-interest income, providing a stable revenue source. This stability can help fund better technology and services across the board. The goal is to make the member feel they are getting more value in perks than they are paying in fees.
The Strategic Case for Subscription Checking
If basic checking is a fundamental product, why offer a premium alternative?
Let’s think about it from two angles:
- The “premium” draw. People like having a better option. They’ll pay a premium for both value and luxury. Premium accounts that offer perks beyond the basics will attract both value-minded and luxury-minded members alike.
- The engagement play. Taking advantage of perks typically means more member interaction. Furthermore, the added value means more account stickiness, since members would have to give up not just a checking account, but the benefits that come with it if they were to switch.
This is to say nothing of the potential financial benefits to the member or non-interest income revenue stream for the credit union.
Stats to Back Up the Value of Bundled Checking Services
This all sounds good in theory, but does it actually work?
We got our hands on some provider statistics from Avibra, a fintech that works with both credit unions and community banks.
Their bundled perks and protections have demonstrated compelling results. Claims of deeper engagement, “stickier” direct deposits, and higher overall non-interest income are compelling.
Here are the numbers:
- 5% increase in member retention;
- 6–7x increase in Lifetime Value (LTV);
- 10% increase in profit.
Especially at a time when fee income is necessary but reviled (nobody likes NSF fees, let’s be real), the premium checking model looks nice.
What Perks Are Members Willing to Pay For?
The success of subscription checking hinges entirely on the quality and relevance of the bundled perks. The perceived value must far outweigh the cost of the fee. A successful strategy involves offering a variety of benefits tailored to different member segments.
Typical bundled perks often fall into three main categories:
- Financial Wellness and Protection: These benefits appeal to basic financial security and peace of mind. Examples include Life Insurance, ID Theft Protection, Subscription Tracker services, Cell Phone Insurance, or Financial Counseling.
- High-Value Lifestyle Rewards: These are perks that appeal to highly active or high-deposit customers. These might include access to Amazon Prime Membership, Travel Credits, or Hotel Credits.
- Health and Well-being: Expanding beyond traditional banking, some programs include benefits like Virtual Mental Counseling, Dental coverage, or Critical Illness support.
The key is to find perks that meet your members’ needs. If you don’t offer relevant rewards, they won’t pay extra for them.
Naturally, if you can offer individualized rewards, your chances of meeting member needs and expectations improves.
Introducing Avibra as a Premium Checking Option
The statistics you read above were from Avibra, so the data we have reflects their partners’ experiences with them. But the numbers were good enough for us to dig deeper.
What made us pay more attention to Avibra was what it describes as an “Amazon Prime-like” experience for checking account benefits.
Essentially, Avibra creates a marketplace of account rewards that members can select from. Each month, members can choose or change the rewards conferred by their checking account subscription.
With over 150 benefits to choose from, there’s a perk for everyone.
Luxury-minded members may select travel, hotel, and streaming credits. Value-minded members may look for subscription tracking, dental coverage, and cell phone insurance.
We think this is a novel, high-value approach to premium checking accounts for credit unions. Their solution is built to bundle perks, protections, and personalized offers directly into existing checking accounts.
Would Subscription Checking Work for Your Members?
Subscription checking is fundamentally a new conversation about member value. It’s an effective way to drive “stickier direct deposits” and higher engagement. By focusing on providing undeniable value and tracking metrics like LTV and retention, you can make a clear decision about whether this model is right for your institution.
But should you build it or buy it?
We’ve seen built versions that work pretty well. But they may also be tough to maintain (my CU lost my favorite debit card reward almost 2 years ago and I still miss it).
If the pricing is right (e.g. per member baseline with the CU setting the member pricing), buying seems like a no-brainer.
See what Avibra’s solution looks like here:
