Freebie Banking: Moving Beyond the Toaster
It dawned on me the other day that banks sure are handing out lots of different gadgets to gain – and keep – customers. No, I’m not talking about free toasters, gift cards, luggage, toolsets, funky new gadgets, but rather other slightly more relevant items. (And while we’re at it, who knew that the only reason U.S. banks have historically offered free toasters was to entice their customers to do business with them because this was “the only way they could pass cost savings on to depositors”!)
But I digress. In the past few months, a number of well-known financial institutions in countries as far afield as Sweden, Singapore, and Spain have offered new gadgets to their clientele, all with the idea of focusing those clients on increasing the amount of business they are doing with that one particular institution.
For instance, Sweden’s well-known Nordea Bank AB recently announced that it will be distributing free iZettle card readers to its small business customers who will in turn benefit from a quicker sign-up process and lower merchant acquirer transaction fees. In Singapore, Standard Chartered announced that it will soon offer (and require that its users use) card-sized security devices as yet another step in its effort to comply with The Monetary Authority of Singapore’s mandate requiring strong authentication. Finally, Spain’s La Caixa has been experimenting quite widely with contactless payments via stickers for mobile devices and is slowly rolling out its new system to an initial 5,000 customers and slowly expanding it to 200,000 within a few months.
So what gives? Why the focus on catchy newfangled gadgets?
- Well, first of all, financial institutions around the world are businesses, just like the corner store and the restaurant in your neighborhood. Anything they can do to increase your visits, your amount of doing business with them, and your loyalty to their offerings is good for them.
- Second, banks are increasingly under attack from other banks and from other non-banks and they need to find additional ways to remain in front of their customers.
- Third, as non-traditional financial services providers (it was PayPal a decade ago and now it’s players such as LevelUp, iZettle, Square, and Dwolla) slowly poach consumers by getting them comfortable with new ways of conducting transactions, the financial institutions find themselves in need of inroads into these new processes, technologies, and systems.
So if you don’t want your bread toasted and you aren’t in the mood to sign up for a new account at a new financial institution just to get some freebie gift, find comfort in the knowledge that soon enough your financial institution will be serving you up one of these nifty gadgets.