Thanks to the increased use of technology like ATMs, online banking, and direct deposit, bank branch traffic has steadily declined in recent years. Without that face-to-face, in-branch contact, bankers have lost access to those interpersonal relationships that used to encourage consumers to remain loyal to their bank.
This changing banking model has given rise to innovative concepts to develop new consumer relationships and encourage customer loyalty. One increasingly popular solution is bank-at-work or workplace banking programs. These dedicated channels focus on acquiring new consumer banking customers via a bank’s current business banking customers. And there are benefits for everyone involved.
Benefits of workplace banking
For the business, a bank-at-work program is a no-cost convenience for their employees. This benefit not only can aid in employee retention, it also can reduce employee stress and thus increase productivity by improving the employee’s financial health.
For that business’s employees, in addition to the convenience factor and reduced stress levels, there are typically monetary benefits to signing up for the workplace banking program. Many banks offer new bank-at-work customers (who are usually required to have direct deposit) incentives like sign-up bonuses, no fee checking and/or savings accounts, reduced loan or mortgage closing costs, credit card rewards, referral incentives, and more.
Plus, having access to an on-site banker at work provides another level of customer service that many people have sacrificed with the rise of electronic banking. This is a banking expert who can provide financial education and advisory services to the employee, guidance to which they may not otherwise have access. Some banks even offer special financial workshops to their workplace banking customers.
For the bank, offering a bank-at-work program to their business customers’ employees also has advantages. It is a great low-cost way to expand their consumer customer base and grow deposits via direct deposit of payroll checks. This in turn allows the bank to grow their loans with a cheaper source of funds. Consumer deposits, loans, credit cards, residential mortgages—all of this enables the bank to increase their fee income while at the same time nurturing their relationship with the business banking customer.
Ideal bank-at-work businesses
I recently reached out to the workplace banking managers for some of our Vertical IQ customers to get their input on their banks’ programs and how they identify business banking clients that are good candidates for this service. One of our clients said that their bank views any company newly implementing direct deposit as the ideal client since this would allow the bank a simple avenue to assist in getting everyone set up.
Among the specific industries this program manager said they target for bank-at-work programs are professional staffing firms because “they typically have direct deposit and are frequently adding new employees.” Similarly, they seek to provide workplace banking services to companies with professionals since these highly paid employees often maintain high balances. They also target large companies with weekly or bi-weekly new-hire orientations as the program allows the bank to get the business’s new employees set up with direct deposit.
Using Vertical IQ to identify well-suited industries
Because of the growing popularity of workplace banking programs, I’ve had a number of our Vertical IQ clients ask me how our Industry Intelligence can help bankers identify ideal business banking clients for this service. There are several chapters within our Industry Profiles that can give you useful information in making this determination.
- Check out the Industry Risks and Industry Trends chapters. These chapters will tell you if the availability of qualified talent, competition for skilled labor, and/or employee retention is a challenge in that particular industry. If it is, adding a bank-at-work program can be a useful employee benefit to attract top talent.
- Take a look at the How Firms Operate chapter. This will tell you about the types of essential employees within the industry, including those with certification requirements (like doctors, attorneys, etc.) and who thus may be highly compensated. Again, employees with large salaries mean higher deposits and higher balances—allowing the bank to loan out money at a lower institutional cost.
- Of course, review the Banking Solutions and Bank Product Usage chapters. Here you will learn if workplace banking is a bank service commonly being utilized by companies within the industry. Also, if ACH (Automated Clearing House) is typically used in the industry (versus paying people with paper checks or cash), clients in that industry may make sense for workplace banking since direct deposit is a qualifier for their employees to receive a free personal checking account.
A helpful trick for Vertical IQ users…
Vertical IQ gives you the ability to generate a custom list of industries with highly paid employees.
- Log into Vertical IQ and go to Sort & Target in the main menu.
- Choose Report: Financial Benchmark Data.
- Select Data Type: Salaries-Wages to Revenue (%).
That wages-to-revenue ratio is telling us that these industries pay a big part of their revenue to employee salaries, so voila, now you’re backing into a list of highly paid employees! And keep in mind too that these highly compensated employees are often a great fit for a cross-sell to premier banking and wealth advisory services.
Working on your workplace banking plan
Bank-at-work programs can be a win-win-win—for the bank, their business banking clients, and those clients’ employees.
In addition to using the Vertical IQ chapters and tips above, be sure to also use your best judgement to consider industries that would be well-suited for workplace banking. For example, take a minute to think about industries that are going to have benefits enrollment fairs. Those fairs present a great opportunity to address questions about workplace banking and enroll employees in direct deposit, all at one time.
Using the Industry Intelligence available on Vertical IQ, bankers can quickly identify which of their business banking clients may be ideal candidates for workplace banking. By offering this convenient service to a client’s employees, you will not only grow your bank’s consumer deposits, you will deepen the relationship with your business banking client. And that “works” for everyone!
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