The

Latest on
New Household Acquisi5on
May 11, 2016

2016 Harland Clarke Corp. All marks are the property of their respec0ve owners. All rights reserved.

Proprietary / Conden0al

Presenter

Steve Nikitas
Senior Strategy Director, Harland Clarke
30 years experience, including senior execu0ve at nancial
ins0tu0on in New York, California and MassachuseLs

Topics Well Cover

Market snapshot
Consumer decision process and pricing
Rela0onship strategies and product innova0ons
Key takeaways

Market Snapshot > > >

2016 Harland Clarke Corp. All marks are the property of their respec0ve owners. All rights reserved.

Who is Switching Their Primary Financial Ins5tu5on?

50%

Millennials wont switch if

the service is good.

45%
40%
35%
30%
25%
20%

18%

15%

10%

10%

3%

5%
0%
18-34 years of age
5

Source: Accenture 2016 Banking Shaped by The Customer

35-54 years of age

2016 Harland Clarke Corp. All rights reserved.

55+ years of age

Benets to the Financial Ins5tu5on

Benets to the Financial Ins5tu5on
Retail checking revenue




$1,429
Retail cross-sell revenue




1,062
Retail net present value of rela5onship
$2,491


Business checking revenue




$3,400
Business cross-sell revenue




4,718
Business net present value of rela5onship $8,118

Source: Haberfeld Associates 2015

2016 Harland Clarke Corp. All rights reserved.

Checking Drives Revenue

Benchmark

Performance

Percentage of protable accounts

65%

Percentage of unprotable accounts

35%

Average checking account balance

$6,367

Average deposit balance per checking account holder

$10,081

Average loan balance per checking account holder

$9,563

Annual checking account service charges

$8.92

Annual NSF fees

Annual miscellaneous fees

$81
$7.26

Average es0mated debit card interchange income

$50

Average monthly debit card swipes

12

Single product households

Average age of checking account holder
Percent of checking account holders over age 50
7 Source: Strategy Corps 20016 Consumer Checking Financial Performance Report
2016 Harland Clarke Corp. All rights reserved.

32%
51
51%

Why the Need for a New Checking Account?

Reasons for Opening a New Checking Account at Time of
Most Recent Opening

Moved to new area

20%

Received beLer oer

20%

Access to more advanced features

18%

Dissa0sed w/previous inst

18%

Wanted variety accts/svcs

15%

Life-changing event

15%

Opened when obtained other acct

10%

Opened acct for child

10%

Spouse wanted own acct

10%

First 0me opening acct

6%

Previous acct closed

5%

Source: Synergis0cs Research Corpora0on

2016 Harland Clarke Corp. All rights reserved.

How Do Consumers Characterize the Rela5onship

With Their Financial Ins5tu5on?
2014

2015

21%

29%

71%

Transac0onal

Advice Driven

79%

Transac0onal

Advice Driven

Consumers are buying low-margin products from their primary nancial

ins5tu5ons and shopping around for high-margin products.
9

Source: Accenture 2016 Banking Shaped by The Customer

2016 Harland Clarke Corp. All rights reserved.

Mul5ple Checking Accounts How Many and Why

Number of Checking Accounts Held by Households Reasons for Having Mul5ple Checking Accounts

Three or
more
17%

HH members maintain indiv accts

and allocate HH expenditures

DK
2%

One
47%

HH members maintain indiv accts

for personal expenses and a joint

27%

Different accts are used for different

HH expenditures

27%

Did not close a previous acct when

opening a new one
Two
33%

33%

Separate acct is held for homebased biz

Child's/dependent's acct is held
jointly with an adult

13%
12%
9%
0% 5% 10%15%20%25%30%35%40%45%50%

10 Source: Synergis0cs Research Corpora0on

2016 Harland Clarke Corp. All rights reserved.

An Opportunity to Expand the Rela5onship

Intent to Obtain Another Checking Account in the
Next Year (by Age)
Very likely
50%

DK
7%

Somewhat likely

40%

Replace for
current ckg
acct(s)
28%

40%
30%

20%

28%

22%

20%
10%
0%

14%
6%
Total

17%
13%
18-34

Posi5on of New Checking Accounts

9%

4%

6%
3%

35-49

50-64

11 Source: Synergis0cs Research Corpora0on

4%

3%
65+

2016 Harland Clarke Corp. All rights reserved.

In addition
to current
ckg acct(s)
66%

Consumer Decision Process and Pricing > > >

2016 Harland Clarke Corp. All rights reserved.

Deciding to Switch: Convenience is Key

This is why I went to the nancial ins5tu5on to open a checking account
39%

Convenient branch locations

36%

Online banking through a website

Convenient ATM locations

28%
24%

Reputation for being a financially

Mobile banking svcs

16%

Clear and easy-to-understand acct/

16%
15%

Large ATM network

Overdraft protection for checks/

14%

Open evening and weekend hours

13%
12%

Reward for opening acct.

0%

13 Source: Synergis0cs Research Corpora0on

10%

20%

30%

40%

50%

2016 Harland Clarke Corp. All rights reserved.

Deciding to Switch: Convenience Redened

What Makes My Financial Ins5tu5on Convenient?
35%
30%

30%
26%
25%
20%

23%
20%

18%

18%

15%

16%
13%
10%
9%

10%

4%

5%

6%

4%
1%

2%

1%

0%

Leading
No Foreign
Online/Mobile ATM Fees
Service

Branches
Nearby

Many
ATMs Nearby Convenient Telephone
Branches and
Branch Hours
Access
ATMs
2014

14

2015

2016 Harland Clarke Corp. All rights reserved.

Other

Mobile Banking Has Become Increasingly Important

Role Of Mobile Banking in Deciding to Switch

75%

29%
50%

30%

32%
27%

26%
30%

31%

25%

10%
13%
7%

18%

17%

16%

2012 Q2

2012 Q4

2013 Q2

15%
7%

0%
2010 Q2

2010 Q4

2011 Q2

2011 Q4

Extremely Important

15

Source: Alix Partners March 2014

Important

2016 Harland Clarke Corp. All rights reserved.

2013 Q4

Branches Play a Crucial Role

Here is where I received informa5on on checking accounts

In-person at branch/oce

49%

Friends or rela0ves

28%

Online at bank/FI website

23%

Mail

15%

Online review sites

13%

Online ads

10%

TV/radio/media ad

9%

Rep. by phone

9%

Newspaper/magazine/print ad

6%

Text messages

3%

Other

6%
0%

16

Source: Synergis0cs Research Corpora0on

15%

30%

45%

2016 Harland Clarke Corp. All rights reserved.

60%

75%

Will Consumers Consider You?

What Was Your Mindset Prior to Switching
Checking Account Providers?

13%
32%
23%

32%

17

Knew exactly which FI

Had one FI in mind

Had a few Fis in mind

Wasn't sure which FI

Source: AOL/Oliver Wyman - 2014

2016 Harland Clarke Corp. All rights reserved.

Who Makes the Household Financial Decisions?

28%

I make all the nancial decisions

52%

67%

My partner/spouse and I share the nancial

decisions

47%

4%

My partner/spouse makes all the nancial

decisions

1%

0%

10%
Female

18

Source: Lightspeed GM/Mintel

58% of Millennials do not include

their spouse/partner in nancial
decision making, compared with 46% of
Gen X and 29% of Boomers.
20%

30%

Male

2016 Harland Clarke Corp. All rights reserved.

40%

50%

60%

70%

80%

Free Checking?

Pricing on Main Checking Account

Fees/
svc .charges
cannot be
waived
3%

57%

Min bal req

None DK
3% 2%

Fees/svc.
charges can
be waived
w/req
29%

Requirements to Avoid
Monthly Service Charges or Fees

43%

Direct deposit
Other accts./svcs.

Free
checking
63%

13%

Monthly debit trans

11%

Monthly deposits

10%

Monthly payment

10%

Auto mortgage

6%

Always sign

6%

Limited check writing

5%

Always use PIN

4%

Not use branches

4%
0% 15% 30% 45% 60% 75%

19

Source: Synergis0cs Research Corpora0on

2016 Harland Clarke Corp. All rights reserved.

Lets Talk Fees How Acceptable Are They?

Any very/somewhat acceptable (net)

80%

Making dep in any amt

23%

Monthly dir. dep. of $500

17%

40%

24%

No branch ac5vity

14%

24%

39%

No check trans.

14%

23%

38%

Special card svcs. annual fee

10%

22%

32%

Paper stmt. fee

11%

21%

32%

Debit inac5vity fee

11%

20%

32%

9%

Min. bal. $1,500

9%

16%

25%

Reward program annual fee

9%

15%

24%

19%

Somewhat acceptable

8% 10% 17%

Fee per debit 6% 11%

0%

Source: Synergis0cs Research Corpora0on

Very acceptable

28%

Check image fee

Debit card annual fee

20

53%

30%

16%

20%

40%

60%

2016 Harland Clarke Corp. All rights reserved.

80%

100%

Rela5onship Strategies > > >

2016 Harland Clarke Corp. All rights reserved.

Maximize Cross-selling Opportuni5es

Financial
Packages Usage and Potential

HH already
has
4%

DK
6%

Acceptable Pricing Arrangement for Package

No fee if certain bal is
maintained in all deposit/
sav/or invst accts/svcs in

Very
interested
14%

53%

No fee if certain bal is

maintained on all credit or
loan svcs in pkg

Not at all
interested
21%

43%

Reduced fees on individual

accts/svcs in pkg

Somewhat
interested
31%

20%

Flat monthly fee

Not too
interested
25%

15%

Other

2%
0%

22

Source: Synergis0cs Research Corpora0on

2016 Harland Clarke Corp. All rights reserved.

15% 30% 45% 60% 75%

Consider the Economics of Rewards Programs

Par5cipa5on
in Rela5onship Rewards Programs

(by Age)

Value of Rela5onship Rewards Among Non-users

(by Age)
Somewhat valuable

50%
100%

40%

80%

30%

60%

20%
10%
0%

40%

25%
13%

11%

8%

Total 18-34 35-49 50-64

23

Source: Synergis0cs Research Corpora0on

8%
65+

20%

87%
72%
44%
42%
30%

79%

66%

44%

43%

35%

18-34

35-49

42%

37%

24%

22%

50-64

65+

0%
Total

2016 Harland Clarke Corp. All rights reserved.

59%

Key Takeaways > > >

2016 Harland Clarke Corp. All rights reserved.

Key Takeaways
Checking account rela0onships are both stable and vola0le
Opportuni0es to acquire mul0ple checking accounts are strong
There is high sa0sfac0on with accounts overall and specic features
Consider a mul0channel approach for marke0ng checking accounts, using the branch
as focal point
Onboarding, packaging, and cross-selling are key rela0onship strategies
Rela0onship rewards have a posi0ve eect on rela0onships

25

2016 Harland Clarke Corp. All rights reserved.

Q&A Wrap Up
Type your ques5on in the chat panel

Steve Nikitas
Senior Strategy Director

www.harlandclarke.com/webcasts
harlandclarke.com/LinkedIn
harlandclarke.com/TwiLer

26

Presenta5on materials and video replay

will be provided within one week.

Visit harlandclarke.com/webcasts for this
and previous events.

Thank You!

2016 Harland Clarke Corp. All rights reserved.